Strategies to Retain Your Firm’s Legacy

by | Mar 14, 2018 | News

A Pattern Exists in CPA Firms

One constant we see as CPA growth consultants and M&A search specialists is most firms want to remain independent. Merging or selling to join forces occurs to expedite the growth process, but most M&A happens because a firm’s options are limited.

We identified a direct correlation between succession and lack of professionals capable of selling. The emphasis placed on technical production due to staffing issues has created an imbalance of professionals who do not have networks and lack the ability to develop the business needed to fund existing and projected buyouts when the rainmakers exit.

Core drivers impacting a decision to merge or sell include:

  • Underfunded capital accounts required to meet current and/or projected partner buyouts
  • Lack of succession minded professionals that:
    • Want to take an equity position
    • Possess the skills to successfully develop business
    • Have the financial resources to buy-in to the firm
    • Will put in extended work hours

The presence of just one of these can prevent a succession.

Our Session

We will walk participants through a growth model and the elements that impact growth, including engaging the firm’s professionals, and financial options to fund capital accounts. We expect this session to last approximately one hour.

Growth Modeling. We will demonstrate a live, interactive growth model. The model starts with a firm’s current revenue, measures the impact of runoff, and produces a monthly organic target needed to achieve the desired net growth. Then, we break the monthly target into four variables, so a firm can create business development steps or evaluate current strategies.

Impaired Leverage. Impaired leverage exists in most firms and impacts the ability to retain their legacy. It is the percentage of professionals who can successfully conduct a sales call and close business. The growth model numbers we will review will make the business development challenges apparent. While a firm may have been successful to date achieving their growth, eventually they may begin to flat-line, if their leverage is out of alignment.

Capital Account Funding. This part of the session focuses on funding the capital account, which is essential to maintaining independent. In many firms, the path to partnership and the buyin mechanisms are unclear, which defers or prevents potential partners or income partners to become equity partners. In addition,
we will discus how the impact of majority equity ownership in the hands of a few partners impacts growth.

The Next Step

Take Away. We can create a custom model for each firm using their specific data. This will enable a participant to self-assess their current strategies for opportunities to augment their existing efforts.

Contact. Bob Lewis, President at 800.995.9186 or email blewis@ThinkVisionary.com

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