Can You Grow Without Merging Up?

Source: CPA Practice Management Forum

Michael Swaim, managing director of Swaim-Brown, Spartanburg, S.C., sets forth some compelling reasons to resist the merger route. To remain independent, firms must provide outstanding service to their clients and have well-defined visions of their futures.

Before succumbing to a merger, firms should avoid the tendency to place the quantitative aspects of the deal ahead of the congruence of their cultures.

There are better ways to grow: 

·          Find the right people. They will probably be experts in either industry or functional niches. Niche players have competitive advantages because they provide value-added services.

·          Sometimes it is more economical to open a new office than to enter a geographic area through merger.

·          Sometimes the best way to find the right people or to enter a targeted market is through the acquisition of a smaller firm.

·          Being a consultant is virtually essential to meeting clients’ needs today, but an alternative is to develop working relationships with outside experts to provide the resources you lack.

The merger route has many disadvantages including loss of independence and authority,  disappearance of your firm culture, and possible failure of the merger.

For the complete article, see CPA Practice Management Forum (CCH Incorporated), February 2005, p. 15.