CPA Firms Feeling the Urge to Merge
Source: Accounting Office Management & Administration Report
As the economy continues to limp toward recovery, many firms are looking to M&A as a growth strategy. According to consultant Allan Koltin, “The vast majority of the top 500 CPA firms with revenues of $5 million or more are looking for mergers and acquisitions more aggressively today than anytime I can remember.”
M&A offers many benefits, including:
- A quick way for firms to increase their market share and broaden their geographic reach
- Access to talent and contacts needed to develop or expand an industry or service niche
- Solving succession planning problems by filling the talent pipeline
- Allowing firms to leverage economies of scale so they can go after larger clients and projects
M&A is an effective growth strategy, but it's important to proceed with caution. Firms should develop processes for identifying potential partners, conducting due diligence, and handling post-merger integration. To ensure a good fit, firms should examine a variety of tangible and intangible factors when evaluating merger targets, including partner quality, firm governance, operational issues, culture, ethical principles and other values, and “chemistry.”
After the deal is done, client retention and integration of the two firms become critical. As Tommy Lawler, CEO of Ft. Worth, Texas-based Weaver, explains, “About 80 percent of integration involves flipping the switch and following our integration plan . . . . The other 20 percent are things that you don't anticipate, such as the psychological impact and anxiety following a merger for a firm that has historically operated independently.”
For the complete article, read “‘Frenzied Pace' of M&A Shaking Up Landscape.”
From Accounting Office Management & Administration Report, Institute of Management and Administration, Inc., Newark, NJ, [email protected], October 2010, p. 1.