The Merger-Mania Trend

Source: CPA Success

The following includes experts, reproduced with permission, from a blog entry by Tom Hood.

In 2009 there were 67 CPA firm mergers (in the Top 100 firms) totaling $821 million, and the AICPA estimates that the number of firms nationally will shrink from 47,000 to 40,000 over the next five years.

There are several major trends converging.

1. The Great Recession of 2008 (2009 and 2010) is receding and firms are seeing growth.
2. Baby Boomer partners are now thinking about retiring again.
3. Globalization is real.
4. Standards overload.
5. Lack of succession planning among CPA firms despite the many “wake-up” calls over past five years.
6. Lack of leadership.

These are major trends by themselves. Taken together, you get merger-mania at all levels.

Here is what I am seeing:

1. Top 100 firms are working to build national and international footprints.
2. Regional firms are looking to strengthen secondary metro markets and broaden their service lines and talent thru acquisitions/mergers.
3. Local firms struggling to keep up with proliferation of standards and regulations are looking to economies of scale, new services, and talent as they acquire smaller practices.

So what should you do about this?

It all starts with your vision, purpose, strategy. Does it fit your strategic plan?

Second, will it fit your culture? This is probably the most significant factor. Despite the focus on compatible systems and structures, none of these matter if the people cannot work well together.

Once you make the decision, I suggest a major collaborative planning session to reestablish the new collective vision, values and strategy that will reestablish your intentional culture. The costs of not doing this can be significant.

For the complete blog post, read “Do you have the urge to merge?”

From CPA Success, the blog of the Maryland Association of CPAs, http://www.cpasuccess.com, March 29, 2011.