“Let’s talk”: How to Navigate Our Firm Through Capital Solutions, Mergers, and Independence
As the accounting landscape evolves, CPA firm leaders face critical decisions that shape their firms’ futures. Whether exploring capital solutions, considering mergers, or maintaining independence, the path forward requires informed choices. As a CPA and an advisor, I enjoy engaging with firms to help them think about their choices. Unencumbered by thoughts of commissions, I approach these engagements with one thought in mind: how does a leader fulfill the fiduciary responsibility of exploring these options?
My experience in the industry working with multiple firms through these scenarios allows your team to explore the possibilities and align them with your goals. We explore the considerations for each and how to navigate the change as you move forward.
The Options Behind the “Doors”
As part of a recent engagement, one of the Managing Partners described it as a “door exercise.” It is fair to say we have various doors behind which are options that require consideration. Allow me to generalize when presenting these doors because it’s never quite as straightforward as I’ll show. We must consider how certain priorities are met for each of these doors. These priorities include, but aren’t limited to, independence, capital, talent, long-term sustainability, and profitability.
In my process, I help firms think about these doors:
Go it alone: How do we grow, provide needed resources, have appropriate succession, think about governance, outsourcing, automation, merger in other firms, etc.? If we choose this path, what must we do to meet the challenges?
Merger: Whether it be a merger up, lateral, or some combination of both, how does a merger strategy help us with the above priorities? How do we identify firms we may want to have strategic conversations with? How do we get partner buy-in?
Capital Solutions: This can include options such as:
Debt (permanent, line of credit, acquisitive focused)
Partner capital: Do we have the right level of partner capital? Does our practice management hygiene utilize too much working capital? We need to explore.
Alternative capital: ESOPs come to mind, but there are others. How do we explore?
Private equity: The “hottest” discussion in our profession has many wondering if it’s right for us. What does a PE deal look like? How do we explore? How do we level-set the various options among the PE players? Is this a complete abandonment of independence? This list of questions is almost unlimited in this area.
Let’s Talk About This
I’ve developed a process of exploration that is neutral to any outcome other than your firm determining what’s right for you. I’m not for or against anything behind these doors; that’s not my role. My role is to ensure you and your firms have appropriately explored the options, confirmed your approach, and determined a focused path forward. If we are to go alone, let’s get ready. If we are to merge, let’s decide on our approach and systematically prioritize. If we are to consider capital solutions, let’s develop a game plan of exploration that leaves no stone unturned.
Firm leaders and firms can get the right answer on their own. But often, we are saddled with the demands of running a company and serving clients and just don’t have the time to focus on these decisions. Equally as true, for such a strategic consideration, an “outsider” can often bring experience and perspective, untainted by biases, that allows assumptions to be challenged and voices to be heard.
When I “hung my shingle” as a sole proprietor, I had one thought: how do I make this place better and fulfill my mission? As the firm grew and we considered mergers, I had one thought: how do I make this place better and fulfill our mission? Thirty-nine years later, I’ve experienced a lot of what’s behind these doors. Let me help you think about how to improve your firm and fulfill your mission.