Richard Wortmann describes his firm as a “Non-traditional, traditional firm.” He’s focused RW Group (his firm) on a specific specialty plus is a pioneer in how CPA and accounting firms can make acquisitions. These ideas could change how you grow your accounting practice.

Richard started off in other, larger CPA firms and only started his practice in 2011. It’s grown rapidly with not only acquisitions but getting referrals.

His best referral source?…

His OLD firm!

In this interview with workflow software founder and Grow Your Firm Podcast Host, David Cristello, Richard shares his ideas on new ways to grow your firm— touching on:

  • How to get referrals from other CPA firms
  • Acquire other companies with 0% risk
  • The signs you need to diversify


Specialization in Your Practice for Fast Growth:

Richard Wortmann started his career in larger CPA firms, working his way up to partner multiple times. He’s been involved in PICPA for decades and recently helping with Auditsense.

In Richard’s last firm (before starting his own practice), he was brought on to help with quality control. He’d done peer reviews and auditing and felt that was where he specialized in.  As his firm role evolved, Richard became more disenchanted with the company and made a bold move…

He told the partners he was resigning and starting a firm to specialize in quality control, peer reviews, and audits.

Something surprising (even shocking) happened… They loved the idea and asked, “Can we be your first client?”

This became a common occurrence as Richard’s new firm focused on auditing, quality control, and peer reviews. Specializing in this area actually had him getting referrals from not just his old firm, but other firms as well.  Usually, it was due to a scheduling or work capacity issue.

[BIG IDEA: Having 2 firms working with a client rather than just 1 proved to bring more value to the client and a higher satisfaction]

The question you have is: “How do I know partnering with a firm won’t lose me my clients?”

Richard recommends calling up societies and other peer reviewers (peer reviewers know many firm owners) and get suggestions and background information on other firms.

How to Get Referrals From Other Firms:

    • Build out your network: Richard has been involved in many societies and his role as a peer reviewer allows him to meet many firm owners and build relationships.
    • Backgrounds: Ask around about a firm before agreeing to partner.
    • Base relationship on honesty and integrity: If you feel a referral is even slightly hinting about switching from the referral firm to yours, be 100% upfront and tell the referral firm what’s going on. What you might get is “Yes, we’ve been looking to not service that client anymore, this is great news.”

If you’re looking to leave your old firm, make sure you aren’t burning any bridges. Keep in regular contact with the partners and see where your specialties might fit in with what they might need down the line.

KEY: Again, be upfront and know that if you ever *steal* a client from a referring CPA, you’ll never get another referral from them again. Worse, your reputation may get tarnished as well.

Signs You Might Need to Diversify:

Richard’s built his firm on top of strong referrals. To grow quicker, he saw acquisitions as the fastest path. A major point he saw when he looked at his book of business — many of his clients were in shaky industries e.g. real estate. If another real estate crash occurred, a major client might be lost.

Many of his other larger clients were in similar “shaky” industries.

It was then, he realized he needed to diversify and find other industries. Right away, he acquired a broker-dealer firm in one of his first acquisitions.

Do you see similar “shaky” issues with your client base?

Making Acquisitions With 0% Risk:

It’s a Buyer’s Market”  — Richard Wortmann

In his first acquisition, Richard went the traditional route. He proposed a note payable over a period of a few years. After 3 years, the firm’s kept 85% of the acquired firm’s clients.

The problem?

The risk is completely on RW Group LLC. The seller gets a steady payout to help fund their retirement and there is 0 risk.

In a buyer’s market, the advantage and leverage lies with the buyer. Richard sees a trend of many older CPA firm owners wanting to retire and get out of the business. In these situations,  you can pick up a great book of business with essentially 0 risk.

Those are the type of firms you want to pick out. Firms, who haven’t built out a succession plan, are much easier to acquire with less risk than more established firms.

How to Make an Acquisition With NO Risk?

It’s simple. Instead of a flat payable paid out, you pay out based on cash collected from old clients of the acquired firm.

>How Richard structures it — Pay out 20% in the next 5 years for all cash collected from the book of business acquired.<<

This way, the seller still has skin in the game and can be a mouthpiece for: Their old clients paying on time and staying with the buyer’s firm.

With this approach, the first 5 years you will see little ROI, but no cash lost. If a client leaves, you get nothing and the seller gets nothing.  Structured even better, if Richard’s firm is able to charge more in fees, the 20% over 5 years is only calculated on the fee structure per client at the time of the acquisition.

In addition, Richard makes sure:

  • There is no acquiring of staff (unless absolutely necessary) and definitely NO partners come over.
  • Have about 30 days for clients to get acclimated and aware of the acquisition, then cut the cords with the past and start again (many of the acquired companies were strictly paper-based. Within 30 days, Richard flips them all to paperless.)
  • Acquire as little as possible, all you want is the Book of Business.

As you grow, marketing is one way to grow your client base. On the other hand, you can also grow with acquisitions. The point to remember is you want as little risk as possible. There are many small companies that have owners ready to retire. They just need a firm like yours to swoop in and buy them out.

Using Richard’s tactics, you can acquire high-value clients with little downside, you simply need to start searching! Grow your practice with acquisitions.

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