What This Owner Learned After 10+ Acquisitions and Divestitures w/Marcus Dillon, CPA

Podcast

Summary

In this episode of The Growing Firm Podcast, host David Cristello welcomes Marcus Dillon, president of Dillon Business Advisors. The conversation delves into Marcus’s journey of acquiring a book of business valued at $400k and the evolution of his firm over the past 13 years. 

Marcus shares valuable insights on client acquisition, pricing strategies, and the importance of maintaining consistency during the first year of acquiring new practices. The episode also explores the challenges and hard decisions he faced, including experimenting with service offerings like bookkeeping and payroll. 

Listeners will gain a deeper understanding of capacity planning and the hard-won lessons learned from the front lines of running a modern firm. Tune in for an engaging discussion filled with practical advice for firm growth and client management.

Guest Bio

Marcus Dillon is a distinguished figure in the accounting and business advisory landscape, known for his innovative approach to client service and firm management.

As the President of Dillon Business Advisors (DBA), Marcus has dedicated over a decade to transforming the way accounting firms operate, focusing on delivering comprehensive, value-driven services to small and medium-sized businesses.

Marcus’s journey began in 2011 when he took a bold step into entrepreneurship by acquiring a block of business worth $400,000. With a background rooted in traditional accounting practices, having worked at both a Big Four firm and a smaller local firm, he recognized the need for a more modern, client-centric approach to accounting. 

His early experiences shaped his philosophy that accounting should not only be about compliance but also about providing strategic insights that empower clients to thrive.

Under Marcus’s leadership, DBA has successfully completed 13 mergers and acquisitions, demonstrating his keen ability to identify and capitalize on growth opportunities. His strategic vision has led to the reshaping of the firm, transitioning from a high-volume, transactional model to a more sustainable, relationship-driven approach.

 This evolution has allowed DBA to serve approximately 100 family groups, generating an impressive rolling revenue of $3 million, all while maintaining a dedicated team of 15 professionals.

A key aspect of Marcus’s ethos is the importance of capacity planning and team dynamics. He has implemented a unique pod structure within DBA, where each client is served by a dedicated team consisting of a client service manager, a client controller, and a client CFO. 

This model not only enhances client relationships but also fosters a collaborative environment that empowers team members to excel in their roles. Marcus believes that effective communication and respect are the cornerstones of a successful team, especially in a virtual work environment.

Marcus’s commitment to continuous improvement extends beyond his firm. He is passionate about sharing his knowledge and experiences with others in the industry. 

Through his involvement in Collective by DBA, a community designed to support accounting professionals at all levels, he provides valuable resources, mastermind groups, and advisory services. His goal is to create a safe space for firm owners and their teams to learn, grow, and navigate the complexities of the accounting profession together.

With a strong belief in the power of mentorship and collaboration, Marcus emphasizes the importance of building a supportive network. He encourages aspiring leaders to seek guidance from peers and to engage in open conversations about the challenges they face. 

His own journey has been marked by hard decisions and lessons learned, particularly in managing client relationships and team dynamics. Marcus advocates for addressing conflicts head-on and fostering a culture of transparency and accountability.

In addition to his professional achievements, Marcus is a family man who values the balance between work and personal life. He understands the toll that the accounting profession can take on individuals and their families, and he strives to create a firm culture that prioritizes well-being and work-life harmony.

As a thought leader in the accounting industry, Marcus Dillon continues to inspire others with his innovative strategies, commitment to client service, and dedication to fostering a collaborative and supportive work environment. His journey is a testament to the transformative power of vision, resilience, and a client-first philosophy in the ever-evolving world of accounting and business advisory.

Detailed Synopsis

The Importance of Consistency and Client Understanding in the First Year After Acquisition

The first year following the acquisition of a firm or a block of clients is crucial for laying a strong foundation for future growth and success. As highlighted in the podcast episode with Marcus Dillon, maintaining consistency and taking the time to learn about clients during this period is essential. Here are several key reasons why this approach is vital:

1. Building Trust and Relationships

The initial year after an acquisition is a pivotal time for establishing trust with clients. Clients may feel uncertain about the changes that come with new ownership or management structures. 

By ensuring consistency in service delivery and communication, firms can reassure clients that their needs will continue to be prioritized. This trust is fundamental for fostering long-term relationships, which are often the backbone of a successful accounting practice.

2. Understanding Client Needs and Expectations

Every client has unique needs and expectations. The first year should focus on understanding these nuances rather than implementing immediate changes or price increases. Marcus emphasizes the importance of learning about clients during this time. 

By engaging with clients, firms can gather valuable insights into their preferences, pain points, and expected service levels. This understanding enables firms to tailor their offerings more effectively in the future.

3. Avoiding Disruption

Making immediate changes, particularly in pricing or service offerings, can lead to disruption and dissatisfaction among clients. Clients may feel alienated or undervalued if they perceive that their needs are not being prioritized. 

By maintaining consistency in the first year, firms can avoid unnecessary upheaval and instead focus on a smooth transition. This stability is crucial for retaining clients and ensuring they feel comfortable with the new management.

4. Experimentation and Evaluation

The first year provides an opportunity for firms to experiment with different service offerings and evaluate what works best for their client base. As Marcus mentions, his firm initially referred out services like bookkeeping and payroll but later brought them back in-house after assessing client needs. 

This kind of experimentation is only possible when firms take the time to learn about their clients and understand any existing service gaps.

5. Setting the Stage for Future Growth

By prioritizing consistency and client understanding in the first year, firms can lay the groundwork for future growth. Once a solid foundation is established, firms can gradually introduce new services, pricing models, or changes based on the insights gained during the initial year. This strategic approach allows for smoother transitions and increases the likelihood of client buy-in for future changes..

Evolving a Modern Accounting Firm: Insights from Marcus Dillon

In the podcast episode featuring Marcus Dillon, president of Dillon Business Advisors, he shares valuable insights into the evolution of his accounting firm over the past 13 years. The discussion highlights key strategies for growth, client management, and the importance of adaptability in the accounting industry.

The Journey of Acquisition and Growth

Marcus began his journey in 2011 with the acquisition of a $400,000 block of clients from a semi-retired partner. This initial acquisition set the stage for a series of strategic decisions that would shape the future of his firm. 

Over the years, Dillon Business Advisors has completed 13 mergers and acquisitions (M&A), including four acquisitions and nine divestitures. This approach has allowed the firm to refine its client base and focus on ideal clients who align with their service offerings.

Client Transition and Pricing Strategy

One significant challenge Marcus faced was transitioning clients from traditional hourly billing to a more structured pricing model. He emphasized the importance of understanding the value of services provided and developing a clear pricing strategy before engaging with clients.

 By creating bundled service packages and assessing what clients were already paying, Marcus was able to introduce new pricing tiers effectively.

The firm’s strategy involved educating clients about the full range of services available, including bookkeeping, payroll, and advisory services. 

However, Marcus stressed the importance of maintaining consistency in the first year after an acquisition to avoid overwhelming clients. This approach allowed the firm to learn about client needs and preferences before implementing any significant changes.

The Importance of Capacity Planning

Capacity planning emerged as a critical theme in the conversation. Marcus shared insights into how his firm tracks time and productivity across different roles within the organization.

 By understanding the effectiveness of client service managers, client controllers, and client CFOs, the firm can better allocate resources and manage workloads. This data-driven approach helps ensure that the team operates efficiently while maintaining high service quality.

Navigating Difficult Decisions

Throughout his journey, Marcus encountered various difficult decisions, particularly regarding client relationships and team dynamics. He noted that the most challenging decisions often revolved around people—both clients and team members. 

The importance of clear communication and timely decision-making became evident as he reflected on past experiences. Marcus emphasized the need for a supportive network of peers to help navigate these challenges, highlighting that avoiding conflict can lead to larger issues down the line.

Future Growth Strategy

Looking ahead, Marcus expressed a desire to continue acquiring smaller firms or blocks of clients that align with Dillon Business Advisors’ service model. He acknowledged the current market’s complexities but remains open to opportunities that would enhance the firm’s capabilities. 

The focus will be on acquiring quality client lists and integrating them into the existing structure, ensuring that the firm continues to provide comprehensive services to its clients.

The Value of Developing a Structured Pricing Model

In the podcast episode featuring Marcus Dillon, the importance of developing a structured pricing model is emphasized as a critical component for accounting firms looking to optimize their revenue. 

A well-defined pricing strategy not only helps in understanding the value of services offered but also aligns the firm’s offerings with what clients are willing to pay.

Understanding Client Willingness to Pay

One of the first steps in creating a structured pricing model is to assess what clients are currently paying for services. Marcus suggests that firms can start by analyzing their best clients to determine the price points that are acceptable and competitive. 

This involves gathering data on existing client relationships and understanding the value they perceive in the services provided. By identifying these benchmarks, firms can establish a foundation for their pricing strategy.

Transitioning Clients to New Pricing Tiers

When transitioning clients to new pricing tiers, it is crucial to approach the process thoughtfully. Marcus highlights that firms should first develop a clear plan and structure for their pricing, which may include bundled services or tiered pricing options.

This preparation allows firms to communicate effectively with clients about the changes and the added value they will receive.

The transition should be gradual, especially in the first year after acquiring a new client block. During this period, firms should focus on learning about the clients and their service expectations without overwhelming them with immediate price increases. This approach helps in building trust and understanding the level of service clients are accustomed to.

Revenue Optimization Through Price Optimization

The potential for revenue optimization through structured pricing is significant. By moving clients from hourly billing to fixed or value-based pricing, firms can create a more predictable revenue stream. 

Marcus notes that when firms acquire clients who were previously only receiving basic services, there is often an opportunity to introduce additional services such as bookkeeping, payroll, or advisory services.

This cross-selling not only enhances the client relationship but also increases the overall revenue per client. By offering a comprehensive suite of services, firms can create a more integrated experience for clients, which can lead to higher satisfaction and retention rates.

Timestamps

[00:01:20] Acquiring a book of business.

[00:05:13] M&A deals in CPA firms.

[00:09:16] Price optimization in client acquisition.

[00:12:00] Client relationship evolution strategies.

[00:14:11] Client acquisition strategies explained.

[00:20:10] Acquisition strategy for client bases.

[00:23:12] Service offerings and client relationships.

[00:25:52] Tracking time for capacity management.

[00:31:00] Hard decisions in business relationships.

[00:34:45] Community support across organizations.

[00:36:34] Growing your firm.