Firm Merger

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Firm Merger

If you’re looking to grow your CPA firm fast, would you consider a firm merger? Rob Cameron started his first firm in 1989 and since then has expanded his practice across Central Illinois through a firm merger with new partners.

Sometimes, you may have to merge when unforeseen circumstances arise…Rob tells about his.

In this episode of Grow Your Firm Podcast, with Jetpack founder David Cristello, Rob walks you through:

  • What is the most important piece in determining the success of a merge [it’s not what you think]
  • The timeline for a merger from discussion to completion
  • What to EXPECT when you first merge


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ADDITIONAL LINKS:

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At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.

To learn more, check out our free 14 day trial at JetpackWorkflow.com. 


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The Steps Leading Up to a Merger

Rob Cameron became a CPA-entrepreneur in 1989 when he began his firm (with his partners). It started off as a smaller firm and slowly grew.

Around the end of the 90’s, Rob merged to form Cameron, Smith & Company. When this relationship began, his partner had a “cut-off” point to begin his retirement. Because the finish line was so far off, for many years they worked hard at simply growing the firm.

The firm grew from two to seven members with both partners splitting the work and the fees as 50/50 partners. Suddenly, the deadline for the partner to retire was approaching.

In the meantime, Rob was in the process of grooming a manager in the firm to be the successor. Unfortunately, just a short period before the retirement deadline, the manager unexpectedly left the firm.

Scrambling for a succession plan, Rob spent many months interviewing managers of other firms. The problem was he found a disheartening fact: Many managers at other successful firms were in great positions with pay they enjoyed, thus they were not eager to make the move into becoming a partner of a smaller firm.

He knew he didn’t want to sell.

Rob went through periods wondering if maybe he (himself) just wasn’t a good partner. Was he doing something wrong?

A Merger Candidate “Emerges”

For many years, Rob was involved in the Illinois CPA Society. He helped with the peer review processes around the state. This position allowed him to meet other firm owners, learn from them, help them, and grow with them.

He recommends: if you’re a CPA firm owner, get involved in your local society so you can reap the same benefits.

While doing peer reviews, he regularly worked with another firm owner on a regular basis. Being the entrepreneur and quick-thinker, he asked for a lunch meeting to discuss the opportunities.

In the meantime, Rob put together an acquisition plan for other smaller firms in the area and sent out direct mailers. With an astounding 25% response rate, he had many lunch meetings set up with smaller firms. In the end, it came down to three firms and one was acquired.

This helped even-out workload and grow the firm to make it more attractive.

It was then, he had his meeting with his peer review partner at the CPA society. They both agreed.

Merging could be a massive opportunity for both of them. They were 60 miles away from each other, but could extend the reach of the firm plus have additional resources at their fingertips (on both sides).

The Important Piece to Determine a Mergers Success:

Rewinding back a period, since Rob was a regular peer reviewer of CPA firms around the state, he saw what it took to successfully complete a great merger. Some firms merged to grow, some merged for resources, and others out of necessity.

He says there’s only one thing that determines the success of a healthy firm merger:

– The Right Culture.

Rob’s own firm is very tech-y (they are Jetpack Workflow users) and laid back. They’ve built a culture where employees can enjoy themselves, their work, where they can laugh.

Others, Rob says, are much different. Some will be very “Suit & Tie”, head-down, no talking,”pencil to paper”, just work, work, work.

Some firms will have members “occasionally” pick up a computer to do a spreadsheet”

If there’s such a major disconnect between culture and practices, the merger can fall apart right away such that the firms split up again.

Rob made sure he went through the proper due diligence to merge with a firm who shared his culture and practices.

Timeline You Can Expect For a Merger And The First Months:

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?

At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.

To learn more, check out our free 14 day trial at JetpackWorkflow.com. 

The workload for a CPA firm used to be much more evenly spread throughout the year. Nowadays, most work is bunched up into about six months of the year. When the first discussions for the firm merger took place, it required precise scheduling and a sprint during the “down” months.

For Rob’s merger, it took about six months since the initial meeting for the process to finalize.

TIMELINE:

  • Initial meeting for 3-4 hours
  • Then, lawyers become involved in the discussions
  • Non-disclosures are signed 
  • Busy periods where discussions will halt for 1-2 months
  • Begin process of merging cultures and best practices
  • Adjust, then finalize

Their timeline was to have it completed by December 31, 2014. This was to get out ahead of tax season the following months. A hiccup they ran into was adjusting all the marketing materials and headers with the new names and pieces of the firm. Rob recommends starting that much earlier due to differing opinions and compliance.

With the firm merger still fresh, Rob advises to let the early stages develop naturally.

“There will be some awkwardness.”

At first, both (newly minted) partners were hesitant to reach out to the other for help and advice. Especially, as they merged and went right into tax season, it took a couple months before they could evaluate everything. Some things are still being merged, such as employee policies. Since they are 60 miles apart, little things like that are still being ironed out. Yet, so far, everything has merged successfully.

Firms merging can have some roadblocks even when the culture is a fit. It’s up to the partners to make sure there’s a window to let everything “seam” together while maintaining the culture the employees like.

Have you been a part of a merger? What did you experience?

“Nothing happens without the intention for it to happen.” – Rob Cameron

Ready To Start Implementing A Workflow Process That Will Actually Save You Time?

At Jetpack Workflow, we have created a workflow software geared towards maximizing efficiency and effectiveness within CPA and accounting practices.

To learn more, check out our free 14 day trial at JetpackWorkflow.com. 

Trackbacks/Pingbacks

  1.  How to Sell Your Accounting Firm for 7-Figures and Beyond
  2.  Buying a CPA Firm Q&A: What if the Accounting Practice period gets delayed? - Jetpack Workflow

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