Key Takeaways

"Don't confuse firm governance with ESG"

CPA firms nationwide are struggling to find the quality and quantity of staff needed to fulfill their ever-increasing workload demands. The failure to meet these necessary personnel levels has direct consequences on bottom line performance and client satisfaction. You would think that these extreme challenges would impact the methodologies and processes that firms utilize and cause them to change. Unfortunately, for many, this is not the case. It’s truly a question of insanity, doing the same thing over and over again and expecting a different result. The following 7 actions are impediments to successful hiring today. CPA firms that follow these will proportionally lessen their level of success in attracting and hiring the resources they need.

CPA firm CEOs who are evaluating their talent on the front lines of this tax season. Some firms are suffering from the pains of mismatched staff, perhaps the result of hiring too fast simply to fill an opening at a bargain price. The cost of a mismatched hire is significant and can come along with cultural impacts of engagement inefficiencies, applying unnecessary stress to staff relationships, putting clients at risk, impacting profitability, and causing unwanted aggravation. Smart CEOs are constantly assessing the strengths and weaknesses of their organization charts, looking to close gaps, and preparing to assertively make improvements where necessary. The treadmill is already in motion and talented people will be on the move sooner than later. Will you be positioned to grab the cream of the crop when they make their move? IGA does recruiting differently from the typical search firm. Learn how by setting up a no obligation consultation with Gary Kravitz, our lead executive recruiting advisor. Take a brief survey to determine if we can be your solution by clicking here .

“Let’s wait until after the 15th.” No CPA has ever said that, right??? Much to the chagrin of many CPA firm leaders, these words are uttered all too easily by partners, managers, and staff. The fact is that the treadmill of the business world is always running and it doesn’t stop because a CPA is battling the priorities of tax season. There is no time like the present to deploy strategies and tactics that enhance the firm’s performance and value. Stepping forward with baby steps is better than not stepping forward at all. More Valuable Firms Perform Better CPA firm valuation is typically driven by top line billings or net fees. Ultimately, buyers will pay a multiple of anywhere between percentage points to a higher multiple beyond 1X net fees. The beauty is in the eye of the beholder, or buyer, of course. With that said, what beauty is a managing partner who plans to not sell beholden to? Is it more profitability? Is it better performance? Is it reduction of write-downs? Is it top line growth? If valuation is a function of any or all of these, does it then support the notion that a firm should be always driving a higher valuation? IGA supports firm owners on their journey to building the firm today that will be sold or transitioned tomorrow, next year, or in 10+ years. A more valuable firm is also a firm that performs better and puts money in the pockets of the owners along the way. So, build the value incrementally, day-by-day, month-by-month, and season-by-season. The treadmill of your firm’s commitment to growth should never pause. Value & Performance Enhancing Considerations for Tax Season Growth-minded CEOs work diligently year-round to improve their firms and they make large chunks of progress especially in the offseason. How can they continue the incremental progress during their busiest seasons? We share a handful of suggestions below. For a more detailed list, click here . Get your team to view your firm as a business enterprise and influence their understanding of how a CPA firm is more than simply a “practice,” its a viable “enterprise.” A successful firm is broken into manageable parts: SALES+PEOPLE+ADMIN+CLIENTS

Our retained search client, is a Carolina based CPA firm that offers a relaxed work atmosphere combined with continuous technical learning and professional development, high spirited client services, and an emphasis on community and team relationships. We get the job done for our clients, while encouraging a work and life balance. We put a high value on technical expertise and maintain a culture that allows personal accommodations. We are always encouraging innovation within a system of technologies and process management. Our purpose is to leverage our knowledge to help our clients manage risk and advise strategies that improves their financial security. We are seeking an experienced Strategic Tax Manager , who is committed to the vision of providing superior service and expertise, while working in a team oriented non silo environment. Qualifications and Duties for this Partner Track Opportunity Include: Qualifications: Bachelor’s degree in accounting Masters in tax preferred CPA. 7 years accounting firm experience with 2 years in management. Directly supervised 3-5 staff. Worked in a multi-location CPA firm with between 20 and 100 staff. Experienced with CCH suite of products. Expert computer skills. Proficiency in Microsoft Suite. QuickBooks expertise. Familiarity with CRM. Comfortable and experienced in firm business development activities; networking and new client meetings. Industry expertise: Manufacturing & Closely held Companies required. Real Estate preferred. This position offers a combination of an office and remote work setting. Duties: Technical review of corporate, partnership, individual and trust tax returns. Prepare complicated tax engagements (or portions). Professional service and relationship manager for assigned list of clients. Proactive tax planning for assigned clients. Tax team technical resource for specialties to be agreed upon. Usage of all relevant software applications. Supervise 3-4 staff and senior tax accountants. Active team member participating in tax practice management. Participates in firm business development activities. This career altering position offers a competitive salary and bonus plus benefits and has partner track potential. Please forward your resume with salary requirements to: Gary Kravitz gkravitz@integratedgrowthadvisors.com

Important Considerations in Transferring or Selling a Firm In every accounting firm, there comes a time when managing partners will change for various reasons such as retirement. The firm needs to be passed on to new owners, whether through an internal transfer or an external sale. In this interesting episode, Dan McMahon, Founder and Managing Partner of Integrated Growth Advisors, shares some of the ways in which IGA prepares firms for the inevitable, as well as strategies for increasing their value prior to the firm changing hands. Dan McMahon is the Founder and Managing Partner of Integrated Growth Advisors . His career includes over 25 years in Chicago and New England as a CPA and business advisor with focused experience on serving professional services firms. Prior to founding IGA, he served as an Audit Partner and the Partner-in-Charge of Sales and Marketing for a regional public accounting firm. He advises clients in the public accounting profession on firm governance, sustainability, generational transferability, and building increased equity valuation. Dan also provides mergers and acquisitions advisory services to business owners including the leaders of CPA firms. Click here to listen to the podcast.

The sheer volume of baby boomers retiring is like a tsunami racing through CPA firms. Is your firm poised to capture enough value to allow for a stable retirement for exiting equity partners? The first group of baby boomers started to turn 65 in 2011 and the wave of additional baby boomers to enter this age bracket will continue for years to come. The implications of this on CPA firms is quite substantial and the impact will be widely felt for years to come. Unfortunately the firms that do not have in place a strong growth strategy aligned with sound tactics will be faced with substantial issues in what promises to be a very competitive environment. The CPA Transition Tsunami On the one side we have the potential for a large number of exits. And on the other side we have limited funds available. The scenario has all the potential markings of a feeding frenzy, and the firms that are caught flat footed will face some serious shortfall. In our capacity as business growth advisors, one of our core client concentrations is focused on the CPA space (two of our business growth advisors are CPA’s) in large part because we know this space extremely well. We regularly advise our clients to prepare for what promises to be tectonic change and to position their firms as best they can to take advantage of these upcoming opportunities. The Impact of the CPA Transition Tsunami While not related directly to any of our clients, some key observations we have made that are broadly applicable to today’s CPA Firms are as follows: Some Firms have not adequately planned for upcoming partner retirements. Firms that are looking to cash out and to retrieve cash equity need to begin their planning years in advance. Many firms that are beginning to consider a potential transition event have not been spending enough time on client development – the result is that too often their client base is aging with them, thereby diminishing the lifetime value of their clients in the eyes of potential new buyers. Too many firms are not properly developing their in-house talent to achieve a healthy and equitable transition where new, younger partners can take over the CPA Firm allowing older partners a healthy exit while also leaving a legacy intact. 79% of firm owners say succession planning will be a significant issue for their firm within the next 10 years, and yet nearly half of them do not actually have a succession plan in place! Source: http://www.journalofaccountancy.com/Issues/2013/Jan/20126674.htm Too many firms with partners of the baby boomer generation are not being realistic about the value of their CPA Firms, nor are they putting in the work to make their firms as attractive as possible for a potential sale or exit through partnership, merger or acquisition. Many firms with baby boomer generation partners are not focused on the reality that there is about to be a deluge of other firms attempting to do the exact same thing they aspire to do. This is often referred to in marketplaces as a glut…. And when there is a glut the price of goods (all other things being equal) goes down due to a finite amount of available capital. The combination of a large percentage of firms with partners of the Baby Boomer demographic, too many firms without solid succession plans in place and too many firms with partners looking to exit has created a heavy merger environment (For further reading specific to this subject we suggest this article in the Journal of Accountancy ), but many of the underlying exit pain points still exist. Those firms that plan to continue operating in their current state are not spending enough time building out their capital reserves – in a world of too much capacity there will be some great buying opportunities at what might otherwise be considered bargain prices. The firms that are quicker to grasp this, and are prepared to act decisively and with vigor will have some great opportunities ahead, likely at the direct expense of their competitors.  Thriving in Complex Times Our role as growth advisors to our CPA clients is to help use growth strategies and tactics to not only prepare for a variety of potential future scenarios, but to actually thrive in these environments. It is unfortunate that some firms might not realize their full potential in a transfer of ownership. However, for those firms that are able to appreciate the role of demographics in this conversation and are willing to focus on sustainable growth and transferability, we are excited about a plethora of wealth generating opportunities that will be arising over the next few years.