So what is the magic sauce that enables your firm to start moving from a merely good firm to a mid-market sustainable brand?
The services provided by ESPOSITO CEO2CEO will assist you with the do's and the don'ts and the good, the bad and the ugly on how to re-engineer your CPA firm. Our services help you focus on what matters if you want to "run with the big dogs".
Many CPA firms are very good at talking and planning about their future (it’s in their DNA), but terrible at execution and implementation. It’s a little like a shoemaker’s shoes. Partners get distracted with client service and give up too quickly in creating change within their own firms. ESPOSITO CEO2CEO facilitates partner retreats and strategic planning sessions that help:
- Determine your firm’s culture and market position
- Identify your strengths, weaknesses, opportunities and threats
- Envision your future, set goals and chart a course to reach them
To assist with implementation and accountability, we provide guidance with:
- Annual goal setting and tactics development
- Measuring actual performance against plan in arriving at partner compensation
Here we are in 2016 and GDP growth continues to hover around 3% per year. Despite executing on your strategic plan and moving toward a mid-market sustainable brand, your firm’s organic growth rate for the past few years has probably been well below 7% or 8% (a decent growth rate to create incremental partner compensation and to fund increasing staff payroll, rent and other costs). Without a credible advisory or consulting practice, your organic growth is more likely about 3%. How do you propel growth so that you can make investments and improve average partner earnings when you are only growing at about 3%? It is very difficult, if not impossible to do.
Deciding to acquire or merge with another firm is one of the most crucial decisions you and your partners will ever make. That’s why you need the advice of an advisory firm who knows the industry, the players and the things to look at when considering a move of this magnitude.
ESPOSITO CEO2CEO has helped merge and integrate over 14 different firms. We can help firms make the right decision about mergers and acquisitions by leading them through a process that includes:
- Defining the firm’s goals and expectations
- Targeting the market and beginning the search
- Reviewing candidates and making an offer
- Negotiating and closing the deal
- Planning for post-merger communications, operations and cultural integration
More than one out of every two CPA firms of any significant size is either discussing a merger combination, acquisition, or sale or is planning to do so in the near future. In many cases, this is occurring because CEOs, managing partners and other senior partners are not confident in the leadership talents and financial wherewithal of younger partners. In many other cases, it is occurring because these firms are unable to attract and retain talent. And in still other cases, these firms are finding that they are not able to hold onto their growing clients as these clients seek private and public capital. In other words, these CPA firms lack “market permission”.
The bottom line: Many CPA firms are primarily small businesses that are quickly running out of time for succession planning, and it’s now time to shift gears into “crisis planning”, bid farewell to traditional internal succession planning, and create an expedited action plan.
The next step towards building a mid-market sustainable brand begins by recognizing that all partners are not created equal. You need a combination of visionaries, implementers, rainmakers, relationship builders and technicians. We can guide you with the following:
- The implications of a transition to a mid-market sustainable brand on your Human Resources function and the impact on your people pipeline
- What it takes to attract new partners, including laterals
- What it takes to develop existing partners
- What it takes to retain the highest performing partners and “rising stars”
As you strive for quality growth, your firm needs to become a performance-driven organization with an effective performance management and compensation plan (“PMCP”). The basic premise is that compensation rewards first look to: (1) how successful the entire firm is, (2) how successful a partner’s line of business is, and (3) how successful the partners are when measuring actual performance vs. their goals. At the end of the day, a great deal of subjectivity is required regarding how a firm divides profit – to ensure that the money is going (1) to your highest performers, wherever they sit in your firm, and (2) to your younger higher-potential partners who are deemed to be your future.
ESPOSITO CEO2CEO can help you develop, implement and monitor your PMCP to ensure that you:
- Drive required behavior
- Use compensation as a key factor in implementing firm strategy
- Change your culture to become performance – and accountability-based
- Create a win-win situation for both your firm and your different lines of business
- Use compensation as a way of running your firm, rather than merely a means of rewarding partners
Marquee clients are recognizable names in their industry sector and, most important, they are companies that are growing organically, consummating mergers and acquisitions and raising private and public capital. As they grow, your services expand, margins improve and your firm grows. Having them on your client list gives you instant credibility. The underlying assumption is that if you handle “Company X”, you must be highly qualified and you will be able to help a prospect with his/her business challenges.
We can help you customize strong client service tools that can help you demonstrate that your firm is distinctive by delivering value beyond compliance services and, as such, stands out from the pack of CPA firms in the marketplace.
At the end of the day, you attract, develop and retain marquee clients by attracting, developing and retaining partners with industry, consulting and technical skills.
In today’s business world, the greatest growth and margin opportunities for a CPA firm are in the consulting area, as clients outsource specialized skills to deal with business challenges that they cannot handle internally. Cybersecurity currently has the greatest potential for growth.
ESPOSITO CEO2CEO can help you identify which consulting service offerings are opportunities for you and how you can attract the partners who can lead the way for your firm.
Technical specialization is also a key to attracting, developing and retaining marquee clients. Examples are international tax, state and local taxes, stock-based compensation and SEC/capital markets skills.
Of the many different technical skills, the combination of industry specialization and private and public capital market skills will help you attract, develop and retain complex, sizable clients with multiple locations that raise private and public capital as they grow. You do it with partners and staff who understand the debt, private equity, venture capital and public markets, and who have the specialized skills to assure high-quality services.
The business world was never simple, but it has never been as complex and dynamic as it is today. For decades, two key factors – technology and globalization – have driven profound change throughout the business world including the mid-market. And both will continue to do so – at an ever-increasing pace.
So, if you want to become a mid-market sustainable brand, you must begin to look at your geographic footprint, clients, sources of new business and service capabilities. Inevitably, you will conclude that you need both national and global geographic reach — particularly if you want larger, more complex clients with the potential for significantly higher fees and healthy margins.
ESPOSITO CEO2CEO can help you identify your national footprint and what you need to do to achieve global reach.
Through a number of alliance partners, ESPOSITO CEO2CEO plans to provide CPA and professional service firms with a number of ancillary services. The first of such alliances is ESPOSITO EXECUTIVE SEARCH. This alliance, with Executive Staffing Group, places partners and practice leaders with local national and international public accounting and management consulting firms on a retained search basis.