Finding the Perfect Fit to Merge from Small to Large 

by Debbi C. Warden, CPA, CGMA, MBA 

Before joining RubinBrown LLP earlier this year, I owned a boutique CPA firm, The Business Manager LLC, which specialized in outsourced accounting for 20 years. In 2014, I began thinking about the future of my practice. At the time, I wanted to begin positioning my firm for succession. That year, I met with a business broker to discuss potentially acquiring another small firm. Ultimately I decided not to move forward because the process was not the right fit for me: I didn’t fit the cookie cutter mold. I needed to be more actively and personally involved in the process, so I put that idea on hold.  Then, in April of 2015, one of the managers at my firm resigned, and this was a major catalyst in encouraging me to make the next step. For small firms, turnover can have a huge effect on your profitability and client retention. I was already struggling with the direction and future of my firm, and this loss forced me to take immediate action. I knew that I wanted collaboration and more resources. I decided that I was ready to join forces with another firm. However, I also knew that I wanted to make this transition on my own terms and aimed to avoid using a business broker.

I quickly found that, throughout the course of my career, I had inadvertently positioned myself and my firm for success in this succession endeavor. I’ve always been very active in the profession and have made a concentrated effort to put myself out there and build a strong network. Leveraging that network was instrumental in my eventual merger. After deciding that I wanted to join forces with another firm, I reached out to two of my contacts, the CEO of our state society and the founding partner of another larger, local firm, for advice and guidance. I received excellent feedback from these individuals and was reassured that I was making the right choice. These individuals also provided contacts of several other firms that may be interested in my firm’s services.  My search for a firm to merge my practice with began.

Succession Outside the Box
One crucial step in this whole process was hiring an experienced coach. My coach was a former managing partner of a respected firm who had extensive merger and acquisition experience. My coach provided expert advice on how to prepare my firm’s package to take to market. Though that process was very time and labor intensive, it was pivotal in the success of this venture. I put together a highly detailed description of the firm, including information about the staff, key performance indicators, client industries and client retention. I had to gather everything that a prospective firm would want to know, and convey it in an intelligently, honest manner. I also had to put extensive thought into what I wanted to get out of this transition. I identified what my deal breakers would be and made sure I could articulate my desires to all prospective firms. 

I knew that my succession decision would have an effect on not only myself, but my staff, my clients, and my family as well. I wanted to make sure I was making every effort to find a firm that would be the right fit. I took the firm contacts I had received, but decided to take a more personal and involved approach to reaching out to them. I leveraged contacts that I already had within each firm (my “back door” approach) to find out everything I could about the firm’s culture. The merger process is a lot like getting engaged: when you find the right fit you’ll know. I ‘dated’ several firms throughout this process, and was very close to moving forward with one, but ultimately my gut let me know which ones were not the right choice for me. The last firm I spoke with was RubinBrown. When it came time to meet with their leadership team, I made the extra effort to fly to St. Louis for a day and have that meeting in person. It was a stressful, whirlwind of a day, but it was a critical aspect in the decision to move forward in this process with RubinBrown. Being able to make in person connections with the firm leaders was invaluable. Throughout this process, I also developed an especially good relationship with Steven Harris, CPA, CGMA, the partner in charge I would be working most closely with, which was another deciding factor in my choice to merge with RubinBrown.

Make Strategic Decisions
My merger with RubinBrown was effective on January 1, 2016, at the very beginning of busy season. Despite balancing the timing with the process of moving offices and adapting to new systems, the merger has been incredibly successful. We are currently nine months in the transition and we have retained 100 percent of staff and only lost two small clients due to the change.

My succession plan was not about selling the firm and retiring immediately. I am working at RubinBrown as a partner and have committed to spending at least five years with the firm. I would strongly encourage firms who are considering M&A as a succession strategy to make sure there is a buffer of time between the transition and your exit. Make sure you have the opportunity to add your unique value to the acquiring firm and help your clients and staff adjust to the change.

The peace of mind I have gained since the merger is invaluable. The personal and direct approach that I took in this process helped ensure that I was making the right decision. While not the most traditional method, I do think that this is an approach that could provide a valuable alternative to other firms who may be interested in M&A activity, and are interested in options aside from using a broker. I also think that it’s valuable for large firms who may be looking to merge in smaller firms to realize that they can also take an alternative route. If there’s a firm you’re interested in, reach out to them to make a personal connection. It’s been my experience that that extra step can make all the difference.

RubinBrown, LLP is a Top 50 firm with offices in Denver, Kansas City, St. Louis and Nashville. Debbi C. Warden, CPA, CGMA, MBA is a partner based in the Denver location.


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