RF Resources

Insider Insights: 2012 M&A Activity Continues (and… a little partner unrest)

2012-03-30T14:44:32+00:00

So far in 2012, there are 7 announced deals (see deal activity spreadsheet attached) and deal conversations are continuing during busy season.

Some of the current trends we are seeing:

•A continued interest in considering potential mergers or acquisitions due to succession or growth issues.
•Several national mega mergers unraveled at what seems like the last minute. That is probably some indication that discussions may have progressed too quickly and the business case to merge wasn’t as compelling as originally thought.
•A realization by managing partners that they may not have their successor in-house in terms of leadership ability.
•Younger and quite successful firm leaders are seeking to merge for continued growth. (Two mid-40’s founding partners are presently in the process of making deals).
•An awareness by a number of firms that they need more rainmaking partners.
•As the economy remains stable, I see more top producing partners with a certain degree of compensation, equity or decision making discontent.
•National firms are getting more active in M&A activities- especially BDO and Grant.
Best to you for the remainder of your busy season!

If you’d like to discuss this or any other issues related to your practice or career, please don’t hesitate to contact me: My direct line is (212) 490-9700. Or email me rfligel@rf-resources.com. Absolute confidentiality always assured.

- Robert Fligel, CPA

Insider Insights: Partner Compensation- Time To Review Your Firm’s Model?

2012-03-07T02:00:00+00:00

We all know that compensation alone has been proven not to be the ultimate motivator, but it can be a demotivator and can also highlight other concerns that may exist in your firm. This is certainly less of an issue when business is coming in during a robust economy and everybody is making money. But, that’s a different story when things get tough, as they have been for the past couple of years and organic growth is much slower.

Here’s what you should consider:

The draw or base.

Most of the firms I work with pay out between 50% and 75% of projected annual fixed compensation before bonus and through quarterly or semi-annual payments bring the total draw to between 80 and 90% of an estimated annual amount. This is a fair formula in my view.

Year-end distributions and bonuses.

Are those paid out on a timely basis? Some firms pay everything out by 12/31 while generally holding back some funds for capital and/or contingencies.

Other firms pay out the year end bonuses three, six or even twelve months after the year end. That’s a very conservative approach. I think that firms should pay out as much as they conservatively can on a current basis.

An open or closed compensation system.

More and more firms have closed compensation systems, so partners not involved in the compensation setting process do not know what other partners earn. The reason more firms have closed systems is to reduce what can be what is viewed as unproductive discussions about why partner x made more than partner y. I find firms that have well defined compensation plans don’t have any real issue with the closed system. Firms that have a closed system generally have a process for reviewing the decision making process with individual partners.

The factors that are evaluated in setting compensation:

• Does your firm have a democratic or fair process?
• Is there a strategic plan? If so, is compensation aligned with that?
• Is there favoritism, politics or nepotism? Many firms I work with have explicit no nepotism policies.
• Are partners compensated on current versus past results?
• Is there an overemphasis on billed hours, realization or new business development in the compensation process?
• Is staff training, mentoring and other things that enhance retention valued?
• Is quality control valued?
• Is talent acquisition valued?
• Is a partnership spirit valued such as sharing work, setting a great example for staff?

How could you be more of a contributor in this process at your firm? One thing you could do is suggest consideration of alternative compensation models. (I do know this would be very difficult for a newer partner). One common method is the scorecard approach, where each partner has agreed upon goals based on their role in the firm and different weightings are assigned.

Here’s your action plan to help evaluate whether your firm has the right compensation plan:

• Is it consistent and transparent?
• Is there a process for questioning the results?
• Is it democratic i.e. not biased by overemphasis on certain factors?
• Is it generous enough in current period payouts?

If you’d like to discuss this or any other issues related to your practice or career, please don’t hesitate to contact me: My direct line is (212) 490-9700. Or email me rfligel@rf-resources.com. Absolute confidentiality always assured.

- Robert Fligel, CPA

Insider Insights: Succession and Growth Drive M&A + Search

2012-02-22T16:55:01+00:00

Yes, this is the busiest time of the year for CPAs, but I am seeing something a bit different this year. In the past, there was little busy season CPA firm merger and acquisition or high level search activity. This year is different. For the past several years the season has stretched out long and longer, but this year seems even more pronounced. Based on recent Federal Reserve actions and comments, it seems very clear that the U.S. economy will at least be stable the next few years as rates will stay very low and the greenback printing press active. This bodes well for the general economy and stock market though higher inflation is likely in the cards. This set of circumstances is giving some degree of confidence to CPAs and other business owners. For the past several weeks, my firm has been in process with several potential buyers and sellers. These buyers and sellers are not just the larger or medium size firms where the managing partner may have the time to devote to this type of strategic activity. These are firms of 5-75 people where all of the partners have significant client responsibilities. On the search side, we are actively working with some partners currently with well-known mid-sized firms. These individuals will not be leaving their firms during this busiest time of the year, but they are having first and subsequent meetings now with the idea of landing a better opportunity in the spring. What accounts for these changes? 1. Retirement minded partners, succession issues and a slowing economy. With organic growth so slow, growth through mergers is more pronounced. 2. The merger mania across the country is creating a mindset that wasn’t so present during the last few years. 3. The potential sellers feel the pressure of needing to find the right upstream merger because of the desire for senior partners/founders to retire and quite often these firms have staffing issues that may impinge on client retention. 4. Regarding partners seeking a new opportunity, it’s much the same. Up and coming partners in their 30’s and 40’s are looking ahead and have some issues. Are the most senior partners proactive and progressive about the future of the firm? Are they fair about compensation? The answers that I hear are generally not positive. In most cases, the younger partners have had conversations internally about these issues and feel that nothing will change until it’s a forced issue due to illness or some other external factors. That creates uncertainty for the younger partners and is the reason more are open to conversations. How are you and your firm reacting to these changes? If you’d like to discuss this or any other issues related to your practice or career, please don’t hesitate to contact me: My direct line is (212) 490-9700. Or email me rfligel@rf-resources.com. Absolute confidentiality always assured. - Robert Fligel, CPA

Insider Insights: 2011 M&A Activity Ends with a Flourish

2012-01-18T17:01:00+00:00

In the last month of 2011, there were five announced deals, the second most of any month in the year. This included some very well known firms, such as EisnerLubin and Pustorino Puglisi.

As mentioned last month, more and more, we are seeing mergers that are not simply the result of succession issues, but rather to create a more robust platform for growth.

This was surely the case with the Eisner and Pustorino mergers as both firms have a cadre of younger partners, good profitability and some nice market niches. Sounds good, right? Well not quite, as what both firms realized over time is that they couldn’t maintain that growth because they couldn’t compete with larger firms for next generation talent and potential merger candidates. As hard as the decision to merge is and was, the desire for stronger long-term growth prevailed.

The opportunities for CPAs continue to be good, in my opinion. However, as a number of managing partners pointed out in a provocatively titled article, “Bring it on” in Accounting Today, there is much to deal with including pricing/discounting, an aging partner group, less premium work, partner accountability and regulatory issues. That’s a lot to handle, but that is the environment we are living with and will be for quite some time.

Bring it on indeed, embrace and attack the issues.

Best wishes for 2012!

Robert S. Fligel, CPA

Insider Insights: 7 Questions to Ask Yourself as 2011 Winds Down

2011-12-22T15:06:00+00:00

This may be the right time to consider for yourself the sort of life and business questions that you’re probably discussing with your clients.

Here are a few:

1. Am I happy and still have the passion for my work and clients?

While you are so busy all year around, when do you really have time to reflect? Sometimes a break like a vacation can give you that chance to reflect. Let me share a personal story. Mid-October I had hip replacement surgery. Ok, I accept the blame for continuing to play singles tennis into my 50’s (plus), but that’s not the real story. The real story is that I really couldn’t work for several days and had to work from home for a handful of weeks after that. What’s the bottom line? I couldn’t wait to get back into my NYC office, get back to state society committee involvement and similar. I also confess that I had my wife drive me to Long Island and wait while I moderated a panel discussion. Ok, this is bordering on compulsive, but let’s just say I still have a passion for what I do.

So, when you take a break this holiday season, even if it’s just a handful of days at home, go somewhere quiet with pad and paper (or iPad) and just write down how you feel about your work and business. If you feel very ambitious, start outlining how and what you might want to change.

2. Do I want this to be my last tax season? How many more Saturday (and Sundays) can I work, perhaps missing my grandkids soccer games?

Hmm. Ask yourself: If I weren’t working at all, what would I do? Do I have a combination of the below to keep myself quite busy and more important, content?

• Family activities – travel, grandchildren.
• Buddies to meet for breakfast or lunch.
• Sports if you are a golfer or tennis player.
• Involvement in your church or synagogue.
• Involvement in your town governance.
• Not for profit or charitable activities.
• Other volunteer activities.

If you don’t do these things now, trying to force them simply won’t be effective.

This list can go on, but the point is to paint of picture of yourself as the (hopefully) healthy and energetic newly retired guy or gal in town. What will you be doing all day?

3. Do I want this to be my last time renewing software contracts, malpractice insurance, hiring and training staff, dealing with fee discounting and last minute clients?

I know this sounds crazy, but some people actually like doing these things – the administrative side of running a CPA practice. But, for most it’s a necessary evil, and it becomes stressful on top of a load of client and staff issues.

Here’s some food for thought if you might want to keep working but not at such a high stress level: Keep those duties for your current firm and free yourself from all or a majority of client pressures. It could be a good first step toward slowing down for real.

4. Am I ready for a lifestyle change?

See No. 2 above and, I might add, speak those who know you well for many years whether close friends or professional colleagues. Ask them what they think as well as what their plans are.

5. Is this the year I sell, merge or bring in a junior partner?

This is a very big question and I’ll try to give some big picture guidance. Evaluate your current firm’s strengths and weakness and your short-, medium- and long-term potential. Be brutally honest with yourself and, if necessary, invest the time and a few dollars to get an expert to help assess your practice.

Prepare a very heartfelt list of pros and cons of maintaining the status quo, merging with an equal, merging up, bringing in a future successor and other alternatives. That would be a good starting point.

6. What will I get if I sell or merge – now versus later?

I don’t think there is much doubt that practice valuations will slowly continue to go down simply based on the likely number of potential sellers over the next 10 years or more. But, I don’t think it will be overly dramatic to the point where you feel the urge to sell just because everyone else is. It has to be a wise business decision. And valuation is in the eye of the beholder. The firm that doesn’t value write up work will be laughed at by the small firm that loves the 60% profit margin on this easy work.

7. Is now the time I start actively planning for my next steps?

In my opinion: Yes. And I say that with all sincerity whether you are 40, 50, 60 or 70. There are different things to worry about at each age, but at least an annual informal planning session is a must. I believe if you aren’t pushing ahead and trying new things each year to be better and more successful, then you will surely start going backward.

It’s year-end. Certainly a time to be thankful for your family, health and all of the good in your life, but also to reflect upon what you want your future to look like.

My sincere best wishes for a safe, peaceful and wonderful holiday season.

Insider Insights: Why CPAs Can’t Ignore the M&A and Partner Talent Markets

2011-11-16T14:49:00+00:00

The main reason is that organic growth is going to be very slow for the next several years. So, CPA firms seeking growth are: (1) making strategic mergers or acquisitions, or (2) bringing in new partners-or groups of partners-with strong books of business.

But how do you position your firm to be desirable to merger partners or new talent?

What it really comes down to is having a very attractive name and reputation so that the potential mergee or partner would say, “We’d like to be with a winner, we’d like to be part of their team.”

So how do you go about positioning yourself to be that desirable firm? First, you will need consensus among the partner group. Without it, I would not go any further. But, with consensus, your next step is to find a champion: a partner in the firm who is well regarded, influential, or important. This is the person who will be given the responsibility and will be held accountable for making sure that the strategy gets executed. This person, as well as the full partner group, should be involved in identifying the strengths of the firm and making sure the strengths are being properly highlighted. This person will be leading the firm in identifying and correcting, or perhaps even eliminating obvious weaknesses in the firm. If they are obvious to you, they are probably obvious to potential merger partners or talent candidates.
Next, make sure that your public image is up to date. Your website should be current, containing more than just the basic information but, make sure good content is present as well. You want to be viewed in the outside world as having a position of leadership in your chosen field. For instance, consider posting white papers on industry groups that you’re already involved with. Wouldn’t it be great if outsiders said to themselves: “You know these guys are really with it, and they’re on top of their game?”

Social media presence gets a lot of press. Sometimes I think it’s overdone, and in other cases I find that a lot of CPA firms really don’t know what to do or how to do it. Social media is not complicated. Just watch how others do it. Find those firms in your geographic area and speak to them. Find out what’s been successful and implement what seems good to you.

Your marketing material needs to be very current, modern, and technologically up-to-date. Old-fashioned printed hard-copy collateral material is not nearly as important as it used to be. Today you need something short and sweet, maybe a “one sheet” that outlines all your firm’s capabilities and clearly highlights your uniqueness in the market.

Next you want your partners, staff and support team to understand and embrace this new strategy. That means communicating with them, and maybe offering robust rewards for identifying a potential new merger partner or someone with a book of business. With the champion partner in charge, consider an internal “strategic growth” committee, made up of another partner, a manager, and some staff, to spearhead new opportunities.

And, don’t overlook the plethora of awards programs than can help position your firm as a great place to do business, i.e. XYZ firm was names a “great place to work,” “working-mother” friendly, “30 under 30.” Maybe you don’t think this is really “you”, but it doesn’t hurt your firm to obtain the recognition.

At the same time, you want to cultivate relationships with external intermediaries, such as the major M&A brokers and executive search consultants in your area. Meet with them, point out all of your value propositions, and listen to what they have to say. And when it’s time to choose one or more in each category, be clear in your goals and accountabilities. Without clear objectives and deliverables on both sides, it could be an exercise in futility. If you cultivate a face-to-face relationship over time, demonstrating a progressive attitude and smooth decision-making, then you could be one of their first calls when a new opportunity pops up.

Don’t overlook the value of being active in your trade associations and professional societies. There is a lot to be said for sitting around the table with your peers, sharing, learning and knowing what’s going on. Perhaps one of those people with whom you’ve shared breakfast or lunch will call unexpectedly, suggesting your firm could be the one with the solution to their strategic merger or talent issue.

There is much to consider here and I certainly know it’s “easier said than done” But, if you want to be in the forefront of these very viable growth strategies, then you need to get started.

There is a real art to positioning your firm as one that others might consider for their strategic options. But, the results can be more than rewarding. They can be transformational!

Insider Insights: Social media and hiring

2011-09-28T12:00:00+00:00

I attended a New York State Society of CPAs MAP Committee meeting recently and the topic was labor law including social media considerations. The presenters were Jeff Naness and Mark Reiss. What I want to share here is that because of the internet and exploding social media websites, there is a plethora of information available about prospective job candidates, so business owners and hiring managers should keep in mind the following:

1. Nothing has changed regarding what you can and cannot base employment decisions on i.e. certain items are still protected age, race, marital status, sex religion and disability.
2. You can use social media resources to gain additional information about a person.
3. Don't assume that all you read or see is 100% accurate.
4. Your decision to hire or not to hire has to be solely based on capabilities and qualifications.

There was also a good discussion about family leave regulations as there have been several amendments or addendums.
If anybody has questions about these topics, please contact me and I'll be happy to connect you to Jeff or Mark.

Insider Insights: Merger and Acquisition update

2011-09-20T22:07:01+00:00

There have been several new closed deals and I feel confident saying that there will be a number of others closing before the end of the year. The primary reasons for the uptick are based on a continuation of the trends outlined in the following pages with the most significant being the aging partner base and continued slower growth environment.
Some of the current top of mind issues include the following:
• Uncertainty about the economy
• The likelihood of significant tax increases
• The unknown of 2012 election results and subsequent actions
• Continuing domestic and international financial unrest
On the positive side, I think it’s an amazing time to be a practicing CPA. Clients need you now more than ever and you have the ability to offer more and more higher value services.

Please sign up for our Deal Sheet also if you don’t already receive http://rf-resources.com/index.php/site/dealsheet/

Insider Insights: Filling your shoes

2011-03-17T14:52:00+00:00

I was fortunate enough to be quoted in a recent Accounting Today article with the above title.
A few excerpts below
The first step for a CPA firm looking to improve its succession plan is to make sure that it actually has one.

They’re all too often absent at accounting firms. “Most firms don’t have any plan,” maintained Robert Fligel, president of New York-based CPA growth and succession consultancy RF Resources. “Even to do a memo would be a major accomplishment.”

Statistics bear that out, as just 35 percent of multi-owner firms and 9 percent of sole proprietors had a written succession plan in place, according to the most recent succession survey conducted by the PCPS Section of the American Institute of CPAs.

In a 2010 WealthStar Alliance survey of accounting firm partners, 94 percent of respondents said succession planning was important or very important, but just 31 percent reported having a succession plan in place. The survey also found that 55 percent of firms plan to make a transition in management or ownership within five years, and 87 percent expect to in the next 10, making the issue especially urgent.
I know that all of you hard working CPAs are probably feeling very overwhelmed right now with the April 15 deadline looming. But, I do encourage you to take a short breather and put on your calendar for perhaps the week of April 25th ” Set up a partner meeting to start the discussion to create a succession action plan”

Or call me. It never hurts to talk!

Insider Insights: Enron Whistleblower and WikiLeaks

2011-01-31T15:08:00+00:00

This is the headline in Accounting Today’s Daily Edition:
Enron Whistleblower Would Go to WikiLeaks Now
http://tinyurl.com/5rr57er

I attended this New York State Society CPAs briefing on Friday January 28 regarding the whistleblower provisions of the Dodd Frank reform bill.

This billl and topic is fraught with issues:
• The regulations are very complex and not even complete yet.
• There are numerous exceptions.
• The whistleblower will need an attorney.
• The whistleblower is likely to be unable to find a comparable job after.

One item not mentioned in this article as a possible solution was posed my Ms. Watkins,formerly from Enron. That was changing how corporate incentive compensation works. There has been a huge incentive for top corporate execs to keep their stock prices high. In many cases, they stood to gain and did gain tens of millions of dollars of additional compensation. I am generally not in favor of even more regulation, but this something to think about.

Insider Insights: Generating More Referrals

2011-01-21T17:42:00+00:00

Duct Tape Marketing is one of my favorite reads and I highly recommend subscribing to their blog http://www.ducttapemarketing.com/blog/ .
It stands out to me in this world of too many emails, texts, social media efforts, industry/technical reading and the like.

A recent blog post referred to obtaining more referrals. Below is a suggested way to set the stage for future referrals while at the same time raising the bar for your performance and taking away the aspect of “selling”.

‘We know you are going to be so satisfied with what we’ve agreed upon today that after the project is completed, we are going to schedule a meeting to make certain you received the results promised. At that time we’ll ask you if you would introduce us to three others that you know need these same results.”

This approach demonstrates to the customer that you have a goal that is beyond just getting their business.

Best regards,
Robert

Insider Insights: Great leadership technique to share.

2010-11-22T18:28:00+00:00

In Sunday’s (11/21) New York Times interview with Geoff Vuleta of Fahrenheit 212 there was a technique that really resonated with me. The technique is the 100 day plan in which all company members meet every 100 days to make a list of all they want to get done in the next 100 days and then each person reports back in a few days with how they will contribute to the plan. Then each person meets with the two firm leaders to develop an individual plan.

The beauty of this to me is that at each 100 day meeting everyone reports on their prior 100 day individual plan results. Nowhere to hide, no excuses. Now, that’s accountability!

Insider Insights: City Room: New Law Takes Aim at Wealthy Tax Cheats

2010-10-26T16:41:00+00:00

I just happened to read about this relatively recent New York State law encouraging whistle blowers and specifically geared toward wealthy taxpayers. I strongly feel that we should all do the right thing and truly hope that the bad apples are few and far between.

But, there is something a little odd about the government legislating and encouraging this.

Maybe its just me but I welcome any comments.

Insider Insights: Partner Compensation

2010-09-22T18:22:00+00:00

I had the distinct pleasure of attending The Advisory Board’s Partner Compensation conference in NYC September 20 and 21.

The Advisory Board is comprised of industry leaders Allen Koltin, Gary Boomer, Rebecca Ryan and Gary Shamis.

It was a fantastic event http://www.partnercompensation.com and I recommend it for the future.

Regarding partner compensation, let me share just a few items of note.

*Less than 50% of surveyed firms have formal partner evaluations (this is even more startling in an era of much concern re unproductive partners.)

*There is a silent crisis brewing. Industry experts recommend having two high potential future partners for each current partner. Very few firms have that and we all know the age demographics of the current partner group.

*Closed compensation systems are becoming more of the norm.

I can provide more details on the above points and more if interested.
rfligel@rf-resources.com or 212-490-9700

I also recommend The Advisory Group’s 10th annual Winning is Everything Conference.
http://winning-is-everything.com/the_conference in Las Vegas January 2011. I will confess that this is a shameless plug for these events because I have attended
and they are great.

Insider Insights: Ed, the rainmaker, Robinson- Super star presenter

2010-05-18T15:17:01+00:00

I had the pleasure of seeing Ed Robinson speak for the second time on May 12 at the Princeton Club. He was speaking to a group of partners from NYC area
public accounting firms.

He is amazing and I will share that my colleague and I (and co-event sponsor) Phil Whitman, received quite a number of outstanding testimonials from those
in attendance.

My favorite takeway is this formula. R= A-D Ed loves formulas by the way.Translation- results =actions less distractions. This says volumes to me.

If you have never seen an Ed Robinson presentation, you are missing something very special, so please check him out if you or your firm need some sales, business development training or coaching www.edspeaks.com

Insider Insights: Please join us at Upcoming Seminars with an all star cast!

2010-04-27T18:00:00+00:00

Yes, I admit at the outset that this is self promoting, but I am very excited about some seminars, speakers and topics that my colleague and I, Phil Whitman (http://www.whitmanbiz.com ) are co-producing.
Here’s the lineup and our all star cast:

May 4 Build the firm of the future- now with Chris Frederiksen, guest speaker Princeton Club, NYC 8-1030 a.m. http://tinyurl.com/y58rmks

May 12 Rainmaking Strategies for Success- with noted speaker and author Ed “the rainmaker” Robinson. Sea Level Cafe, 6 E. 43rd Street, NYC 8-10:30 a.m. http://tinyurl.com/34d2ne5

May 20 Deal Makers, Deal Breakers. Potential pitfalls in CPA M&A deals. Bill Carlino, Accounting Today as moderator. Panelists-James Alterbaum, Steven Berger and Thomas Manisero. Princeton Club, NYC 8-10:30 a.m. http://tinyurl.com/3xapuq2

Please register for any or all at firmofthefuture@gmail.com or call Carolynn at 917-531-9223

Insider Insights: Client portals

2010-02-01T15:20:00+00:00

“My whole year is (consumed by) constantly making copies of things for people. It’s not even the five minutes to make a copy, but pulling the file out, running the copy, stamping ‘copy’ on it, and (talking to clients) when they come over, and that takes the most amount of time,” he said. “Now I make a PDF file, and it’s online, and they can get it as often as they want. I spend two minutes doing that, and I can spend my time on other things.”

These are the words of a small firm owner quoted from an excellent article in the February 2010 issue of The Journal of Accountancy. http://www.journalofaccountancy.com/Issues/2010/Feb/20092359.htm

The prevalence and importance of client portals was also underscored by Gary Boomer at the recent Winning is Everything Conference. . Portals are something clients either expect or are very pleasantly surprised when it’s offered and used.

As a client, how great is it to be able to securely access your prior year tax returns, financial statements, estate and trust documents and anything else you would like.

A couple of points to note

-Portals are available through most of the major tax software vendors
-The cost is not prohibitive and the article mentions even lower cost options
- To encourage use, include a box in engagement letters to check if you DON’T want to use the portal.

Ok, gotta go now to email my CPA to find out when they are setting up my portal!

Insider Insights: On hiring and advice to young people in the workforce

2009-08-12T14:44:00+00:00

The most recent was an interview with David Novak, President of Yum Brands ( KFC, Pizza Hut,Taco Bell and others)

There were several parts of the interview I really liked.

On hiring
“Everybody is looking for ambition, passion, the ability to inspire. I think the thing that I have found in the highest-potential people, and the people who can have the most impact in your organization, is that they’re avid learners. Are they continually trying to better themselves? Are they continuing to look outside for ideas that will help them grow the business?” This leads into his favorite interview question. “ How do you stay on top of your game?”

Advice to young people
“Treat your job like you run the place. Not in terms of ego, but in how you think about the business” That’s what I like to call taking ownership interest. It shows you care and are enthusiastic and it certainly makes the job more interesting.

Insider Insights: You got the informational meeting/interview, now what? Here are some sound do’s and don’ts

2009-03-27T00:20:00+00:00

Let’s face it, this is a really tough economy and it’s very difficult to find a new job opportunity. What that means is more and more people are networking like crazy with family, friends, former co workers and the like. One of the natural outgrowths of this is the informational or exploratory meeting.

If you are having an informational job interview as part of your job search there are steps you should take to make the process more of a two way exchange of information. This will allow the company to learn about your expertise while allowing you to lean how the company may benefit your career. Here are some sound dos and don’ts.

“Carefully structure your questions so they both seek information and indicate you have expertise and knowledge about the person/company with whom you are having the informational interview”, says Nancy Fox, owner of Fox Coaching Associates. She also recommends “asking questions that will elicit a response,” without trying to pitch yourself. This interview is supposed to be for informational purposes.

Mark Bregman, Ceo, of Boyle, Ogata Bregman, and executive search firm, thinks the way to proceed with the interview is to:
• “Treat it as a customer visit- what is the “benefit to the buyer” of having this conversation with you?”
• “Find the pain- what is this person’s biggest business issue right now? How can you offer a solution?”
• “Ask, don’t “tell”- Ask questions, let them talk. Don’t sell yourself. The more you hear from them, the more you can find the way your background might fit. Then you can close rather than sell.”

Jill Diamond, President & CEO of Lanartco Inc., a performance boutique for professionals, believes how you deliver your conversation also plays an important role in the interview process. According to Diamond, “Your vocal presence plays a very big role in creating interest from others in your conversation.” She says, “Engage your listener with your voice.” Many times people spend more time focusing on the quantity of information they can fit into each thought and forgetting about the quality of the presentation of each point.

You also need to do your research. Read the annual reports, visit the company’s website. Gather as much information as you can from other sources so that you can prepare questions for the companies. Pauline Jordan, a Principal Resource Specialist at Alexander Mann Solutions, feels you should “insist on asking your own questions.” Mann says, “In the current climate, you can’t afford to waste time with companies who won’t be transparent with your future career.”

In closing, try not to waste your time, or the company’s. Ask direct questions to gain the information you need. Share your personal experience without trying to sell yourself and discover how you can benefit from each other.

Insider Insights: Getting paid on time- A recurring issue now for CPAs

2009-01-31T17:13:00+00:00

Collections

Just about all of my clients are complaining about slow collections.

Below is how one of them clients handles this issue.

Outstanding current balance

If an ongoing client owes more than a small amount of money ($2500 or so) they won’t do
new work (including 2008 tax returns) until they pay 75% of the prior balance.

Exceptions

They would respond to tax notices and other small emergency
items without getting paid and they would file
extensions for past due clients .

How are you handling past due clients? I will summarize and share my results with you

Insider Insights: How To Choose An Accounting Firm Among Other Topics

2009-01-29T14:51:00+00:00

For those of you who don’t subscribe, this is a good issue as it offers practical advice on “how to” many things including choosing an accounting firm, audit firm, marketing firm, banker, broker, assisted living facility, forensic accountant and much more.

I found the articles well thought out and sent in my own two cents on how to choose an accounting firm as noted below

What a great issue… How to guide 2009.

I was particularly attuned to the “How to choose an accounting firm” and would like to add a few things.

Check New York State disciplinary actions http://www.op.nysed.gov/rasearch.htm
But, I would add to discuss any findings with a CPA that you are considering choosing as some offenses are truly minor .

If you really want help with your business issues as opposed to just taxes, financial statements and the like, ask for several examples to be sure this is a regular service

Frequency of contact- make sure what you want fits in with how the CPA normally practices

Where is the work performed . The vast majority is now done at the CPA’s office, but you may want more in person contact.

Insider Insights: The End of the Big 4?

2009-01-21T15:00:00+00:00

A few tidbits

“The public’s patience may be running out. One sure sign is that investors are starting to blame big accounting firms for frauds at places they never even audited. There’s been no indication that PwC or KPMG, for instance, should have known Bernard Madoff was running a Ponzi scheme when they blessed the books of other funds that sent him money. The firms are getting impugned anyway, even though Madoff’s auditor was someone else.

Then there are the scandals where the firms have lots of explaining to do. Last week, PwC’s India affiliate issued a statement about its work for Satyam Computer Services Ltd., which overstated its cash by $1 billion. The firm said its audits were conducted “in accordance with applicable auditing standards and were supported by appropriate audit evidence.” “

We’re starting to see a flood of statements similar to the one above by PwC regarding Satyam. Wait! That’s what PwC said when they pulled their audits at Yukos. And that’s what EY is saying as it begins to distance itself from its prior audit opinions at Anglo Irish Bank.

“Ernst and Young confirms that all of the audits conducted for Anglo Irish Bank shareholders were undertaken in accordance with the appropriate auditing standards.

Let’s tear down the walls and rethink how we should protect the investor, who in many cases is now the taxpayer. Get rid of the for-profit audit firms involvement in the nationalized entities and those receiving government bailout funds and draft all able bodied audit and accounting professionals into the National Service Corp for Accountability and Transparency. TM

The public companies, what’s left of them, can pay a fee like banks do to the FDIC/Federal Reserve now for exams. The audit firms should have no direct profit motive and no relationship with the companies or their executives. They will work for the government and have no legal further responsibility for the audits. (That’s one thing that should make the Big 4 happy.) The audits will performed by the government with a new National Service Corp for Accountability and Transparency TM and additional remaining audit firm loaned staff.

The full post is linked below.

http://www.retheauditors.com/2009/01/how-will-we-solve-financial-crisis.html

I look forward to your comments.

Insider Insights: It’s preseason time

2009-01-16T16:53:00+00:00

Before you get totally buried in year end taxes, audits, reviews and the
like, use this preseason time wisely. I am sure you are worried about
your investments, the economy etc but this is your last opportunity for
a good while to do some things you have been putting off.
So… don’t just take it a bit easier, but consider the below.

Get together with those long time and good paying clients even if there isn’t
a specific “required “ reason . Wouldn’t it be great if someone asked you to get
together to talk about your business and life in general. As we both know,
something good and productive almost always come out of face to face meetings
like this.

What are some of the things you have you been meaning to do for a long time
but haven’t?

For example

Do you want to find out more about business networking through sites like
linkedin.com ? Use this time to sign up and get started.

Take a top performer out to lunch ( or someone you think has that potential).
This is not part of a year end evaluation or similar type of meeting, but just a chance
to show your interest and get to know them better .

Not happy in your job? Use this time for some planning. Get your resume up to date.
Talk to your close friends and advisors about what you are thinking,
create a presence on sites such as linkedin and facebook and determine possible
target companies.

Been thinking about your firm’s succession. If you don’t have an internal successor,
sit down and do some planning regarding the different alternatives.

Need to spend some time thinking about and organizing your own financial and estate
planning ?

-Get your wills, lists of assets and the like up to date
-Make sure you are adequately insured for life, disability and long term care

The list goes on.

Be proactive and get out of your comfort zone. I can promise you that it feels good!

If you would like assistance or just want to chat about any of this,
please contact me. rfligel@rf-resources.com or 212 490 9700.
It’s always confidential.

Insider Insights: Convert your voicemails to email or text and save time.

2009-01-13T03:03:00+00:00

If you are like most professionals and are out of the office a good deal
of time, you must get your share of voicemails. I find it a bit tedious
to listen to them and write down the info so I don’t forget to follow up.

Here a solution that I just tried and it is working well.

Callwave.com is the firm and it is just one example.

When I am out of the office, I forward all of my office calls to my cellphone as
that is where this technology kicks in. If I cannot answer the call, it gets
forwarded to callwave and within minutes, I will have an email with all of the details.
So far, it has been remarkably accurate at capturing the caller’s name, phone and
message content.

I am on the free trial right now, but its not very expensive if it really helps you.

One caveat, adjust the number of rings before voicemail/this new service picks up so
your callers don’t forget how technologically current you are !

Insider Insights: NYC CPA firms at the top

2008-11-20T01:19:00+00:00

Just received the November 17 issue of Crains’s New York and
was quite pleased to read the special section-Best Places to
Work NYC 2008.

Why?

How about this…. 4 public accounting firms in the top 15! I have
been outof public way many years, but I still know this is slightly
better than 25%.

What a compliment to the leadership at these firms and to the
industry in general.

The public accounting profession has had a startling turnound in how
theytreat their staff. Not too long ago, a managing partner referred to the
prior attitude toward staff as “my way or the highway.”

Don’t get me wrong. I know public accounting is still a very demanding
profession. Everyone from entry level to partner put in long hours regularly
and have their stresses. But, sabbaticals, flex schedules, contests and
other initiatives to add more creativity and fun to the workplace have
elevated the public accounting firms immeasurably from where they used to
be. This will undoubtedly lead to reduced turnover and higher realization
and profits. The recent financial meltdown will also no doubt enhance the
desirability of CPA careers.

Kudos to the leadership of all of the CPA firms in this Top 50 list. In
order of their ranking:

*Metis Group
*Marcum and Kliegman
*Citrin Cooperman
*Friedman
*Berdon
*Weiser
*Amper

Ok, Where is my 7 column paper and old audit bag? Well, let’s not get
completely crazy.

Insider Insights: Partner Compensation

2008-09-05T20:54:01+00:00

There is an excellent article in the September 8 issue of Accounting Today
by Marc Rosenberg.

http://www.webcpa.com/article.cfm?articleid=28866&pg=ros

This article amplifies something I hear about regularly ie the lack of firm/partner goal setting,
evaluations and consideration of non production factors in determining partner compensation.

Below are a few of the key findings.

*Setting and achieving strategic planning goals is not usually part of the compensation
process at the smaller firms.

*Partner evaluations are only performed in 50-75% of the larger firms and 28% of the
smaller firms.

*Production metrics (book of business and billable hours) and formulas are the prevalent partner
compensation method in smaller firms whereas more intangibles are considered in larger firms.

Not mentioned is another factor that was well documented in a recent PCPS study ie the lack of
partnership agreements in a surprisingly large number of firms.

Lots of room for improvement here for sure.

Insider Insights: Don’t stop or slow down your marketing

2008-08-13T12:28:01+00:00

Good article I read today ….”Why are you relaxing your marketing efforts?”

http://hellomynameisscott.blogspot.com/2008/07/why-are-you-relaxing-your-marketing.html

It can be very tempting in a slowing economy to cut back or eliminate
your marketing efforts.That is exactly the wrong strategy and here’s why.

1. Your stronger competitors will not be cutting back, but, if they do…
2. That’s great as you can grab greater market share.
3. In a rough economy, sales and profits will be down, so now more than ever marketing is important.
4. The economy will turn around and when it does, you want to have some forward momentum
versus starting from a standstill.

Insider Insights: WARREN BUFFETT, PETE PETERSON & DAVE WALKER address U.S. economic challenges in a live discussion

2008-08-11T16:00:01+00:00

If you are as concerned as I am about the U.S. economy, this is something not to be missed.

Warren Buffett, Pete Peterson and Dave Walker address U.S. economic challenges in a live discussion on August 21.

Panelists Warren Buffett, CEO of Berkshire Hathaway, Pete Peterson, senior chairman of The Blackstone Group and chairman of the Peter G. Peterson Foundation; and Dave Walker, president & CEO of the Peter G. Peterson Foundation and former U.S. Comptroller General engage in an informative panel discussion LIVE from Omaha, Neb. The discussion will explore the growth of the national debt and what can be done to make the nation more fiscally sound. Questions will be taken from the live audience in Omaha

For more information, including tickets see http://www.iousathemovie.com/about/

Insider Insights: What can a small CPA firm do to recruit and retain staff?

2008-07-23T13:32:00+00:00

There is a good article in the July 2008 CPA Journal by Mark Steadman “What small CPA firms are doing
to recruit and retain staff “

In this article, Mark gives some good background on prior surveys done on this topic (most notably, the one
by the AICPA’s Private Companies Practice Section) and provides the results of his own survey. A few
of the results follow.

Top 5 recruiting activities

Employee referrals
Internships
Firm website
Personal relationships with college faculty
Increased starting salary

Top 5 retention activities

Open door policy
Flextime
Paid overtime or time off
Improved technology to reduce mundane work
Providing professional growth opportunity

Note: the average size of the responding firms was 10 professionals, so some of these activities
need to be scaled for smaller firms.

The very best part of the article in my view is the ending comments about the advantages
of smaller firms including:

More relaxed environment
Career advancement opportunity
Skills development in multiple area such as tax, audit and consulting
Ability to work with clients directly and help them grow
See the “whole picture” of a client business

The smaller firm that can broadcast these advantages via existing employees, their website
and other means will surely do better in the competitive CPA
recruiting world.

Insider Insights: Survival techniques for small firms

2008-07-01T13:36:00+00:00

Two things really jumped out to me in reading it.

1. Don’t procrastinate because the problems facing many firms are huge. To name just few:
-Staffing shortage.
-Technology and regulatory concerns.
-Overwhelming succession statistics as quoted by Mr. Aquila including:
8000 baby boomers retiring each day.
75% of small firm practitioners have one or more partners retiring in the next 5 years.

The consequence of the above are staggering. There aren’t enough remaining to buy out or take over those retiring.
Valuations for the less desirable firms are also going to be severely affected.

2. Be innovative. Easier said than done for sure, but there is a fine example given of the Kellog & Andelson firm in California.
What can you do to be innovative? Here are a few suggestions:
Be an active reader of trade publications such as Accounting Today, CPA Practice Management Forum and your state society magazine or newspaper.
These sources are full of ideas and examples of what other firms have done.

If you are not a member of one of the accounting associations, research them and join one. You can share directly in what other firms are doing in other
parts of the country.

The real culprit…... Not having these issues at the top of the to do list. It’s your business and your livelihood. Why shouldn’t some actions regarding
it’s future and success be part of each day’s activities?

Insider Insights: Who’s in Charge? You or your Email ?

2008-05-08T16:46:01+00:00

I confess that I , like many others , spend too much of my day “working off of email”. Part of the reason is being conditioned to think that customer service and response time is expected to be ASAP. In the vast majority of cases, I know that isn’t really necessary and it would be quite possible to check email just a few times per day.

Let me share a tool I do find very powerful for desktop searching of emails. I use this frequently each day to quickly find information. You can search by date, sender, receiver, subject, contacts, attachments, key words and more. This is the one I use and I am sure there are others. Major time saver!

http://us.config.toolbar.yahoo.com/yds

Am also testing a new and seemingly highly rated new desktop organizer http://www.xobni.com

See the blog entry for other good tips ! http://legalease.blogs.com/legal_ease_blog/2008/04/do-something-ma.html

Insider Insights: Spring Cleaning for CPAs

2008-04-24T17:03:01+00:00

Another beautiful Spring day! Having lived in New York more than 30 years, I feel qualified to remark about how unusual this weather is. Springtime in New York usually conjures up memories of one or two nice days and quite a few rainy or almost cold days.

What’s the point, you may fairly ask.

The first and simplest point is to try and enjoy this nice stretch of weather. “Sneak” out of your office a few minutes early if you can. Surprise your spouse or children by suggesting a walk after dinner or going out for ice cream. I must confess that I cannot help myself from sounding a bit corny, having grown up in North Carolina during an era like the old television show “The Wonder Years.”

The second—and more serious point—is to suggest you consider some very focused business spring cleaning. Most of the CPA firms I work with do some of this already. But I am suggesting something a bit more comprehensive.

1. Client list. You have heard it all before, I am sure. But have you really done much about it? Have you analyzed client profitability? Have you spoken to lower profitability clients about increasing the fee? Have you honestly considered terminating the clients that truly are a thorn in your side? All of my clients who do these things are quite happy they did.

2. Personnel. Busy season is over and undoubtedly there are tax returns on extension that need to be finished, other work you couldn’t get to during peak season and your regular recurring work. And, yes for most firms there is a labor shortage. So, why am I suggesting a hard evaluation of your staff? The reason is simple. As an example, if you have staff that are very high maintenance or have weak technical skills resulting in work being redone and fee write-offs, then are you really better off keeping them? I have certainly heard from many CPA firm owners that something is better than nothing. I am not so sure about that, given what I always find, which is that these weak links either quit or get fired anyway. I personally think it’s better if you have to do a good deal more work pending a good new hire versus the headaches of a bad staffer

3. Projects and the future. If you are like every other business owner, you are very happy to get the work (and invoices) out the door and to have some time left over for family and downtime. Believe me: I am in favor of all of the above and especially the quality of life. But, my advice for today is to try—simply try—to carve out the planning time for the most critical projects on your plate. This may include your internal systems, such as tax or accounting software, email or internet issues, paperless concerns, succession of your business or marketing. If you can make the time to at least map out a plan for some of these issues, then take the second step, which is to outline the activity steps that need to be done to put it in motion. And, if you are really sincere about getting some of these projects moving, put something on your calendar even if it’s just an hour per week to start attacking the action steps.

I recognize that it’s hard for most CPA firm owners to execute all these suggestions, given time constraints and their being a little out of their comfort zone. But, in the words of that immortal philosopher, Phil Knight the founder of Nike, “Just do it” and start.

Insider Insights: M&A and search activities are continuing during busy season !

2008-02-27T21:24:01+00:00

Yes, this is the busiest time of the year for CPAs, but I am seeing something a bit different this year. In the past, there was hardly any busy season CPA firm merger
and acquisition or high level search activity. This year is different.

The many changes seen in the first quarter 08 economy versus first quarter 07 economy seem to hold true in the accounting firm M&A area. My theory is that it might have something to do
with more partners looking at the slowing economy as a time to sell while other forward thinkers are thinking growth by acquisition. Whatever it is, we are seeing an extremely ACTIVE market
unlike past busy seasons which tend to be the quietest historically.

For the past several weeks, my firm has been in process with several potential buyers and sellers.These buyers and sellers are not the larger or medium size firms where the
managing partner may have the time to devote to this type of strategic activity. These are firms of 5-75 people where all of the partners have significant client responsibilities.

On the search side , we are actively working with some partners currently with well known mid sized firms. These individuals will not be leaving their firms during this busiest time of the
year, but they are having first and subsequent meetings now with the idea of landing a better opportunity in the spring .

What accounts for these changes ?

Retirement minded partners, succession issues and a slowing economy.

The potential sellers feel the pressure of needing to find the right upstream merger because of the desire for senior partners/founders to retire and quite often these firms have
very severe staffing issues that may impinge on major client retention .

Regarding partners seeking a new opportunity, it’s much the same. Up and coming partners in their 30’s and 40’s look ahead and have real issues .Are the most senior partners proactive
and progressive about the future of the firm? Are they fair about compensation ? The answers that I hear are generally a resounding no . In most cases , the younger partners have had many
conversations internally about these issues and know deep down that nothing willchange until it is forced due to illness or some other external factors. That creates uncertainty for the
younger partners and is the reason more are open to conversations currently.

How are you and your firm reacting to these changes?

Insider Insights: Tip for making CPA firm merger discussions more productive

2007-11-24T18:56:01+00:00

In my experience, below are the major reasons more multi-step discussions do not result in a completed transaction.

Lack of personal chemistry among the partners
Incompatibility of professional practice philosophies
Significantly different compensation models and/or profitability
Inflexibility on key issues such as equity, compensation or management .

Much has been written about the first one, personal chemistry, as being the ultimate deal breaker. I don’t disagree with that, yet I do find that it often takes two or more meetings to really determine if the chemistry is there. Let’s face it… you have created and built a successful business. That certainly would not have happened without a reasonably good personality that both clients, staff and referral sources would feel comfortable with. Sometimes it is through discussing sensitive topics that you may discover the person who seemed so pleasant and flexible really is quite the opposite.

For this reason, I highly recommend delving into #‘s 2, 3, and 4 above as soon as possible.

Insider Insights: Why CPAs don’t plan for their own retirement

2007-11-01T19:47:02+00:00

Following are what I believe are the major reasons why CPAs that should be planning for succession simply are not:

Don’t want to give up control, be “managed”

( A very valid concern. Someone is going to be the new firm leader and that simply has to be accepted. The right merger partner will be very good at smoothing the transition.)

Say they cannot find the right fit

(It’s certainly not easy, but this is usually an indication of lack of preparation or motivation.)

Can make more money by not selling

(Somewhat true in the short run , but the practice will be ultimately sold well below market
by waiting until there is a crisis like death or disability.)

Don’t have time

(This is a smokescreen. We all make time for that which we think is important.)

Fear of change

(This is very real and may be the number one reason.)

Don’t have any other interests besides work.

I think it is critically important for CPAs to take the time and sit down with their closest advisors, friends or family and map out a long term plan. Equally important is to create and begin executing an action plan as in almost all cases, this is a lengthy process.

Insider Insights: cpa firm mergers current trends

2007-10-19T19:30:00+00:00

Until the past few years the vast majority of firm mergers related closely to the age and succession issues of the smaller firm. More or more firms now are considering an upstream merger as a means to grow better and faster. These tend to be multi partner firms with an acceptable dispersion of ages within the partner ranks. Some of the considerations are:

• Improved ability to recruit in a larger firm
• Pace and status of technology
• Regulatory demands of the profession
• A desire to provide a broader range of client services
• Ability to achieve meaningful economies of scale.

This is an ongoing trend and more and more of my time is spent consulting with Managing Partners about merging up.

Insider Insights: Current trends in CPA firm mergers

2007-10-02T14:46:00+00:00

When pricing the transaction, it becomes all too easy to focus on price as a percentage of the most recent revenues. As almost every CPA knows, except in the rarest of circumstances, the agreed upon price is not the final price. The multiple, or percentage of revenues, is a subjective number based on the following factors:

 The profitability of the transaction to the buyer
 The degree of synergy between the firms. ie . Does the buyer want to open an office in the city where the seller is located or does the buyer have practice specialties the seller covets?
 The terms of the deal: the longer the payout period, the lower the price or multiple
 Client or industry concentrations
 Recurrence of revenues

The most successful deals are those which exhibit a compelling synergy between the two firms. In those cases, the seller typically ends up receiving much more than the nominal negotiated price of the transaction because of additional services offered to the seller’s clients and higher seller profitability due to leveraging lower level staff post merger.

Insider Insights: Upcoming partner shortage and other CPA firm issues

2007-09-10T17:19:01+00:00

Two recent articles I have read highlighted the upcoming partner shortage.

In webcpa.com, it is noted that 7 to 9 percent of all partners in multi partner firms will be retiring within the next three years. This statistic will be even more acute in single partner firms where in close to 60% of the instances, the single partner /founder is over 60.

In CPA Practice Management Forum, Sam Allred notes that “more partners will retire from the accounting profession in the next decade than have retired in the past three decades combined “

These are some stark reminders of what many of us already know. Compounding this is the fact that it remains very hard to attract and retain quality staff.

Ironically, in both of these articles, a significant part of the content related to how good the market is for CPA services. This is quite true. Revenues, bill rates and profits are up for most practicing CPAs. At the same time, I hear from many CPAs. that they are not happy with their quality of life i.e. working harder, making more money and enjoying it less.

What is the message here? It is not at all to be the doomsayer by saying this is bad and that is bad. My message is really a call to action.

*If you have talent internally, there is no shortage of assistance with “best practices” to help you nurture and develop it.

*If you have staffing problems, I would be willing to bet that you are not investing the time, effort and money to attack the problem. This is not a criticism as much as a reality issue. You are probably already working more hours than you want.

* If you have succession issues, there are also a number of alternatives to consider. I have found that there is a great deal of fear and procrastination when it comes to this topic. The real downside here is that as more and more CPAs retire, the opportunities for firms seeking to merge or sell will become more limited and selective with a likely effect on practice valuations.

I am a CPA, have been part of the CPA profession since 1973 and am happy to offer my support and help in any way possible.

Insider Insights: The “University” within the CPA firm

2007-09-04T16:27:00+00:00

At the risk of sounding like the person who tells his kids that they had to walk 10 miles to school every day, let me share a fairly new development in the profession.

In the July/ August issue of The New York Enterprise Report, Ronald Tramazzo of Citrin Cooperman and Company wrote how his firm uses a “comprehensive training program to improve productivity, reduce turnover and build morale.” The essence of the article relates to how the firm is supplementing the required technical training with offsite (and 100% casual dress) sessions on topics like networking, marketing, business writing, consulting, rainmaking and presentation skills. As part of their training effort, the firm also offers the services of a professional business coach , a sabbatical program and an incentive program related to new business activities (note the word “activities” versus new clients obtained)

I tip my hat to Citrin Cooperman and others like them for coming up with some creative ideas and investing the time and money to back them up. These are very critical elements of creating a culture to attract and retain excellent staff. I certainly recall trudging into my initial CPA firm’s conference room at the end of the day to hear one of the partners or managers speak about purely technical issues. Unless you were fortunate enough to work directly for someone who had the skills and was willing to teach you about topics like effective business writing, client relations and marketing, then you had to learn somewhat on your own.

Insider Insights: Welcome to Insider Insights!

2007-08-27T10:55:00+00:00

What makes me qualified to offer this? I’m 56 and have spent my entire career in the CPA world.

My father was a CPA who owned a firm for many years. I worked there during summers and school vacations, and admit I showed promise even then—I was a whiz on the 10-key adding machine and none of my dad’s employees could produce and collate multicolored tax returns faster than I could.

I began my own career at a well-known mid-size firm, and then spent a few years at a Fortune 500 company. From there, I was Director of HR for one of the “Big Eight.” I’ve been an entrepreneur/consultant for the past twenty years.

So I have some perspective when I say that the CPA profession is seeing tremendous changes. These are turbulent times with many concerns for succeeding CPA generations.

I wish I could say I have solutions to all the problems. I don’t. No one does.

However, I can offer my professional and personal insights, which will hopefully be valuable. But there’s a catch. I want something in return—a response. Start a dialogue. This blog is a place to share your knowledge, concerns, solutions…anything relevant to the profession.

Insider Insights: Are We Investment Advisors?

2007-08-22T22:28:00+00:00

In other words—should you offer your clients investment and insurance services directly or through a third party—and earn a commission?

While offering financial service is perfectly legal, this question remains one of the most sensitive and controversial topics around. I’m always surprised that some extremely small firms offer these services…and other firms that I consider to be very progressive and successful do not offer these services. The responses generally fall into one of two camps.

Pro-
“Providing financial services is one of the best decisions we have ever made,” “I wish we had started much sooner,” “We have been providing this advice for years and only getting paid our normal rate at best,” “My only regret is not having enough time to do this,” “I like this better than the rest of my practice,” “How great is it having a guaranteed income as soon as the doors open on January 1st,” “Who has more overall knowledge of the client and can be more objective than I can?”

Con-
“CPAs should do what they do best and leave investments and other specialties to those specialists,” “I do not want to be directly or indirectly involved in investment-related decisions,” “When the market goes down, I don’t want to get the call from an upset client,” “While okay to do so now, I still don’t think CPAs should accept commissions or referral fees.”

I’m in favor of firms offering financial services. I think the longtime CPA truly is a trusted advisor and will do only what’s best for the client. Providing advice —directly or indirectly—on financial services is no different than advising a client on how to structure a transaction, or providing complex tax and estate planning or a myriad of other crucial business and personal issues. Is there a risk that you can be blamed if things don’t go well? You bet there is— but only if you give bad or erroneous advice that gets a client in trouble.

On the other hand, suppose you recommend two investment advisors to a client. The client picks one and the advisor designs an age-appropriate, diversified investment portfolio that you regularly review. You receive commissions from the advisor which is disclosed up front to your client. If there is a broad market turndown, did you do something wrong to be blamed for? I would say no, you should not be blamed—and your “good” clients will clearly understand that.

Readers, where do you stand? What pros and cons do you see?

Insider Insights: Troublesome Two

2007-08-07T19:27:00+00:00

Recruiting and retention- “We can’t find good people,” “I have to review/fix almost everything my staff prepares for me.”

Succession, merger/acquisition- “I don’t have anyone internally to buy me out,” “I really don’t want to sell or merge,” “I’d like to acquire a practice.”

Future posts will go into details and specifics about what the major issues are and some suggested solutions.

For a start, though, and to be sure your specific questions get answered, let me know your biggest concerns around these two major issues.

Insider Insights: Where’s the Passion?

2007-07-17T19:30:00+00:00

In “Think You’re the Only One with a Work/Life Balance Problem?” from CPA Trendlines, Rick Telberg unveils the “lopsided work-life balance” of most CPAs.

Reading this entry makes me realize how often people disregard passion.

What is that one pursuit you really love and would do more if time and money allowed? Are you a fanatic golfer (as most are)? Do you love to travel, cook, collect some type of memorabilia, spend time with your spouse or kids, or attend concerts and sporting events?

Do you occasionally daydream about this activity? Do you think about that unbelievable concert you saw or that amazing golf or tennis shot you made? Do you often think, “I can’t wait until I retire to do more of that!”

I have two messages for you today:

Make more time now for what you love. We all know people who were “waiting” and then, all of a sudden, it was too late. Take my father, for example; he always wanted to play golf in Scotland. He was a serious golfer who played regularly; he even bought a house on a golf course and was also often seen putting in his bedroom into one of those odd metal shapes that was supposed to mimic a golf hole. Looking back, I believe he did make time for his passion, but he never made it to Scotland. I think part of the reason was that he had a thriving CPA practice that he built from scratch… and also believed that the time would be there later.

Recreate your passion. I suspect you had that incredible fire in the belly when you began your own practice. Each new client, not to mention each check that came in, got you fired up.

For a quick little self-evaluation, ask yourself:
Do you still have the passion for what you do?
Do you wake up each morning anticipating the day?
Does completing a complex tax return or client business transaction still give you a sense of satisfaction?

If the answer to any of the above questions is “No,” then it may be time for some serious introspection. I clearly remember a crossroad in my career and the struggle to figure it out.

How did I resolve my own work-life balance? At age 28, I was on a very good track in the public accounting world, but really didn’t know what I wanted long-term. The financial rewards looked good…but I just wasn’t sure I really wanted public accounting—with the long hours and demands from clients, partners and staff—as my ultimate career. I ended up leaving the profession, trying private industry and ultimately my own business.

In my own business, the clock never truly stops, but I feel I have learned to master the work-life balance dilemma. Some of the ways include beginning my work day very early 7 a.m or even earlier. I must confess that early a.m. time is not all work as I like to work out and use part of that “extra time” for that purpose. At the same time, I generally get home by 6 p.m. which is probably on the early side for most professionals. I rarely miss any of my daughter’s school activities and have done my share of coaching. It is not unusual though to do some work most weeknights.. maybe a call or two or concentrate on writing an article. Now that I think about it though, I need to turn that Blackberry off earlier!

Opportunity: NYC audit manager with a large regional firm and a specialty in hedge funds and private equity.

2011-10-17T18:42:19+00:00

New York City: NYC audit manager with a large regional firm and a specialty in hedge funds and private equity. Excellent personality and temperament plus great job stability.

Opportunity: NYC based single partner seeking to merge with a $2-5 million firm for continued growth.

2011-10-17T18:35:35+00:00

New York City: NYC based single partner (mid 40’s) grossing 435k is seeking to merge with a $2-5 million firm for continued growth. Diverse and stable client base.

Opportunity: CPA, Mid 40’s with established and profitable practice (400k)

2010-07-09T20:27:00+00:00

Long Island: CPA, Mid 40's with established and profitable(400k) practice is seeking to become a partner in a $1-2 million firm.

Opportunity: Tax Partner in Charge

2010-03-22T18:53:12+00:00

New York City: Tax Partner in Charge. Due to an upcoming retirement. A well regarded 50+ person firm is seeking a Partner to lead their tax department. Strong management, technical and business development skills are necessary.

Opportunity: NYC Practitioner with a 550k business specializing in physician practices.

2012-04-25T15:08:32+00:00

New York City: NYC practitioner with a 550k business specializing in physician practices. Solid long established practice with good staff that would be a nice addition to any firm.

Opportunity: Very progressive and long established Eastern Long Island Practice is seeking a Senior Manager

2012-04-25T15:02:11+00:00

Long Island: Very progressive and long established eastern Long Island practice is seeking a senior manager with strong audit technical skills. Good opportunity for future partnership. Young and proactive leadership.

Opportunity: Audit partner or Director (no capital required)

2012-03-07T21:19:55+00:00

New York City: Audit partner or Director (no capital required). Small and very profitable two partner firm with a high end not-for-profit niche needs a successor partner for a partner who is seeking to reduce their workload. This is perfect for an underutilized and entrepreneurial younger partner or a senior manager seeking partnership and greater financial rewards sooner. This is a very established firm with a significant presence in their market niche. Congenial work environment and a true opportunity for the right person to do extremely well. Must be capable of overseeing the planning and execution of all audits and financial statements, pre and post audit client meetings and the firm quality control guidelines. A truly great opportunity.

Opportunity: $2+million, 2 partner diverse and well established New York City firm is seeking to merge.

2012-03-07T21:17:32+00:00

New York City: $2+ million, 2 partner diverse and well established New York City firm is seeking to merge with a larger firm by the end of 2012. The two partners plan to transition out over the next 3-5 years. There is not an internal successor to take over the business. The two partners are congenial and active day to day with their clients and staff. They have a number of $20-40k+ annual fee clients and solid industry niches. They are seeking a compatible culture and a firm that has younger partners and senior managers to whom they could transition their business. They are realistic about valuation, so this is an excellent opportunity for a new firm to expand.

Opportunity: A tax partner in his mid-40s, now based in the suburbs, would like to move his practice to New York.

2012-03-07T21:07:38+00:00

New York City: A tax partner in his mid-40s, now based in the suburbs, would like to move his practice to New York City and take it to the next level. In his view, that means working with larger and more sophisticated client. He is strong technically and relishes the leadership and mentoring role he has at his current firm, where he has been for more than 20 years. I can see why his clients and staff like him--he has a nice way about him. He is mainly tax focused, involved in high level planning, consulting and review of the more complex returns . A smaller portion of his time is dedicated to audit, reviews and compilations, so he knows his way around that area, but tax is his main skill and interest. He describes himself as the “go to” person in his firm for difficult client or internal issues. A sound next step for him would be to join a Manhattan based firm with an established tax practice, a down to earth style and growth plans.

Opportunity: Prestigious Family Office is seeking a Managing Director -Must have very high net worth experience.

2012-01-04T19:22:00+00:00

New York City: Prestigious Family Office is seeking a Managing Director -Must have very high net worth experience.

Opportunity: Well known and highly successful 400+ person firm is seeking a Chief Operating Officer.

2012-01-04T19:19:00+00:00

New York City: Well known and highly successful 400+ person firm is seeking a Chief Operating Officer.

Opportunity: Tax Partner-in-Charge, NYC for a Highly regarded non-NYC firm.

2012-01-04T19:16:00+00:00

New York City: Tax Partner-in-Charge, NYC for a Highly regarded non-NYC firm.

Opportunity: CPA, mid 30’s with a small book of business is seeking a very small firm equity buy in opportunity.

2012-01-04T19:14:00+00:00

New York City: CPA, mid 30's with a small book of business is seeking a very small firm equity buy in opportunity

Opportunity: Audit partner with a 900k book of business is seeking a smaller, entrepreneurial firm.

2012-01-04T19:11:00+00:00

New York City: Audit partner with a 900k book of business is seeking a smaller, entrepreneurial firm.

Opportunity: Tax partner with a 750k high net worth and business management book of business

2012-01-04T19:09:00+00:00

New York City: Tax partner with a 750k high net worth and business management book of business seeking a new affiliation.

Opportunity: Westchester CPA with a 450k diverse book of business is seeking to merge with similar or larger firm

2012-01-04T19:05:00+00:00

Westchester: Westchester CPA with a 450k diverse book of business is seeking to merge with similar or larger firm.

Opportunity: Large regional NYC firm seeks a Partner or Director due to growth and a medium term succession.

2011-10-25T15:09:00+00:00

New York City: Large regional NYC firm seeks a Partner or Director due to growth and a medium term succession. Responsible for engagements covering accounting irregularities, white collar crime, corporate investigations and shareholder disputes. Extremely collegial work environment.

Opportunity: Fast growth midtown $70+ million firm seeks an addition to the current team.

2011-10-25T15:04:00+00:00

New York City: Fast growth midtown $70+ million firm seeks an addition to the current team. This is ideal for a manager or senior manager wants a QC transition. Definite partner path if desired.

Opportunity: Long Island and NYC firm seeking a tax manager due to continued growth.

2011-10-19T18:38:00+00:00

Long Island: Long Island and NYC firm seeking a tax manager due to continued growth. Top rated firm with low turnover.

Opportunity: National firm seeking a C Corp expert at either the manager or senior associate level.

2011-10-17T19:08:00+00:00

New York City: National firm seeking a C Corp expert at either the manager or senior associate level. Large regional firm seeking a Tax Partner with expertise in accounting methods.

Opportunity: Senior manager, large firm, with strong litigation and forensic skills.

2011-10-17T19:04:01+00:00

New York City: Senior manager, large firm, with strong litigation and forensic skills. CPA with prior audit experience Business developer as well.

Opportunity: Senior manager and #2 in the Quality Review group in a mid-sized firm Seeking a larger firm.

2011-10-17T19:01:00+00:00

New York City: Senior manager (mid 30’s) and #2 in the Quality Review group in a mid-sized firm. Expertise with SEC and privately held firms. Seeking a larger firm environment with a definite partner path.

Opportunity: NYC Tax Partner with a 700k book of business. Expertise in high net worth and family office/business

2011-10-17T18:56:21+00:00

New York City: NYC Tax Partner with a 700k book of business. Expertise in high net worth and family office/business management. CPA, JD, LLM. Very personable and seeking a more entrepreneurial firm.

Opportunity: Partner, State and Local Taxes. CPA, MS, Taxation.

2011-10-17T18:51:18+00:00

New York City: Partner, State and Local Taxes. CPA, MS, Taxation. This person has been a practice leader for a large NYC based firm. Strong technical and business development skills

Opportunity: Long Island based sole practitioner -revenues of 525k seeking to merge with an equal or larger firm.

2011-10-17T17:02:00+00:00

Long Island: Long Island based sole practitioner in his mid-40’s with revenues of 525k is seeking to merge with an equal or larger firm for continued growth and a long time succession plan.

Opportunity: Partner in charge of NYC office

2011-06-01T15:24:00+00:00

New York City: Non NYC headquartered mid-size firm with a small NYC office is seeking a partner to run their NYC office. The ideal person will be a CPA with 15+ years audit or tax experience from a mid-sized to larger firm. This person will have an accomplished record of business development and leadership and be very desirous of a leadership role. The firm is highly successful and has quite a number of niche businesses that can be replicated in NYC.

Opportunity: Business management practice leader

2011-06-01T14:16:40+00:00

New York City: Well known, respected and highly profitable regional firm is seeking a leader for their business management practice. The ideal person will have 15-20+ years of experience in a CPA or business management firm. They will have an expertise in managing day to day financial affairs of super wealthy business owners and families plus entertainment and sports celebrities. Leadership, business development and client handling skills are expected to be in the upper echelon. Compensation package will be very generous for the right person. This is a fantastic opportunity at a very nice firm.

Opportunity: Accounting and Tax Manager seeks to buy a practice or affiliate with firm seeking successor.

2010-08-04T19:45:00+00:00

Long Island: Accounting and Tax Manager with 12 years public accounting experience and a small book of business seeks to buy a practice or affiliate with firm seeking successor. (CPA, MS-Tax)

Opportunity: Audit Partner for Next Generation Leadership

2010-07-08T04:29:00+00:00

Rockland County: Audit Partner for fast growing local firm that is seeking next generation leadership.

Opportunity: One Partner Firm Seeking Merger for Growth

2010-04-02T03:30:00+00:00

Long Island: One Partner (Mid 40's) grossing 550k with primarily high net worth client base seeking to merge for growth.

News: NYSSCPA-Nassau Chapter Small Firm MAP Meeting

2012-04-16T19:23:30+00:00

Location:
On Parade Diner
7980 Jericho Turnpike
Woodbury, New York
516-364–1870
Contact Robert for more information rfligel@rf-resources.com

News: AccountingToday.com Story - Filling your shoes - Featuring Quotes from Robert Fligel, CPA

2011-03-01T16:28:00+00:00

The first step for a CPA firm looking to improve its succession plan is to make sure that it actually has one.

The survey also found that 55 percent of firms plan to make a transition in management or ownership within five years, and 87 percent expect to in the next 10, making the issue especially urgent.

Starting small is not a bad idea, as Tim Michel, principal of Akron, Ohio-based Michel Consulting Group, learned when he was a managing partner at New Philadelphia, Ohio-headquartered Rea & Associates - as long as you start early.

He polled the partners to determine when they thought they would retire, and found “a significant percentage” was planning to leave in the next three to five years.

According to Michel, this would be the time to put the wheels in motion. “The more time you take, the better,” he said. “Some firms have in their agreement that you have to give notification within one to two years of retirement. But that’s not enough time to transition a relationship [with the retiree’s clients].”

Instead, Michel recommends a five-year transition period to properly acquaint clients with partner successors.

An even earlier concern should be fully developing and defining every role in the company - especially those at the top, according to Bill Reeb, chief executive officer at the Succession Institute in Austin, Texas. “Firms confuse the line of the board of directors and managing partners - they blend those way too much,” he said. “They need to embed the necessary power into the governance process. By separating those [roles], they can create clarity that is duplicable with future generations.”

Partners should be able to look at seven to eight people to fill their position, and assess whether those candidates would be successful, Reeb said. If not, the roles are not defined enough, and should be less tied to unique leader personalities.

“The problem with succession is that many very successful firms are built around specific people and their talents,” he said. “When it comes time for them to retire, finding someone with that same combination of vast talents is almost impossible. The shift from the characteristics of the first managing partner to the characteristics of a second managing partner is almost like starting a business over, like selling a business and hoping it survives.”

CULTURE

Talent and skill level alone are not enough for most employees to climb the hierarchy into a high-potential position.

“People rarely fail because they don’t have the talent,” said Gary Hourihan, chairman of consulting firm Korn/Ferry International’s Leadership and Talent Consulting Group in Irvine, Calif. “They tend to fail because they don’t have the key behavioral characteristics and they don’t fit in with the culture.”

Management should promote the positive elements of this culture in order to retain future leaders long before the grooming process begins.

“What happens in our profession is that we have not self-advocated in the best fashion,” maintained Philip Whitman, president of Whitman Business Advisors in New York. “We haven’t shed the glamorous light on our profession that really exists.”

Up-and-coming leaders need to know where they stand, and what they can expect - and they need to hear it from a credible source. “The lack of communication can be dangerous,” warned RF Resources’ Fligel. “You look at partners in their 60s, and if they don’t tell you something, you’re going to think the worst.”

“The environment for younger staff is to see busy, crazy partners running around, and they say, this is not something I want to sign up for,” added Whitman. “They get off the merry-go-round a little too soon.”

Those staff who do remain on board should be able to “solve complex problems and make decisions quickly enough,” said Hourihan. “Research suggests that as you move up the hierarchy that becomes more and more important.”

These behavioral elements are a critical part of the overall succession plan.

“You should evaluate the senior management team and pit successors against those characteristics,” Hourihan added. “It allows you to see where you have holes in the succession plan process.”

Retaining high-potential staff should always involve annual reviews and proper compensation. “The annual expectation [for future leaders] should be supported by roles and responsibilities,” said Reeb. “This needs to be backed up with compensation that you stick to that rewards those people who are accomplishing the firm’s strategy and punishing those people who decide to go rogue.”

Ron Ashkenas, a senior partner at management-focused Schaffer Consulting in New York, agreed that keeping potential successors means cutting those on your staff who underperform. “You need serious performance management that takes the bottom performers out every year,” Ashkenas said. “People don’t want to stay in a firm side by side with someone that doesn’t work very hard but gets the same performance rating and sticks around.”

ENGAGEMENT

It is critical, then, to engage younger staff, first to retain them, and then to prepare them for a leadership trajectory.

The firm’s succession plan should accomplish this when set up in a cascade formation, said Ashkenas, with every manager responsible for the development of those below them, and partners making reviews at every level a priority from the top down.

“For every partner, part of the job is knowing they have a successor,” Fligel said. “They should all be grooming somebody.”

This model will also “push work down, get younger people involved with clients and get them to take important leadership roles with the clients,” said Michel, who used this strategy at Rea & Associates. “It’s more of a team approach, pushing the work down, giving responsibility, and it brought them along quicker so they felt more comfortable and capable working with the clients.”

Part of this team concept requires employees to work against their ingrained career philosophy. “The problem is, most people know how to develop themselves,” said Reeb. “That strength comes from decades of making themselves better, faster and stronger than everyone else.”

Leaders should direct this energy into mentor relationships, continued Reeb. “If you learn to make five other people better every year, you have an incredible ability to grow and expand and be more profitable,” he said. “But it is a different culture to do that. The stronger the individual, the weaker the firm - but it doesn’t have to be that way.”

Instead, leadership development should be a priority, and it should be understood that it’s worth the obvious risks.

“The best mark of a really good leader is that his or her people are highly desired by others,” said Ashkenas. “A lot of times, leaders don’t want their people to be snatched up by other people, but it is a mark of accomplishment to develop them to make them attractive.”

EXTERNAL FORCES

Attractive potential leaders recruited externally, through a merger or acquisition, should be just as highly developed - especially in the early stages.

“Firms should pay more attention to the people, the talent side of an acquisition, and more on the due-diligence phase,” said Hourihan. “Lots of companies should go in, look at characteristics of the management of the two companies, where the friction points will be, and get them on the table up front.” This will most likely include “vastly different compensation programs,” he added.

When partner succession is altogether trumped by a merger or acquisition leadership change, there “can be mass defections,” said Hourihan. A successful blending of cultures should be stressed.

In the wake of all the recent transactional movements between firms, a clear succession plan is only more valuable. It begins with ignoring emotional aspects and outlining a clear plan.

“It’s human nature; we don’t want to deal with mortality because it’s a very daunting thing,” said Fligel. “But there’s a fantastic sense of relief when you do these things. And you should think about your clients - you don’t want to leave them in a lurch.”

News: Crain’s New York Business - Highlighting RF Resources, LLC

2011-01-01T15:41:00+00:00

Gobbling Up Small Fry
An M&A wave for accounting firms as partners age and recession takes its toll
By Steve Garmhausen

News: HOW TO IMPROVE PROFIT MARGINS IN YOUR PRACTICE

2010-08-19T10:32:00+00:00

Moderator: Robert Fligel, CPA of RF Resources LLC Panel: Larry Bloom, Robert Brown, Eliot H. Lebenhart, Doug Sinetar All CPA’s CPE: 2 On or before 20th: $25 After 2oth: $35 Come hear your peers discuss : -The practice area that is almost guaranteed to add 30-50k to your bottom line. - How to fend off fee discounting when engaging new clients. - Practical tips on pricing, billing and collections to convert your A/R and WIP into cash more quickly. - How to overcome some of the barriers to getting paid what you are worth. - How to use the 1040 to perform post tax season services. - How to eliminate your ” C ” and worse clients and… better yet, find someone who wants to buy them. Information and Registration:http://www.securedtransactions.com/stores/ns-nccpap/details2.php?id=36491

News: CPA M & A Deals

2010-07-29T15:46:00+00:00

by Robert S. Fligel, CPA, President of RF Resources LLC

News: Practice Management Conference

2009-10-28T18:17:00+00:00

Practice Continuity Panel
Robert Fligel -RF Resources, LLC

Ted Felix -Parente Randolph, LLC
Making the decision to sell or merge upstream. The process.
John Repetti -Graf, Repetti & Co, LLP
Identification of potential merger / acquisition prospects.
Glenn Friedman –Metis Group, LLC
To Be Or Not To Be? Making The Match.
Doug Phillips -Weiser LLP
Practice evaluation considerations.
Dom Esposito -JH Cohn, LLP
Post Acquisition transition and integration the first 24 months.
Tim Christen -Baker Tilly Virchow Krause, LLP
Things Gone Right and Wrong. Lessons Learned.

News: No-Cash-Down Practice Acquisition

2008-09-23T16:55:00+00:00

by Robert S. Fligel, CPA, President of RF Resources LLC

News: Nine Proven Strategies to Ensure a Successful CPA Firm Merger or Sale

2008-09-23T16:27:00+00:00

by Robert S. Fligel, CPA, President of RF Resources LLC

News: Having the Right Firm Merger Mindset

2007-10-31T15:30:00+00:00

Article written by Robert Fligel for the Practical Accountant’s November 2007 issue about how to take advantage of current trends.

News: Unspoken Obstacles

2007-10-26T22:12:00+00:00

For the New York State Society of CPAs’ publication, The CPA Journal, Robert Fligel wrote about the unspoken reasons inhibiting firm mergers.

News: Special May 9th Partners’ Session: CPA Firm Sales and Mergers

2007-10-24T18:03:00+00:00

For the Manhattan/Bronx chapter of the New York State Society of CPAs, Robert Fligel gave a presentation discussing sale versus merger versus internal succession, and what to expect if you sell or merge.

News: Consolidation Caveats

2007-09-01T16:54:00+00:00

For The Practicing CPA, the newsletter of the AICPA’s private practice section, Robert Fligel wrote about current CPA merger trends versus the consolidations in the late 1990’s. Read at AICAP Website.

News: Nassau/Suffolk Chapter of NCCPAP Educational Foundation, Mergers & Acquisitions Roundtable

2007-07-09T18:06:00+00:00

Robert Fligel organized and led a roundtable discussion attended by more than 20 CPAs about current trends and real life buyer and seller experiences.