Feeling the Urge to Merge? First, Consider the Angles

Partner retreats may be gearing up for new merger, acquisition and competitive strategies. But which side of the deal do you want to be on?

by Rick Telberg

As the tax season winds down this week, accounting firms will be looking ahead to the next busy season: strategy season.

After a couple weeks of R&R, cleaning up the office and getting re-acquainted with family and friends, many CPAs will be planning for their firm retreats — strategy sessions that both assess the lessons from the latest busy season and plot a new course for the year ahead.


Many CPAs are reporting an outstanding tax season. Although, compared with last year’s, which came on the heels of a global financial collapse, anything might look like an improvement. Many firms tightened their operations and slimmed down headcounts for this tax season, which should have expanded profits were it not for the fact that maintaining top lines has required some fancy footwork as clients cut back or just vanished.

“Collections and fee pressures are very difficult these days,” according to CPA Ira Rosenbloom, who was managing partner of Mintz Rosenfeld, a prominent New Jersey firm, before it merged into J.H. Cohn. Today Rosenbloom runs his own consulting practice for CPA firms, Optimum Strategies LLC in West Caldwell, N.J.

With clients hammered by the economic downturn, Rosenbloom notes, “First you agree to work for less and then they make you wait to get paid.” Do the math: At 20 percent off in fees, firms need to bring in five clients for every four you needed to make the same money a couple years ago.

In this world of “angst and agitation,” in Rosenbloom’s words, many CPAs could be making huge strategic decisions at their firm retreats this year. Front and center will be the question of mergers or acquisitions. “We’re already seeing a very hot market in mergers and acquisitions,” Rosenbloom says. “And there’s a bunch of practitioners out there who aren’t getting any younger. They know they that they will need to hook up with another firm. But they’re just not sure how to take the first steps.”

Indeed, many firm owners get hung up on the question of whether they want to be a buyer or a seller. In fact, Rosenbloom says, that’s the wrong question. He should know. While at Mintz Rosenfeld, Rosenbloom engineered his share of deals. And he was still in an acquisition posture when J.H. Cohn came courting. Making the shift, personally and organizationally, mentally and practically, wasn’t easy.

So whether you think you’re a buyer or a seller, immediately after tax season run your SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis and be sure to list the strengths and weaknesses of every other CPA firm in your market. Not only will the analysis help you compete, but it could also help you identify a potential new partner.

Ultimately it may not matter whether your firm is a buyer or a seller, just that you hook up with the right firm for the right reasons.

Copyright 2010 AICPA.