[IMGCAP(1)]David Sibits has been seeing a lot of changes at CBIZ in the past year as the firm copes with the economy and manages its acquisitions of Tofias and Mahoney Cohen.
Sibits joined CBIZ in May 2007 when he was named president of CBIZ Financial Services. Prior to CBIZ, he was appointed executive managing director of RSM McGladrey's Ohio region shortly after the firms acquisition of American Express Tax and Business Services. At RSM McGladrey, he oversaw five offices in Ohio with 30 managing directors and more than 250 employees. He had earlier been executive managing director of the TBS Eastern Region, which included 35 offices in 13 states.
Prior to RSM McGladrey, Sibits was the managing shareholder of Hausser & Taylor LLC from 1992 to January 2004. American Express acquired Hausser & Taylor's tax and consulting firm in Ohio, which was the seventh largest in Cleveland and one of the top 35 accounting firms in the U.S. He talked with WebCPA about how his firm has been managing this year.
How are you dealing with the acquisitions you made about a year ago of Tofias and Mahoney Cohen? Is the integration going smoothly?
Its really going very well and very smoothly. What you find is that when you acquire well-run organizations like Tofias and Mahoney, they require far less handholding than organizations that are not as structured and organized.
Have you found differences between the two firms in terms of skills or cultures?Theres a natural cultural difference between New York and New England to start out with, but both cultures really fit pretty well within the overall culture at CBIZ, that is, first caring about clients and our associates. Both of them fully operate in that fashion. Different strengths come out of each. The New England operation, led by Tracy Gallagher, is probably one of the best-run firms that Ive ever seen. The ability to take positives from the best practices and apply them elsewhere within our organization is very beneficial. New York, while in a tough market right now with the economy, is really an organization that brings different types of product lines to us: family office services, bankruptcy reorganization. That likewise is going to benefit us long term by being able to use it throughout the United States.
How is your firm being affected by the economy?
I have to be very careful because were part of a public company. Like most firms in this industry, we are all seeing a downturn in terms of top-line revenue, some of our locations much more than others, the two coasts the East Coast, except for New England, and the West Coast, primarily the Southern California area probably being the most affected.
And you said youve seen some effects in New York as well?
Yes, in some locations the pricing has really gone back to times that we probably have not seen since the 80s, where firms are willing to take on work that some would view as almost negative margins quite honestly.
Is that something youve been forced to do as well, to cut back on your fees and rates?
Where weve got long-term relationships with clients and theyre struggling, we attempt to make sure that we are accommodating them where we can, hopefully being able to make a little bit of an investment in that client so, when things get better, that client remembers. You have to be very careful in that area. We would prefer to really keep our margins and our pricing as solid as they were.
Do you find many firms are trying to take business away from you by undercutting your rates?
I cant say that I can make a definite comment on that, but what I can say is that where there are opportunities coming in some of the markets that are basically beauty contests, where six or eight firms are being invited to bid, the pricing has been a major factor. Where we can focus on strengths, where we have a definite market niche, whether its family office services or not-for-profit services, or something where you have a distinct characteristic that sets you apart from your competitors, pricing tends to be less of a challenge.
What kind of expertise did you get with the acquisitions? Were you able to build up some of these services like not-for-profit and family services?
The New York office has a very robust family office services practice that they really have solid expertise in. They have a very strong bankruptcy practice led by Jeff Sutton that is really renowned throughout the United States and is very positive. New England has a tremendous not-for-profit practice, an outstanding public tax practice where they do work for public companies in the tax area, but not in the audit areas. Some really nice niches came about, niches that you can then develop in your other offices as a result of having that expertise.
Do you foresee other acquisitions taking place in the year ahead at the firm?
We need to be very careful again, being a public company. We continue to be very focused on growing our organization both organically and through acquisition, and we continue to have discussions on doing so, yes.
Which other firms are you in discussions with?
I cant comment.
What other changes do you foresee in the firm in the year ahead?
I think that we will continue to try to build out and expand our specialty practice teams, not-for-profit, and ERISA services. We have very strong forensic, litigation, bankruptcy and wealth management practices that we can build out. I think were going to continue to take advantage of our acquisition strategy. I believe were going to be able to, because of some of the excellent firms having to let people go as a matter of economics, bring in some very talented people from other organizations that will help us by bringing new ideas within our organization, so we view those as positive.
Do you think client fees and billings will be up next year over this year?
I think that were going to have to be very cognizant of providing better service if we expect that to happen. But I cant go out on a line and tell you that there are going to be major increases in billings, no. In tougher times like this you need to make sure that you can deliver first-class services at a lesser cost because you cant just build in pricing increases. We continue to look for ways in which to be able to provide the clients the service that they deserve and want.
What kinds of predictions do you have for the accounting profession in general next year?
I think we will continue to see consolidation. If you look at some of the markets, there are firms that look exactly the same competing for a smaller pool of business, which will likely result in the need for the A and B to join up and become a C. I think thats going to present good opportunities for us as well as others.
Do you think the firms that are owned by public companies are in a better position than the partnerships?
Well, we have capital that can be used for that. That doesnt mean that thats attractive to everybody, but it is a very viable alternative. There are excellent competitors out there doing acquisitions without that capital and doing a great job of it: the Virchow Krauses and the combination with Beard, Miller and Parente. Theyre getting it done.
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