For many mid-market accounting firms, the status and activities of the Big Four are of passing interest, but not much more. but EOS accountants LLP has charted an innovative and successful growth strategy by linking with the big Four and other firms.

According to founder and managing partner Michio Ishii, collaborating with the Big Four and other Japan-based accounting firms helped his firm grow with Japanese companies doing business in the United States. He graciously shared his experience and perspectives.

 

STRATEGIC STEPS

Ishii spent several formative years with Tohmatsu Awoki, the predecessor firm of Deloitte Tohmatsu. An original member of the firm's U.S. operation, he eventually left to start his own firm. The practice he built in the New York City area included a number of Japan-headquartered clients who used Ernst & Whinney (the predecessor to E&Y) in Japan and relied on Ishii for their U.S. subsidiaries.

Ishii was growing so fast that he decided to merge his practice with Ernst & Whinney in the U.S., accessing more staff to meet the demand. His mission was to develop their Japanese practice, and he remained there for 11 years before founding EOS in 1996.

A primary motivation to launch his own venture was Ishii's growing recognition that U.S. subsidiaries of Japanese firms needed different solutions, which were often not part of the Big Four's evolving strategy.

Ishii observed that while a Big Four firm was a good choice for the large, established U.S. operations of a large Japanese parent company, the smaller U.S. subsidiaries increasingly were dissatisfied. As smaller entities, they often needed more hands-on, intimate service, including business, management and technology consulting.

The Big Four had difficulty servicing these smaller subs, with needs that didn't easily fit in their business model. As a result, services were more expensive and often did not meet the need. These were, however, the specialty of mid-market CPA firms.

Ishii and his partners identified their market hole (a need without an existing solution) and energetically went about filling it. The rest, as they say, is history. He and his partners amicably left the Big Four to start EOS.

The Big Four firms acknowledged Ishii's premise: that certain U.S. subsidiaries of their corporate clients were unhappy and could use EOS to fulfill needs that the Big Four couldn't. And ensuring good service for them was a priority.

Ishii and his partners were tightly focused and attracted U.S. subsidiaries of Japanese parent companies. Their prospects were companies that lacked adequate accounting professionals and infrastructure. This was a timely development, as Japanese businesses were actively in pursuit of U.S. acquisitions.

 

POWERED BY RELATIONSHIPS

The approach worked, and over time EOS was sought out by other Big Four players to serve their U.S. clients as well. The strategy became even more valuable when Sarbanes-Oxley established regulations that precluded audit firms from providing many of the services these clients needed.

Ishii and his partners nurtured close ties with other large Japanese accounting firms, and became known in Japan as the go-to firm for U.S. subs of Japanese parents. EOS grew as a result of close and trusting associations with individual partners in these large Japanese firms.

Today, EOS Accountants has become a solid mid-market international provider. The firm has expanded well beyond its Teaneck, N.J., headquarters, with offices in San Jose, Calif., Los Angeles, Honolulu, San Mateo, Calif., Detroit and Chicago. More than half the staff is bilingual in Japanese and English.

Successfully navigating the relationships with the Big Four and other accounting firms remains the key to the firm's success. As the large global players became less interested in serving smaller U.S. subsidiaries, and as they were regulated out of a number of service lines, Michio Ishii and EOS were prepared to meet the need.

Ishii says that his firm continues to grow its formal and informal links with practitioners in Japan. As younger partners are developed, the next generation continues to focus on the relationships that have been central to the firm's success.

As we concluded the interview, I was struck by the elegance and sophistication of the EOS strategy: finding a market hole, developing a unique distribution channel, having a focused niche discipline, and navigating the complexities in relationships with other firms.

It beautifully illustrates the application of key growth concepts implemented in a creative way. As a result, EOS has achieved an enviable position - going where the competition is not and staking its rightful claim in the international world!

 

 

Gale Crosley, CPA, is founder and principal of Crosley+Co. (www.crosleycompany.com), providing revenue growth consulting and coaching to CPA firms. Reach her at gcrosley@crosleycompany.com.

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