by Melissa Klein
Chicago - The Leading Edge Alliance, an accounting firm association based here, has expanded its borders beyond the United States by adding seven new member firms to its fold.
The new additions, which include a Japanese accounting firm, along with two Canadian firms and four U.S.-based firms, bring the group’s membership to 36, double the number of firms that it started with when the alliance formed in October 1999.
LEA’s new members - Baden, Gage & Schroeder, of Ft. Wayne, Ind.; Brady, Ware & Schoenfeld, of Dayton, Ohio; O’Sullivan Creel, of Orlando, Fla.; Warren, Averett, Kimbrough & Marino, of Birmingham, Ala.; Evans Martin, Brampton, of Ontario; Fuller Landau, of Toronto; and Hongo Accounting, of Tokyo - account for a combined $96.5 million in revenue.
Three years ago, when firms like Century Business Services and American Express Tax & Business Services were gobbling up local CPA firms at a rapid clip, 18 large local firms banded together to form LEA in an effort to buck the consolidation trend by leveraging their combined resources.
"We wanted to create an organization where the focus was on larger firms," said Karen Kehl-Rose, LEA’s president and chief executive. "Our group of members were all in associations where they were the largest firms - and felt they weren’t getting the value. They felt that they were always the givers, and never the receivers of information."
"Most associations are out there are a mixed bag," she continued. "The problem is - and it’s not only faced by associations, but also CPA societies - that when you have a mixed population, it’s hard to create a product or line of service that makes everybody happy. You always have to hit it sort of in the middle to satisfy [both small and large firms]."
Today, LEA’s 36 member firms collectively represent more than $500 million in revenue and more than 4,000 staff. Hongo, a $15 million Japanese firm, became acquainted with the group because it works with a number of LEA member firms in the financial-services area, according to Kehl-Rose.
Plans are underway to implement an LEA Canada, where the group is already looking to recruit other firms. Kehl-Rose said that LEA is also in talks with some European firms that are interested in joining.
Kehl-Rose describes the group’s typical member firm as independent, a leader in its market, with annual revenue of $10 million to $30 million, a track record of strong revenue growth over the past five years, an aggressive growth strategy and offering non-traditional services, such as consulting.
And as many groups do, LEA limits its members to one firm per metropolitan service area. "If you don’t do that, the information sharing is limited, because no one wants to share information if someone in their market is sitting across from them," she explained.
When Brady Ware & Schoenfeld went shopping for a new firm association, the similarities among the group’s member firms was one of the traits that the firm liked about LEA, according to BW&S managing director, Gary Adamson.
"The reason we liked Leading Edge so much is because they’re [made up of] similar size firms. They have similar interests, similar growth plans. And they have some very aggressive firms - we like that," Adamson said.
"What we’re looking for is strength beyond our internal resources and size," he continued. In particular, the firm is looking for best practice information to strengthen its industry niches - auto dealerships, manufacturing and distribution, construction and medical and professional practices - and an international network to help it serve larger clients that are doing business overseas. LEA has an international network through a strategic alliance with Kreston International, an international network of accounting firms based in the United Kingdom.
"Their activity around special interest groups offers a great opportunity for a lot of people inside the firm to get involved and make our niches better," Adamson said, referring the group’s 45 SIGs, which run the gamut from accounting and audit to forensics to employee benefits. The subgroups are open to all employees of members, not just managing partners, in order to allow employees at all levels to participate.
SIGs meet face-to-face, once or twice a year, but are in regular contact by telephone and e-mail, and have dedicated areas on the group’s web site for communicating.
In addition, LEA members have access to an online library where they can post or read documents and information.
"We use e-mail and technology to the fullest extent," said Kehl-Rose. "Our whole database, all of our registrations, and our e-mail distribution lists, are all on our web site. It gives us an advantage from an administrative standpoint. We don’t have to have a staff of five people, so it helps us keep overhead low."
Besides Kehl-Rose, who is the group’s only full-time employee, LEA hires people to work on a contract or part-time basis.
Two firms have departed the group. Founding member firm Lang Group Chartered, of Bethesda, Md., merged into BDO Seidman in October, according to president Andrew S. Lang, who now serves as BDO’s national director of nonprofit services.
And Albuquerque, N.M.-based REDW Business & Financial Resources departed the group in April. "We elected to drop out and we’re in the process of doing due diligence on a new association," Irv Diamond, the firm’s CEO, said of the decision to leave the group. "We’re refocusing our efforts. We’re looking for more technical exposure than we were getting, especially in audit and consulting."
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