After serving as a regional managing partner with a national firm for several years, in the late 1970s Len Miller decided to find a new home for his technical expertise in accounting and consulting, as well as his firm administration skills. He co-founded his own firm in Phoenix, Miller Wagner & Co. Ltd., and ran the business for more than two decades before consolidating with CBiz Inc. in early 1999. Today, Miller serves as the president of CBiz Accounting, Tax & Advisory Services LLC.With over 40 years of experience, Miller is a recognized expert in the fields of finance, real estate, general business consulting and various litigation support matters -- but he still places an emphasis on the programs his firm has in place to retain and develop its own employees.
In an exchange with WebCPA, Miller discussed the current M&A environment, the state of the accounting profession, and CBiz’s own plans for the future -- which include entering as many as a dozen new markets, as well as a goal to achieve growth of $100 million in revenue through acquisitions by the end of 2009.
How do you see the M&A outlook shaping up for the industry? How about for CBiz?
The accounting industry has seen M&A activity start and stop over the years. From where we sit, we believe that deal activity could be starting to warm up again. There are a lot of firms that are at, or near, a transition point. The original partners in the firm are getting older and many of them are unsatisfied with their internal transition prospects. They are left to consider other exit strategies outside their firm, and for many that means a merger.
Our thinking is that this transition point will create a lot of opportunity for those companies actively looking to acquire other firms.
At CBiz, we are looking to be very aggressive in making acquisitions over the next two to three years. We've identified 10 to 12 markets in which we'd like to target our purchases and have set up specific guidelines for the sort of firm we'd like to acquire within those cities. Our goal is to achieve growth of $100 million in revenue through acquisitions by the end of 2009.
You headed up your own small accounting firm at one time. What sort of advice would you give to a practitioner who's thinking about a merger -- both from a philosophical perspective and a compensatory standpoint?
The advice would be different, depending on the size of the firm. In most instances, if it is a single practitioner or a very small firm, I would advise against merging with a larger regional or national firm. The transition process is very difficult because of the strong culture differences. If the practitioner has previous experience with a larger firm, then the case may be different.
On the other hand, a medium or larger firm tends to not face the clashing of cultures, as most are already structured in a more formal way, making the transition easier.
Based on prior experience, when you are exploring a merger the most important factor is to ensure that the goals and objectives of your firm are in line with the other firm. If the goals and objectives are not compatible, post-merger, both firms will not be working towards the same goals, creating unhappy partners and employees.
It is also important to consider a merger as an effective method to grow your business in your own market. A merger casts a wider net of professionals and adds expertise in specialty areas that you might not have had before. You can develop new markets faster and draw on the capital that a national firm provides.
What's one issue that you think should be on firms' radar screens and isn't?
The Securities and Exchange Commission, the Public Company Accounting Oversight Board and other regulators are still trying to figure out what they want Sarbanes-Oxley to look like going forward. Clearly, they believe that adjustments have to be made to make SOX compliance palatable for the smaller public companies -- specifically, the non-accelerated filers. However, this is not the most critical issue facing our industry.
The most pressing issue that we must address is the talent gap we have as an industry. Lack of personnel is at a crisis point and we need to do something about it. At CBiz, we have developed a training program designed to help make the most of our recruited talent.
For the entire decade of the 1990s, enrollment in accounting programs at universities around the country was down. That, in turn, created an underwhelming amount of fresh talent. The Big Four gobbled up as much of that talent as it could when Sarbanes-Oxley came into effect.
Today, we are working to actively recruit from college campuses and are setting up programs to create awareness of the unique career path opportunities that exist within CBiz. The industry needs to develop new strategies to help make accounting an attractive career path for the next generation.
What is your firm doing to attract and retain talent?
CBiz has established and standardized a national recruiting program. Additionally, all new hires and established employees are required to go through training programs specific to each. We also have developed “onboarding” programs for new employees to orient them to the organization.
CBiz constantly monitors each program and the effectiveness of these programs at attracting recruits, advancing their skill sets and giving our people exposure to a wide variety of feedback and experiences. We feel the training program is the best in the country, and the results speak to that.
We are constantly seeking methods to retain employees and make CBiz their permanent place of employment. We strive to find and develop the talent with the firm. Our growth also enables us to offer opportunity that most firms cannot.
How do you frame the business challenges CBiz faces -- do you look at them as a matter of the larger national firms competing against the Big Four? When does the question of competition among the other national firms enter the equation?
The Big Four firms, for the most part, are in an industry by themselves, as their target market is focused on Fortune 500 firms. CBiz focuses on small public companies and large closely held business, so we do not have much direct competition with the Big Four. On a day-to-day basis, we find ourselves in competition with the rest of the Top 10 national accounting firms, such as Grant Thornton, BDO and McGladrey.
In recent years, we have seen an increase in business resulting from what I call the Big Four push. By that, I mean the Big Four has focused a lot of its attention on Sarbanes-Oxley, [which] is pushing the smaller clients out the door. These clients are perfect for the next tier of national firms, such as CBiz. It is an exciting time for all of us.
Getting a little more topical, what do you think -- both as a practitioner and as the president of a large company -- of President Bush's proposal to create a new tax benefit for taxpayers buying insurance on their own, and treating employer-provided health insurance as taxable income?
From a practitioner's perspective, the best approach is to concentrate on the legislation that gets passed, instead of on the myriad of proposals that may or may not get passed. That is not to say you ignore significant proposals from the president, but, in most cases, what is proposed either never gets passed or is changed in the process of being passed. CBiz has a national tax office that meets throughout the year to address important proposals and new legislation and formalize a standardized approach.
As for the new tax benefit the president has proposed, I think it is important that all options are on the table. It is no secret that health care is a concern for both companies and individuals, and I expect a lively debate ahead of the 2008 presidential election.
Anything else you'd like to add?
CBiz is more of a start-up compared to the other established top-tier national accounting firms. Of them all, CBiz is the newest. We have made a lot of progress over the last five years as we aggressively worked to transform CBiz into a national firm. We are now refocusing those aggressive efforts on growing the firm. We expect to double the size of our accounting practice through both internal growth and acquisitions over the next five years. At this point, we are open to speaking with any firm that is considering a merger.
