Practice profile: Pricing it right

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Globalization, mergers and acquisitions, and the subsequent sprouting of multi-conglomerates has made transfer pricing — the pricing of transactions between separate entities of a multi-entity company — an obligatory practice for many growing businesses. And though these companies — ranging from the behemoths like Apple, in the news for investigations into its allegedly favorable transfer-pricing arrangements abroad, to smaller multi-divisional corporations — approach the regulations as a compliance issue (or headache), Alex Martin sees things differently.

With more than 20 years of experience as a transfer-pricing economist, Martin has witnessed an evolution in the process. What was once the province of huge corporations has impacted companies of all sizes, as they open international offices and affiliations.

But rather than companies perceiving transfer-pricing regulations as the burdensome baggage they must lug overseas, Martin recommends they embrace the rules as an opportunity for cash savings and more streamlined international operations. He recommends it officially, and frequently, in his capacity as principal of transfer-pricing services at Southfield, Mich.-based CPA firm Clayton & McKervey. Martin has a unique client base for this burgeoning practice — other accounting firms, which comprise the majority of his clientele.

“I help companies either figure out the correct price, or defend what’s been done in the past,” Martin shared. “What I think is an interesting niche for our practice, is that 70 percent of my work is working with other accounting firms. We effectively serve as a complement for the firm’s tax and accounting services, in an area that’s dominated by very large firms.”

Scaling up

Indeed, transfer pricing is a heavily resourced practice at larger firms, including the Big Four firm where Martin previously worked, but regional firm Clayton & McKervey has carved out enough of a specialization to recently be named one of the world’s leading transfer-pricing advisory firms by International Tax Review.

“We’ve found, over time, that clients are very pleasantly surprised that firms like us have transfer-pricing expertise, and feel the market — the middle market up to $1 billion — are really underserved,” Martin explained.

The firm advises clients with a revenue base up to $250 million, with a low end of about $10 million, and $50 million is its typical “sweet spot,” according to Martin. In addition to transfer pricing, Clayton & McKervey provides a variety of other tax, assurance, accounting and consulting services to middle-market companies, especially those seeking global expansion.

“Our specialty is deep,” explained Denise Asker, director of marketing at Clayton & McKervey. “We are able to focus so clearly on closely held, internationally minded businesses. We don’t do government or nonprofit work. We know our lane and know to stay in our lane.”

The firm’s size and regional scope make it a suitable partner, instead of competitor, to the other accounting firms it works with on transfer pricing.

“A lot of accounting firms, great accounting firms, work with international clients, and call for someone to help on the transfer pricing side,” Martin said. “[Our] hand’s up right away. We’re a firm in Michigan, not a national firm, so they know they can trust us; we’re not going to take their business.”

Clayton & McKervey has built up this client base through its membership in global accounting firm association PrimeGlobal and the firm’s “exceptionally good inbound practice, for companies just setting up shop in the U.S. for the first time.”


Clayton & McKervey branded itself as an international firm nearly two decades ago. The firm was established in 1953 by Don Schmaltz as Schmaltz & Co., but Don Clayton and Kevin McKervey took over in 1998 and expanded the firm’s focus to a global marketplace. Clayton remains chairman at the firm (McKervey passed away in 2016), which is now led by president Robert Dutkiewicz.

“This was before larger competitors in the Michigan market considered that option” of international work, Martin said. “[The firm] is nimble in that way. Over time, they became more nimble … if they wanted to handle international, Clayton & McKervey was ahead of the game. [The firm is now] bigger, with more resources, and competitors have international practices now, but they were certainly nimble and entrepreneurial in thought process and strategy — jumping into a new area like transfer pricing was certainly a risk.”

The firm also developed a foreign direct investment group. “I think we’re unique in this aspect,” Dutkiewicz shared. “We have a group exclusively for foreign direct-investment companies, and we pride ourselves on being an extension of their team overseas, and help them with all compliance matters, and accounting. As they grow and build out their organization, a critical component of that is transfer pricing services.”

Martin joined Clayton & McKervey four years ago, after time in the Big Four, three years in Washington, D.C., and four years in Melbourne, working with the Australian tax office, where “they are exceptionally good at transfer pricing, and I learned what works and is not going to work.”

Dutkiewicz credits Martin’s experience in Australia and exposure to many other treasuries, including those in Germany, France and Canada, as being especially helpful in his work with clients.

Telling their story

After opening his own transfer pricing practice in Detroit, Martin came to Clayton & McKervey, where he enjoys the entrepreneurial culture and client base. “I have a big smile on my face when I’m at work; it’s an engaging atmosphere I find fulfilling.”

Martin especially enjoys his role in helping clients tell their story, a perhaps lesser-known part of the transfer-pricing process.

For one recent client, “a German company with 12 subsidiaries well-regarded in terms of product line, that we know will rise to a certain revenue level and will need more help managing cash flow,” Martin helped in “explaining their tax story so that if they’re operating in France, they don’t have a French tax agent, [saying] 90 percent of your profit should be here. These are the kinds of things I enjoy doing — sitting down with the R&D person, asking, ‘What makes your product so much better than the competition?’ I hear amazing stories.”

Martin also has the pleasure of sharing how proactive transfer pricing can positively impact clients’ bottom lines. Engaging clients in conversations about their pricing methods that start with “We’ve always done it this way” can end with his coaching them into more cost-effective ways of conducting business.

“A lot of companies haven’t necessarily faced a transfer-pricing audit until recently,” Martin explained. “A lot of companies say, ‘I’ll wait until the tax agent.’ To talk first about cash savings, as opposed to bringing up the compliance report-writing issue, makes for a much more productive conversation.”

Martin also tends to steer the discussion away from technical esoterica to actionable advisement. “Our thought is, as long as we’re being the most practical in providing that advice, figuring out how to apply best practices, we’ll be the go-to firm. I want to make sure accounting firm clients feel comfortable bringing up transfer pricing and see it as a business generator, not just a compliance issue.”

Transfer of knowledge

Martin often brings this discussion beyond client consultations, positioning himself as a transfer-pricing expert at a time when more companies of all sizes are seeking guidance on the subject.

“The compliance side gets a lot of attention. With different treasury groups, regardless of what country you’re in, the common theme is it’s only going to get more comprehensive,” said Dutkiewicz. Transfer pricing will continue to “migrate down to smaller and smaller companies,” he added. “What’s happening now, are treasuries are concentrating more in the middle market, and that focus continues to happen.” As Clayton & McKervey plans to keep serving that market size, Martin’s education efforts are especially applicable. He regularly hosts webinars, reaches out to specialty tax and accounting groups, attends conferences, and publishes articles.

While transfer pricing is “the No. 1 issue for multinationals now,” according to Martin, the topic also opens the door to a “whole host of other areas we can get into, using transfer pricing as a starting point.”

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