Practice Profile: Weaver takes it coast to coast
Founded in 1950, Weaver has deep roots in Texas that helped it flourish into the largest accounting firm headquartered in the Southwest.
The firm experienced rapid organic growth over the years, opening a Dallas office in 1960, and acquiring other firms in the area to develop into a large Dallas-Fort Worth full-service accounting firm. More recently, Weaver expanded into Houston, Austin, San Antonio and Midland.
The firm’s dominant regional presence also earned it the No. 39 ranking on Accounting Today’s 2018 Top 100 Firms list, with $115.2 million in revenue, though the position is also the result of the firm adopting a more deliberate national strategy.
“Going back three years ago, the firm’s goal was to be the firm of Texas, and that drove what we did from the geographic perspective,” explained John Mackel, Weaver’s managing partner and CEO. “We are still focused on continuing to grow in Texas, and to generate $200 million or more in revenues in our Texas offices. Three to four years ago, we decided if we could expand to the east and west coasts and build those markets, as well as create relationships there, we could combat the advantage our national firm competitors could have on us in the near future and capitalize on our well-established Texas footprint and business relationships.”
With this in mind, Weaver opened an office in Los Angeles in 2014 and another in New York City in 2017.
Both of the new offices focus on the financial services industry, specifically investment companies, with the LA location’s success setting precedents for New York City, which also absorbed the firm’s previous Stamford, Connecticut, office.
“Over a three-year period, we’ve established the practice, to achieve a break-even point in LA,” Mackel said. “We basically did the same thing in New York, and in a two-to-three year period [expect] to be at or above break-even point there as well. We are expanding our consulting services in LA, and look to do that in New York as well.”
The Los Angeles office is led by executive partner Matt Anderson, partner-in-charge of alternative investments, while assurance services partner Ron Honka is the primary contact for audit in the Manhattan location. Weaver does not have office managing partners, instead managing employees along service lines and industry groups. This structure helped the firm target opportunities in specific industries in opening new offices, and should serve them as they continue to bring niche services to these newer locations. Weaver has two energy compliance services partners in New York and recently added a forensics, valuation and litigation services partner in LA.
“We will build out our consulting services in those offices, find the right talent, from a valuation and forensics services perspective, as well as IT and risk advisory services, depending on the resources available,” said David Rook, chief operating officer of assurance and advisory services.
New offices, new hires
From a wider recruiting perspective, Mackel explained, Weaver has witnessed the impact of the profession-wide talent shortage.
“We’ve seen in the profession, for one of the first times, there are more open professional services jobs than qualified people to fill them,” he said. “It’s not as much a Texas issue as throughout the rest of the country — we talk amongst the partner group and managers, about the turnover rate and the importance of keeping high performers, because filling experienced-hire positions is going to be tougher.”
Weaver’s history, leadership team and culture helped streamline initial recruitment efforts in both New York and LA.
“We’ve been incredibly lucky with the hiring process — the partners in the LA office have been great for the firm,” shared Sean Muller, chief operating officer of tax services. “If you make a bad hire, it can be a problem, but we built a great team.”
“The first partner we hired in LA, a Dallas partner had a relationship with, had worked with that individual and knew they were a high-quality professional — that was key,” explained Mackel. “It was somewhat similar for the first partner in New York. We’ve tried to start with people our partners know, to shorten the process.”
Still, recruitment “took due diligence,” reported Rook. “Adding people we know and are comfortable with took six to eight months, maybe more, because you have to identify partners in new locations that will build a similar culture and quality that we have as an overall firm. Whereas in Texas, you identify a partner candidate, and they are integrated in the firm in a month or two because you have an existing culture and people in the Texas offices.”
For prospective partners outside of Texas, the Weaver leadership team will typically travel to meet with them and “share the vision and sell them on Weaver,” said Mackel.
That vision encompasses three critical selling points, among others, according to Mackel: “We don’t have succession issues, we have no debt, and we are growing organically at 10 percent or more annually.”
Mackel took over as CEO in 2015 and he, along with Rook and Muller, are all under the age of 50.
“Internally, we don’t have succession issues,” Mackel said. The firm does have several upcoming retirements, he explained, “with 16 partners retiring across the firm in the next three to four years.” The firm is prepared with a healthy pipeline of emerging leaders.
“If you look at the makeup of Weaver, versus our peers, we have many strong, experienced leaders, but we also provide up-and-comers with opportunities to serve in leadership positions, and see what they can do,” Muller said.
Over the last three years, the firm has added 32 new partners, with only nine of them hired from the outside. Also, 11 of those partners are female, Mackel reported.
Over those three years, the firm has also grown 38 percent, or an average annual growth of 11 percent. “We don’t see the benefits of merging up like other firms have done,” Mackel said. Instead, the firm continues to “move upstream and add a lot of larger clients.”
Weaver will continue adding these clients, though competition proves fiercer at this new level. “It’s a challenge to build name recognition, to break into new markets and gain market share,” explained Rook, though that’s also an issue of being the new fish in a larger pond. “We have won some larger clients in New York recently,” he added.
As Weaver gains traction in new markets, the firm’s structure and Southwest stronghold provide critical support to both clients and employees.
“Because the teams in New York and LA are working in niche practices, it also made it easier,” Mackel shared. “The other challenges, from an operations standpoint, are building out IT infrastructure, working on name recognition. We’ve taken that step by step and continue to work on that. The advantage we have is that Texas is a really strong labor market on the accounting firm side. Some firms on the east and west coasts have trouble recruiting. We utilize some people in Texas to work on LA and New York engagements.”
“There is increased competition from larger, super-regional and national firms coming to Texas particularly because of the economy, which has been stronger in Texas,” Rook explained. “There is a lot of new competition in larger markets like Dallas, Fort Worth and Houston.”
Weaver’s niche practices give the firm a competitive edge, while its service-line revenue splits between audit, tax and advisory follow Big Four trends.
Weaver’s advisory services were started by Sarbanes-Oxley compliance in 2005, leading the firm to form a risk advisory services practice, Rook explained. Over the next few years, the firm formalized an information technology advisory services group, followed by its energy compliance services practice. Now, the firm is focused on growing its transaction and forensics and litigation services. The firm’s target is to have about 25 percent of its revenue in advisory, “similar to a national, Big Four firm,” Rook explained.
“On the tax side … the split is more like a national practice,” said Muller. “We put groups together and allowed people to pick where they wanted to specialize in their careers. This has helped recruit outside people, and allowed us to differentiate [new] opportunities for all of our people.”
Specialization helps Weaver win larger engagements, Muller continued, especially in the private equity space, where the firm has maintained strong relationships for years.
“We bring different tax partners to the table to share the expertise they have in all areas,” he explained. “As opposed to being general, we really try to specialize in that. We have gotten to the size we really need to grow and reflect our expertise as a firm and not just a local office.”
Weaver’s national vision is not at the expense of its local presence, however. Mackel reports one of the firm’s most exciting developments is moving into Dallas’ uptown area in October, a deal Weaver signed two and a half years ago to be closer to the investment fund community and establish a new “flagship office, from a marketing perspective.” The firm opened its second Los Angeles-area office in January, and the New York City office moved to its permanent Manhattan space this summer.
“Our goal is to continue to grow at a 10 percent organic rate per year,” Mackel said. “With the market opportunity in LA and New York — I don’t see why in 10 years, they can’t be as large as our Houston and Dallas offices. We will take it one day at a time, one year at a time.”
AT A GLANCE
Headquarters Houston, Texas
CEO/Managing partner John Mackel
No. of partners/staff 101/710
Year founded 1950
Services Tax, assurance, advisory
Industry specialties Oil & gas; financial services; manufacturing, distribution & retail; government; renewable energy; private equity; financial institutions; real estate; oilfield services; nonprofit; health care; higher education; construction; technology; insurance.