In this edition of Generational Viewpoints, we’ll explore perspectives from two generations on merging with another practice. Generation X co-managing partner John Bly (of pre-merger firm LB&A CPAs), born in 1979, and Baby Boomer partner Johnny Wood (of pre-merger firm Haynes Strand and Co. PLLC), born in 1952, share unique experiences in merging their firms into one, a North Carolina-based powerhouse with 66 employees now known as
“How does your generation approach the concept of entertaining and integrating a merger? And what could others learn from yours?”
BLY’S GEN X VIEWPOINT
[IMGCAP(1)]When approaching the merger question, you have to look at a potential merger in pieces. Once I make that initial connection with the interested firm, I begin doing my homework to determine whether or not it would be a good fit. In a way, I view mergers as a dating process. Both sides learn and grow and you are testing that compatibility for a marriage — only with firms, not people! During this process, I look at the culture first, which I believe to be the most important piece in determining the compatibility.
Since there is so much to consider, I like to enlist the help of my due diligence checklist, which includes analyzing the following: nondisclosure agreement; revenue by month, time reports, tax returns and financials for the past three years; salaries per person, average raises and bonus structure; staff duties; hourly billing rate by person; HR policies; benefits; owner perks; insurances; software; services performed; receivables, collection and billing policies; equipment and its date of purchase; references; startup cash needed; inventory; research; and bank debt.
When you look hard at each of these pieces, it allows you to build a merger integration plan with your team. I involve my other firm partners, firm administration, IT employees, marketing team, etc., at an early stage in the merger cycle. This encourages key people to buy in early and lead the change, ensuring a smooth transition overall.
To me as a Gen Xer, a merger is very exciting. The process really allows our people to raise the ceiling on what is possible in our firm. It gives each team member an opportunity for future learning, growth, and promotions that may not have been possible before the merger. It also allows us to pick the best things from each firm as we merge, so that we become a firm filled with best practices across the industry.
WOOD’S BOOMER VIEWPOINT
[IMGCAP(2)]The real issue for my generation is that succession planning is an idea that most people choose not to engage in or address. As a result, many firms may be forced into a negative outcome.
If you look at firms our size throughout the country, you’ll find that succession planning is perhaps the biggest problem. I think that my generation really hasn’t approached merger planning because doing so might seem like a failure. I see it as a business strategy to help firms continue for another generation. Merging with the right firm with the right mix of people is critical and the point is to be forward-thinking, which a lot of CPA firms don’t do well.
LB&A, being a bit younger, saw the opportunity to draw on our experience, and we saw the opportunity to draw on their youth. If you aren’t thinking about opportunities and the future, what’s going to happen during the next 10, 15 and 20 years in our industry, or any industry? You’re going to become reactionary and survival may be a problem.
For Haynes Strand and many others, a merger is the best way to stay ahead of the market changes. Sustainability also requires business development, and that is hard to find in the people of younger generations. We’ve searched for years for people who are local, entrepreneurial and see opportunity, and they are difficult to find. Younger people seem less comfortable talking to people, which is hazardous because you can’t develop a relationship by e-mail. Merging with a firm that has entrepreneurial young people was key for us.
Of course there are differences between the two original firms, and coming together takes time. But being willing to merge has enhanced our ability to think forward and has prolonged the sustainability of both of our firms.
This column is facilitated and edited by Brianna Marth, the Millennial consultant, and Jennifer Wilson, the Baby Boomer co-founder and partner, of
