Is Selling or Merging with a Publicly Listed Accounting Firm the Right Step For You
As you consider the many options for transitioning your accounting firm for the future, you will need to ask yourself if a public company is the right home for you, your clients and your team.
There is a healthy diversity of opinion on whether the public ownership of accounting firms is a good or bad thing, but what we can all agree on is that:
Your firm is your legacy
Your clients are friends
Your team is family, and
The history of publicly owned accounting firms is littered with spectacular failure & ruined retirements.
Factors to Consider
Cultural Alignment & Client Fit
This may be by far the most important factor because the culture you create will determine the happiness and tenure of your staff and clients.
How do these points fit in?
Do you prefer a head office corporate culture or a small office intimate feel?
Are you casual or formal in your approach?
Are you flexible or ridged in your dealings?
Are you inclined to be conservative or innovative?
Are your clients likely to be deterred or excited by being part of a big public company?
Are you ready for the constant focus and ongoing disclosure demanded of ASX listed companies?
Professional Autonomy
Typically, professional accounting requires the tailoring of a solution to a client’s specific needs utilising your substantial training and experience; so ask yourself, are you comfortable with more head office control of this or is absolute professional autonomy not so important to you?
Corporate Governance
‘Red tape’ is a term we often use to describe the level of control and protocol that applies to your firm and its operations.
What is your tolerance for bureaucracy?
Can you work in a corporate top-down environment?
Do you think it’s better that the people running a practice are not involved in strategic decision making or do you prefer a commercially reasonable and professional, collegial consensus model?
Appetite for Operational Change
“A public company cannot operate with 50 plus different ways to do things.”, Former Stockford Executive.
“We bring total revolution. There will be no looking back.” Former Stockford Executive.
* (Mark Pickering, Vol 11, No 1, 2015 The Journal of Accounting & Organizational Change)
Rewards & Opportunity for your Team
How invested are you in the overall satisfaction and rewards of your team? You need to consider how will the company develop professionals for the future, given that rewards for effort are shared with passive shareholders? How does it compete for talent when someone can move to a “traditional firm” and share in all the profits?
Increased Commercial Focus
How will the corporation’s primary duty to shareholders effect your pro-bono work or your occasional generosity to friendly clients and loyal staff? Will you be comfortable cross selling services of others in the network and dealing with strict KPI’s and ASX deadlines?
Corporate reputation & network
As they say mud sticks! So take care and do your due diligence. Ask around and get a feel for the reputation of the people you are considering. In addition, find out if you will get input into future dealings which may affect you and your reputation. The below quote is elitist and offensive, but illustrates our point!
“We had a meeting of principals in the firms combined at our location to discuss our specialties. One principal, from a one-man band, put up his hand as a specialist in everything. It was terrible; he did not know much about anything….”*
*Quotes from former Stockford partner.
(Mark Pickering, Vol 11, No 1, 2015 The Journal of Accounting & Organizational Change)
Bottom line is that this is a big call! Experience tells us that selling to a public company can and often has gone wrong.
Be sure to do your due diligence and understand what the governance will look like, what your role will be, what autonomy you will have and what the integration will look like.
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