First, your leadership team must agree on the benefits you’re seeking from the combination (see my last post for a potential benefits list).  Ideally, these will be the specific objectives you most want to accomplish from the merger or acquisition or what will be different or better (and how) once the combination is complete.

Then, you’ll develop agreed-upon qualifying criteria to identify your list of potential integration partners.  Initial criteria to define include your potential suitors’ ideal or desired:

• Size – in revenues, employees, locations, and market reach.  If you’ve decided to merge your firm upstream, you’ll be looking for a suitor larger than you.  A merger of equals and acquisitions of smaller practices or individual books of business dictate the appropriate size considerations, too.
• Location(s) – what area do you want or need their main location (or corporate headquarters) to be?  What other locations are you seeking (if applicable)?  Define the geographic profile that you feel will mesh with your firm’s growth plan and reasons for undertaking a transaction.
• Leadership and ownership structure – what type of leadership or ownership structure do you feel will best meet your intention for merging?  For instance, if your firm is seeking a merger as a succession strategy for an aging owner group, you’ll want to seek merger candidates with younger owners and leaders.  If your firm is seeking a smaller, simpler acquisition, you’ll want to seek firms with a smaller number of partners or shareholders.
• Product/service mix – if you’re looking to acquire talent to start up a particular niche or service area, then that will dictate the product/service mix that potential partners must offer to make your target list.  If your strategy is to add more capacity to your current service areas, you’ll want to identify firms whose services virtually mirror your own. 

Then, assign a team member to use your initial criteria to conduct research and identify firms in your chosen geography and of the size, leadership and ownership structure and offering the product/service mix that fit your criteria.  You can find these firms by:

• Conducting web-based research using key words from your initial criteria and then carefully reading web pages, LinkedIn profiles, and other web references to find firms that meet your requirements.
• Letting your trusted referral partners, fellow alliance members, association contacts, consultants, and other key service providers or vendors know of your firm’s intentions and the details of your target profile so that that they can suggest or refer candidates to you.
• Looking at competitors you’ve respected in the past that you feel may meet your initial criteria.
• Using firm lists produced by accounting trade publications or the state society in your target geography to identify potential firms.

These sources will help you develop a first round list of potentials.  Ideally, you’ll gather information about each potential partner by reading their web site, social media sites, filings, association affiliations, and press releases.  Organize this data into a grid where the prospective suitors are placed as columns and the data you garner about each from your research populates the rows – with a row for each of your qualifying criteria and other rows for other pertinent information you may discover in your first-round research (like their mission statement, values, names and number of partners, niches, and more).

Once you have your “potential targets” matrix populated, gather your firm’s M&A team (which may be a small group) to review and discuss each firm.  This process is likely to shed additional anecdotal information on the candidates and may cause you to eliminate or add some based on reputation or other feedback you receive. 

During this meeting, you should agree on who from your firm will serve as the point person to reach out to the remaining potential targets to explore their interest in integrating with your firm.  This should typically be a high level contact on your side (CEO, Managing Partner, or practice leader) reaching to a senior decision maker on their side to meet for a meal and talk about growth strategies and their interest in a potential combination of the type your firm is envisioning. 

With luck, these outreach activities will generate a few interested potentials to begin deeper discussions in earnest.   In my next blog, we’ll discuss qualifying criteria to evaluate as you pursue a serious M&A candidate.  In the meantime, if you have any ideas about identifying a list of M&A pursuit potentials or any other thoughts on the subject of merging, please share them with us.  We’re interested!

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping CPA and IT firms achieve success.  Learn more about the company and its services at www.convergencecoaching.com.

Merger “mania” seems to be taking hold in the accounting profession.  According to a November 2010 Journal of Accountancy article by Joel Sinkin and Terrence Putney, CPA, “…leaders in the profession believed there would be more mergers and acquisitions in the 10-year period from 2007 to 2017 than in the entire prior 100-year-plus history of the accounting profession in the U.S.  The activity since 2007 has proven this assessment to be accurate.”

So, should your firm consider merging?  In this blog, we’ll explore the types of transactions that you might consider and also identify some of the good and bad reasons that may drive you to consider a business combination.  In future blogs, we’ll explore things to consider when evaluating potential merger or acquisition targets and what to envision in the post-merger period called “integration.”

There are a number of business combinations you can consider, including:
• Merging your firm “upstream” into a larger firm
• Merging with a firm your size, which is referred to as a “merger of equals”
• Merging a smaller firm or an individual practice into your firm
• Acquiring an individual practice where the clients come over, but the practitioner does not

Motivators for a merger or acquisition (M&A) strategy are many, and they are not all healthy.  From my perspective, good reasons to consider a business combination include the desire to:

• Join a larger, more established firm to leverage their brand, infrastructure, marketing savvy and potential to invest in your growth
• Enter a new geography, new service or industry niche or diversify your firm’s services in some way
• Add more value to clients by partnering with another firm that has services you can swiftly add to your portfolio and benefit your clients
• Layer in additional clients and/or service delivery personnel who reinforce your firm’s existing product/service mix and will integrate well with your people
• Grow rapidly to remain competitive with other competitors who are gaining girth through their own M&A strategy
• Find a home for clients and/or staff who will need leadership and infrastructure as you and/or your partners retire (due to lack of a true answer to your succession)

On the flip side, negative reasons for considering a merger, which often lead to a failure to find a suitor, consummate a deal or enjoy a successful post-merger integration, include the hope of:

• Finding a buyer who will come in and rescue your firm from poor financial performance, an unprofitable lease or other facilities issues.  If this is your situation, expect a low valuation or first get your financial house in order before seeking a match
• Merging with a firm with leadership who will straighten out partner behavior or performance issues that you haven’t been able to resolve.  In this case, most firms will shy away from dysfunctional leadership teams unless the deal involves removing the cause of the issues.  I recommend that you resolve your unity and behavioral issues before finding a suitor
• Integrating with a firm to find a home for a weak team of successors.  Most firms are interested in acquiring only the strongest talent in this market, where many are still seeking clients and projects to fill their own capacity.  If your team members are not of the caliber that another firm would hire them if they applied directly, be prepared to consider a transaction that involves transferring clients and downsizing the team to eliminate the weaker players as part of the transaction

There can certainly be exceptions to these, where a firm will see something of strategic value in your firm despite these issues, however, the rule I’d like you to consider is that it’s hard to move or sell your yet-unresolved problem at a valuation or deal structure that you’re going to be happy with.

If your leadership team has decided that an M&A strategy is important to your firm achieving its future vision, stay tuned for my next post where we’ll explore ways to find the right integration partner and how to prepare for conducting and enduring the due diligence process.

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping CPA and IT firms achieve success.  Learn more about the company and its services at www.convergencecoaching.com.

Establishing mutually beneficial relationships with referral sources can be a win-win-win for you, the referral source, and the clients you serve. 

If you don’t have the right referral relationships now, begin by visiting your local bank branch and asking to speak with their small business banker.  Let them know that you would like to talk about the possibility of getting to know each other better and share your ultimate goal to make recommendations to your clients who may require their services as well as serve as a reliable and trusted resource for the personal banker’s clients.  Other potential sources for referral relationships are attorneys and other service professionals. Many times, these individuals are looking for a trusted CPA to recommend to their clients, and if you have reached out to them recently, you should be top of mind.

Although asking for these types of meetings can feel somewhat awkward at first, it will start to feel more natural the more practice you get.  Local networking groups and online communities such as LinkedIn and Ryze are also great places to find potential referral partners.

When you qualify your referral source prospects, consider learning:  
• About the products and/or services they offer
• Their target client industries or niches  
• The geographical area their organization covers 
• How they would describe their organization’s culture
• Their philosophy toward client management  
• How many clients they have and an average client profile, including size and revenue
• Who they are currently aligned with in terms of referral relationships
• How they would approach managing shared client relationships with an alliance partner, including revenue sharing, communications, etc.
 
Keep in mind that you may need to meet with several potential referral sources before you find a resource you can trust and feel comfortable referring.  If it doesn’t feel right or you wouldn’t feel confident referring your clients to the prospective source, simply thank them for their time and move on to other sources until you do find the right fit. 

Referral sources are long-term relationships where mutual respect and trust are present.  These deeper relationships take time to develop, so you should plan to meet with referral source potentials regularly and over time before they begin to refer clients to you.  You only need a few real referral sources to really generate opportunities, so be particular about who you choose to partner with.

If you already have some strong referral sources you haven’t met for awhile, it is important to schedule regular meetings, perhaps as often as quarterly, to make the most of the relationships.

Meeting with one referral source per week for lunch (rather than eating at your desk) will give you an opportunity to strengthen your relationships with your referral partners, uncover potential new business, and break up the week by getting away for some proactive relationship building.  Track your referral source meetings and outcomes to help you identify where you should be investing more (in the productive relationships) and where you may need to develop new referral sources (when others are not progressing).

Don’t forget that referral source meetings are also an opportunity to teach your people and “succession plan” by developing rapport between your younger people and the next generation within referral sources’ organizations.  Invite one of your team members to lunch and ask your referral source to do the same to make an introduction, teach them what happens in those meetings, and begin building new relationships so the alliance between your two organizations continues into the future.

When you proactively seek the most beneficial referral relationships for your firm and then nurture them with regular follow-up, you will build your business and be able to better serve your clients!

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping leaders achieve success.  Learn more about the company and its services at www.convergencecoaching.com.

To begin managing your opportunities, start simple.  Set up a sales pipeline report to track each engagement opportunity you have, keeping track of the prospective client organization name as well as the contact name, telephone number, and e-mail address. In addition, you’ll want to track a brief description of each service and/or product that’s of interest and the source of each lead for tracking the effectiveness of marketing campaigns and for determining which marketing activities to favor.  If you don’t already have a contact management or CRM system in place, we have a great Excel template for you to start with – access it by clicking here http://www.convergencecoaching.com/CSCguestsalesandmarketing.htm and choosing “Sales Pipeline Tool.”

As you’re setting up each opportunity, you will need to assign a probability that each engagement will close — we use a simple A, B, or C probability rating in our firm.   An A opportunity is one that needs services we can fulfill, their budget is within our range, we’re talking to the decision maker and their timing to close is within the next 60 days.  B opportunities are 61-90 days out in terms of close date, or once where we are still qualifying the need to ensure we’re a fit.  We rate opportunities a C if their timing is 91 days or more away or if we may not be a fit on service need or budget.  By rating your prospects, you’ll be able to prioritize and focus energies on those most likely to close in the near term.  

Each opportunity should also be assigned a single owner within your firm that is responsible for driving the engagement through the sales process and for updating the pipeline with the last date of contact, and the next follow-up action and date.  These dates provide firm leadership with the exact status of each opportunity and can help identify any technical or leadership resources needed to support the sales process and help project future service and/or product demand, to assist in capacity projections, too.  In this time where most firms have more resources than they have work, it’s critical to be able to project future capacity needed and the pipeline is a rare leading indicator of your firm’s upcoming performance.  Using it strategically can help you apply more marketing and sales resources to avert over-staffing issues and/or take necessary steps to reduce headcount if opportunities simply are not materializing or maturing as needed.

There has never been a better time to have solid information about your firm’s potential pipeline of new work – please start gathering this data in a sales pipeline report today! 

If you’re already using a sales pipeline report, we’d love to hear from you on what you’re using to track and manage it, how often you produce the report, who reviews it and any other wisdom you have to share with us.  And, if you are thinking about tracking your firm’s pipeline, we welcome your questions, too.  Post away!

Gratefully,

Jennifer Wilson

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping leaders achieve success.  Learn more about the company and its services at www.convergencecoaching.com.

Meet With Your Clients
Cross-serving your clients – or selling additional services to them - is the holy grail of the accounting profession.   It is a great client retention strategy because clients are more likely to stay with their CPA firm the more services the firm provides for them.  Making your firm a “one-stop service provider” helps build client retention and loyalty.

I’m not suggesting that you explore ways to deliver more to your existing clients just so you can sell your clients more “stuff.”  Instead, I want to help you uncover real client needs waiting to be met, because if your clients have unmet needs and you’re not solving them, you run the risk that someone else will.

To position yourself to meet your clients’ needs, conduct at least one existing client meeting per week this summer (either by phone or in-person).  Start with your “A” clients or your largest clients and eventually contact all of them.  Use the meeting as an opportunity to “check in” and see how you are doing for them.  Then, ask a few questions to help you assess whether or not the client may be a candidate for other services, including finding out their most important goals for the coming year and what challenges they’re most concerned about as they look ahead. 

Assuming the client is satisfied with the quality and level of service that they are receiving, you can also share that the highest compliment they can pay you is the referral of a friend or colleague to your firm. Ask them if they know anyone who is looking for a CPA or someone who could benefit like they have from your services - and make sure that they know you’re not “too busy” to accept referrals or to do more work for them.

Build Referral Source Relationships
Another great way to develop business this summer is to focus on establishing long-lasting relationships with referral sources.  If you already have some strong referral sources, be sure to first reach out to them and schedule an appointment to meet if you haven’t met for awhile.  Then, commit to continue meeting on a regular basis, perhaps as often as quarterly, to deepen the relationship and stay current on changes in your firms.  If you want to build additional referral sources, begin looking for potential bankers, attorneys and other service professionals with whom to partner. 

Start by contacting your own banker, insurance agent or other professional service providers and make them aware of your interest in exploring a referral relationship.  You can also contact your local bank branch and ask to speak with their business banker.  Most business bankers are very interested in CPA relationships, so your interest is likely to be reciprocated. 

With any potential referral source, let them know that you would like to talk about the possibility of getting to know each other better because you would love to be able to make recommendations to your clients who may require their services and want to serve as a reliable and trusted resource for them to refer their clients to.  Although asking for these types of meetings can feel somewhat awkward at first, it will start to feel more natural the more often you do it. 

Keep in mind that you may need to have a couple of meetings before you determine if you are going to have a win-win referral relationship.  If it doesn’t feel right or you wouldn’t feel confident referring people to the prospective source, simply thank them for their time and move on to other sources until you do find the right fit.  Referral sources are long-term relationships where mutual respect and trust are present.  You only need a few to really generate opportunities, so be particular with whom you choose to partner. 

Dedicate time to these two activities every week, and you’ll be sure to generate new relationships and new business, too.  What one specific action can you take this week?  Post your commitment and share your result, too.  We’re interested!

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping CPA and IT firms achieve success.  Learn more about the company and its services at www.convergencecoaching.com.

In my next two blogs, we’ll explore three activities to help you capitalize on your summer growing season.  Today, we’ll explore the first of these activities: networking in your “social sphere.”

All too often, I find that people aren’t taking the time to really get to know the people in their social and professional spheres.  How well do you know your neighbors, the parents of children you coach in Little League or your fellow golf club members?  Where do they work?  Who is their accountant?  Your neighbors and the parents of your children’s friends, for example, are all potential individual tax and/or financial planning clients, and they may be corporate prospects, too. 

Your daily environment is filled with potential prospects that could benefit from the services that your firm has to offer.  Start paying attention to people in your sphere and intentionally deepen your knowledge of them and their circumstances – more ask than tell – to see if there are opportunities where you can be of assistance.  Your sphere includes clubs like Rotary, networking groups like your local Chamber, and professional associations like the AICPA, your local state CPA society and the Association for Accounting Marketing (AAM), exercise groups and clubs,  sporting clubs and teams, PTA and other children’s groups, church groups, Toastmasters and many more venues you may interact with outside of work. 

The number one way to uncover opportunities within your social sphere is to be curious.  Ask people questions like:

·         What does your organization do? 

·         How do you like it? 

·         How long have you been there?

·         What role do you play there?

·         Who does your accounting?

·         Who does your corporate tax?

·         Who does your tax personally?

·         Who is your auditor? 

·         Who is your CPA?

·         How do you feel about the service you are receiving?

·         How are they doing for you?

This list of questions isn’t meant to be asked serially, in some rapid-fire and overly inquisitive manner, but instead a few of these questions may make sense to “slip into” a conversation you’re having with someone you have begun to build personal rapport with or with someone you have met in a professional networking setting. 

Also, don’t hesitate to share the services your firm offers with your family members and close friends and then ask them if they have any ideas for referrals.  Ensure that everyone you know knows what you do and the difference you make for the people you serve.

Please don’t hear me as suggesting you turn every personal conversation into a self-serving business opportunity!  Instead, if you haven’t educated those close to you on what you do and enrolled them in supporting you, doing so once and then reminding them once per year will be just about right. 

And don’t forget to engage in online social networking as part of your overall networking strategy.  If you haven’t already – check out the most popular business and social networking sites, including LinkedIn and Facebook!  These sites are rapidly gaining in popularity and provide a powerful way to build a network of connections – be sure to connect with me at http://www.linkedin.com/in/jenniferwilsonprofile.

Summer time is the time to “make hay” and drive firm growth.  To reap the harvest, dedicate time every week this summer to network in a more meaningful way within your social and professional spheres.  And be sure to share your successes with us on this blog, too.  We’re interested!  

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping CPA and IT firms achieve success.  Learn more about the company and its services at www.convergencecoaching.com

To further your client relationships:

• Make your care and concern evident.  In client surveys, clients consistently tell us, “I wish my CPA would call me out of cycle – for no reason – to check in on me or my business.”  When busy season is over, consider calling your top 20 or 25 clients for no reason and just check in.  See if you can be of service.  Show that you care.

• Ask rapport building questions.  As I suggested in my last post, ask your clients questions like, “What is your most significant concern right now?” and “What would you most like to achieve in the coming year?” to understand their fears and dreams.  Study and read about their issues.  Send them links to interesting articles and information about things they’ve told you they care about – personally or professionally.  Illustrate that you understand them.

• Be accessible and responsive.  Clients know they are important when you make yourself available to them.  Establish a personal response commitment for e-mail and voice mail (typically by close of next business day or 24 hours) and discuss the importance of responsiveness with others on your team.  When clients need you, be accessible and available – make it easy for them to work with you.

• Keep your word and commitments.  When you make a commitment to a client, move heaven and earth to deliver it.  If you cannot, reset expectations ahead of time and establish a new commitment – then keep it.  Acknowledge missed commitments.  Apologize if you are unable to keep your word, ask if there is anything you can do to minimize the disruption and commit to do better next time.

• Make a difference and be different. Your clients want you to deliver real value.  When you understand your client’s life and business, you can provide them proactive advice and save them money and/or increase their peace of mind.  Clients don’t forget the difference you make for them when you deliver.

• Stay in front of your clients.  As competitors loom, communicate regularly with clients via e-mails, invitations, blog postings, newsletters and phone calls.  See or talk to every key client at least monthly.  Be as in touch with your clients as your competitors will be.

As we look to the coming summer months, there really is no more important activity you can undertake than deepening your client relationships.  Doing so will uncover new service opportunities and areas where you can improve, too.  What ideas or plans do you have for deepening your client relationships?  What challenges do you face?  Please post a comment and share your thoughts.  I’d love to hear from you!

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping CPA and IT firms achieve success.  Learn more about the company and its services at www.convergencecoaching.com.

This is the question I pose to many tax professionals I meet – and the response I get is usually lukewarm.  Something like “pretty well” or “it depends.” That’s why I’m writing this blog – because your answer to my title question – “How well do you know your clients?” really matters – especially in this economy! 

People want to do business with people they know, like and trust.  And strangely enough, clients feel they know you better when they believe you know them – and know them well.  If you want to retain your client, you have to take steps in every e-mail, phone and face-to-face interaction to deepen your rapport and know them better.

As elementary as it seems, deepening rapport and building the foundation of trust and partnership requires that you:
• Ask your client personal and professional rapport building questions
• Exhibit your genuine interest in your client’s responses by listening
• Seek and point out areas of common ground or interest
• Use the new information you gather to further clarify your goals and objectives in each engagement and interaction
• Remember what you learn about your client (which always means writing it in the client file or storing it in your contact management system) and referring to it in future client meetings

It saddens me to know that too many of the CPAs in my life don’t take the time to consistently build rapport with their clients, thereby missing real opportunities to develop long lasting friendships, find more meaning in their work, and make a deeper difference for the very real humans they encounter in their work.  We’re all seeking a deeper connection in life – why not in work, too?

In a future blog on this subject, I’ll share some additional ideas for deepening your client relationships.  In the meantime, seriously consider asking more non-tax related questions of your clients as you encounter them in the next several months.  And, if you have an opinion on this blog or rapport building ideas that have worked for you, please post your comments.  I’m interested!

Jennifer Wilson is a partner and co-founder of ConvergenceCoaching, LLC, a leadership and marketing consulting and coaching firm that specializes in helping CPA and IT firms achieve success.  Learn more about the company and its services at www.convergencecoaching.com.