In Other News, Water is Found to be Wet

Sometimes, despite overwhelming evidence to the contrary, people can’t be convinced of events or truths.

Like the beleaguered spouse who discovers receipts for hotel nights and assorted jewelry of which he/she was never the beneficiary and who steadfastly refuses to believe that their other half may be checking in for the evening without a toothbrush.

Or, for a less dramatic and far more practical example: trying to convince a practitioner client with partners who resemble Jimmy Stewart circa 1995 and with no visible plan for succession that entering into a merger or bringing someone from this century aboard as a partner is a viable pathway to remaining in existence.

When I am fortunate enough to be asked to give a presentation on the M&A landscape before various groups or state associations, and I proceed to show attendees that the volume of CPA firm affiliations is arguably at the highest level since the late 1990s when the consolidator craze had the profession squarely in its crosshairs, I’m often met with mixed reactions.

Some understand what’s happening in the profession; others say they enjoyed my presentation and thank me for coming. But much like the above-mentioned spouse, many will revert to their best impression of an ostrich, ignoring what is obviously a festering internal problem and placing their heads squarely in the ground.

So imagine my surprise when I read that the M&A frenzy is expected to rise in 2013 with roughly 300 executives indicating in a survey that they expected their company to make at least one acquisition over the coming year.

The poll, conducted by Big Four firm KPMG and my former company SourceMedia, revealed  that some of the driving factors that will fuel the M&A surge include expanding geographic reach and entering a new line of business.

Sound familiar? Like the legions of CPA firms in New York expanding to regions like Philadelphia, Washington D.C., or even as far down the Atlantic seaboard as South Florida? How about the firm that has been eyeing a new practice niche like wealth management or forensics affiliating with a firm that has an established unit in that area?

Conversely, the article said that despite the spike in M&A activity, the parties should analyze what they termed “integration issues” – i.e. culture, operations and human capital.

Hmm.

Sounds an awful lot  like our oft-repeated mantra  of the four C’s that are  vital to any successful union – culture, capacity, continuity, and - of course - chemistry.

The truth is there are too many practitioners that will never come to grips with the fact that they have procrastinated almost to the point of no return in terms of fashioning a transition strategy, despite all that they read or hear. 

Sadly, we’ve read and heard about it all before.