A 2018 Wish List

This will mark my final blog post for 2017 and that small bit of news will most likely elicit applause from those of you who are tired of me continually scolding you for procrastinating with regard to succession planning.

Yet many will continue to kick that critical can down the road in 2018 until you contact us in a mild panic about what to do. Trust me, I’ve seen this movie before and I can expect at least half-dozen reruns in the New Year.

Change: Whether Behind or in Front of the Door

A number of years ago, one of my former managers who had been charged with reversing a extended slide in advertising sales at our publishing company addressed a room full of editors and sales staff on what to expect in the coming months.

Most of us were fearful of wholesale layoffs and divisional restructuring and many in secret, including yours truly, were scouring the want ads (remember those?) in case we were summoned into the office and summarily handed the dreaded pink slip.

Instead, he held up a piece of construction paper with a picture of a clock – both hands on 12. He then took a Sharpie and drew one hand so it was five minutes past the hour.

“Change doesn’t have to be 24 hours,” he said. “This is change.”  We all breathed a sigh of relief that we would at least be employed for the short term and, in a storybook ending, within three years our division turned in the best performance in the company’s 50-year history.

Not to sugar coat it, “change” is often a scary word. For most, change is often perceived as a negative although it often can be quite the opposite.

Your Firm Should Have a “Honey Do” List

Once the seasonal decorations come down and the mailman requires a power-lifting belt to deliver your monthly credit card statements, the small window between now and tax season is probably a good time to take a holistic view of your practice to see what needs to be done post 4-15.

Unlike my already assigned chores of re-grouting the upstairs bathroom and finding a competent electrician to rewire the stove hood, yours should be far more practice-centric and have a checklist to determine if anything occurred during the year that would have an impact on your strategic goals.

And that list probably should start with your staff.

I know this may sound crazy…

In observance of daylight savings time and the Thanksgiving holiday, I am officially setting my scales back 10 pounds. After Thursday and a traditional Italian gravy meat feast two day later, I can say with all certainty that Sports Illustrated will not be contacting me for their annual swimsuit edition.

The annual gobble-fest also marks what I like to call the final lap of our M&A season, as our deals in progress try and close out prior to the onset of a new and grueling tax season.

Many of our clients often assume the look of a contestant who is stumped on Final Jeopardy when I explain to them that the period leading up to 1040 filings is often our busiest of the year.

And on the surface it does sound counter-intuitive. Why would anyone want to place the added burden of completing a merger on top of all the season-related issues – i.e. extra staff, new regulations, software license renewals etc.?

But consider this.

Good “Buy” To You

Over the summer those who sign my paychecks enrolled me in a seven-week sales training course that purported to take a different approach to the art of selling.

I won’t regale you with all the details of the curriculum, save for a few items. For one, their pre-qualifying process was a far deeper dive than many of us were taught. Another point of differentiation is that the actual sales pitch comes at the end – not the beginning.

The jury is still out and will be in terms of my final deal numbers as to whether it was a good investment, but if anything I have been far more capable in being able to distinguish serious merger candidates from the proverbial “tire kickers.”

Even I know those interested in accounting firm M&A should not fall into the same category as a family of four debating whether to purchase a new SUV. The latter will go from lot to lot, sit for the sales pitches and then determine whether it’s in their budget.

Firms – either on the buyer or seller side should be far more focused on what they want to do.

Seller firms I allow a little more leeway on ambivalence. It’s a big decision – probably the biggest business-related decision of their lives. So naturally there’s bound to be more than a tinge of caution or even uncertainty. Buyers should be far more decided. But it’s amazing just how many are not.

Case in point.

When all said and done, it’s a phone!

In the classic 1970s sitcom, “The Bob Newhart Show,” the star of the series plays a Chicago-based psychologist who shares an office floor with a number of other medical and dental professionals.

When the communal coffee maker breaks down he instructs the office assistant, a ditsy six-foot red head named Carol, to order a new one. Later, when he asks her how the replacement process is going, she replies that it’s hard to decide on which model to purchase since all most of them do is make coffee.

Somewhat perplexed, Bob asks isn’t that the eventual purpose of a coffee-maker?

I recalled this long-ago forgotten vignette while watching the news a few weeks back and an on-the-street reporter was interviewing people waiting on a snaking line, many of whom I later learned had camped out the night before.

Were they waiting for Springsteen tickets?

Front row for Foo Fighters?

$50 orchestra seats to “Hamilton?”

None of the above.

Time after Time

You remember when many of you were raising children and warned them against performing certain safety-defying acts – such as not touching a hot stove?

And then think back of how many times they ignored you and decided on a live demonstration. Many tears, Band-Aids and salve applications later they got the message. Hopefully they didn’t need to learn that lesson twice.

Funny how often the same stubborn principles often apply to grownups. Not that many adults would purposely hold their hand on a white-hot burner, but rather they display their obstinance in other areas.

Take for example inertia.

It has been my experience that accountants can often lay claim to being the heavyweight champions of inertia – particularly when it comes to mergers.

Relaxing on the Job

Nearly 30 years ago, I began a job with a publishing company that was one of the last holdovers to have a designated smoking room. Basically it was a re-purposed conference space but for those employees who still smoked, it was a welcome alternative to having to go outside and light up – especially during the throes of a New York winter or during a raging thunderstorm.

Despite complaints from us tobacco-free folks that the second hand smoke was regularly wafting into the work area, the CEO (ironically a non-smoker himself) steadfastly refused to close it down.

Finally, someone complained to one of those workplace safety watchdogs and management was told to either padlock it or face a hefty fine. Since cost is always far easier to judge than policy, it was eventually cleaned out and the acoustic ceiling tiles which had turned an ugly shade of yellow from years of smoker abuse were mercifully replaced.

But that was then and this is now.

Know Your Limitations

Last week I was speaking with one of our clients in the New England region who was in the market to acquire a “tuck-in” practice – an industry term for a practice that can literally be tucked in to an existing firm without taking additional space.

And as luck would have it, a seller firm fitting his wish list description had come across my desk just the week before.

It was a two-partner firm within reasonable commuting distance, generating just over $1 million in revenue with each owner looking to slow down between three and five years.

On paper it looked to be what we proverbially refer to as the “round peg in the round hole.”

So when I attempted to arrange a meeting, the owner of the buyer firm said that he could only entertain meetings after the 10-15 deadline because he was “knee deep” (his term not mine) in returns.

On a scale of 1-10 with one being the worst, this was a response that at its most generous rated a 3.

Why?

Breaking from Tradition

It probably comes as a surprise to exactly no one that accountants are not the first on line to adopt the C word – “change.”

Whether it’s new strategies or technologies, their idea of venturing out into unchartered waters is substituting a green tie in place of a brown one.

In many cases, “glacial” may be the word that best described the pace of change in the profession.

There are three ways to grow in this business. 1. One client at a time or what is known as “organic growth.” 2. Merge with another CPA firm. 3. Begin a new client service line.

But with the advent of profession-altering trends such as blockchain and robotics promising to revamp the accounting process as we have traditionally known it, there will be significant changes afoot – whether the profession is ready or not.

Like I warn attendees at many of the sessions I present – this is not your father’s accounting firm.

Not Letting Go

The other day I received a call from a client of ours who inquired about de-mergers. Apparently he brought in a sole practitioner about 18 months or so and during that time, the mergee has not lifted a proverbial finger to begin transitioning his clients.

Needless to say it’s been a frustrating year and a half for our client. He found the seller firm through another advisor – obviously one who simply matched two firms together and disappeared during the drafting of the contract.

I told him yes, we occasionally do help clients with a de-merger but we’re not particularly fans of it.

Here’s why.

Out of His Depth

Years ago, a workout partner of mine told me something that to this day still holds true.

“You will meet some of the nicest people while at a gym and some of the strangest.”

Some three decades later I have never encountered anyone at the 10 or so health clubs I’ve belonged to over that span who disputed that point.

Lou is a case in point. A mustachioed curmudgeon in his late 60s there is arguably no member in my current gym of 3,500 who is more dedicated to exercise than Lou.

Each day he comes at roughly 8:30 am and leaves nearly three hours later after taking several group fitness classes and then working out on his own.

Lou is also perhaps the world’s biggest skeptic when it comes to everything from government to Wall Street. He is convinced the system is rigged for the 1 percent (this despite his being an attorney for one of the world’s most well-known Fortune 50 companies).

And don’t even bring up the subject of accountants and financial planners. Apparently he once had a CPA who felt the most telling barometer of his skill was to get Lou the largest tax return he possibly could. You can imagine Lou’s surprise when he received a letter from the IRS several months later informing him of a pending audit.

Ditto for a financial planner who told Lou that he could no longer manage his portfolio as he was leaving the business to pursue an MBA. Only later did Lou learn that MBA was an acronym for “Mexico, Brazil and Argentina.”

So with a pedigree like that you can imagine his ill will toward the profession.

Sour “Apple”

Just when you thought it was safe to go back in the water…

Pardon the shopworn cliché, but today’s missive amplifies why cyber security and security surrounding personal information in general is one of the most in-demand client service niches in the accounting profession.

Some of you may recall several months back I reported receiving a series of sham phone calls from folks claiming to be from the IRS who warned me that I owed a large amount in unpaid taxes. If I didn’t tender X amount immediately I would be subject to “severe” (their term not mine) legal action.

Of course having covered the profession for 12 years I at least knew that the IRS never calls, rather they send you a letter. So as you can imagine I had a lot of fun when I called the number they left and proceeded to skewer the fraud on the other end of the phone.

But I did think that once tax season done, the calls claiming that I owed a large debt to the IRS would cease.

Well the IRS calls did indeed stop, only to be replaced by ones purportedly from Apple. Yes that Apple.

CPA Makeover

With all the conversation about weather-related events in other parts of the country, the Northeast has experienced what is known as an “Indian Summer” – with temperatures reaching in the mid-80s at the end of September. In fact, I established a personal record by re-starting my air conditioning the first week of October.

So taking advantage of sunshine and abnormal temperatures, I took a long walk the other day and noticed one of my neighbors speaking to a home improvement contractor. He explained that he was putting his house on the market and was just now getting to all the projects he had put off for years.

“Gotta get it ready for when the real estate brokers start bringing people in,” he explained. “Especially the kitchen and the bathrooms because that’s what really sells a house.”

I thought about it and realized that he was right. Whenever I visit someone’s home I usually notice both of those areas first.

So it would stand to reason that the same principles would apply to a CPA practice that had made the decision to merge and intends to polish it up for potential suitors.

Chemistry 101

As someone who has been out of the courting phase for nearly three decades, I can still remember the feeling of when you had high hopes for an upcoming date and then for no inexplicable reason, it didn’t seem to click.

And there seemed no valid reason for it. You shared similar interests, appreciated a wide variety of foods and even offered the same opinions on hot button issues, or on a less serious tone, movies.

I’m sure we’ve all been there at one time or another and wondered either aloud or quietly, what happened?

As I grow older and hopefully wiser, I learned what happened. Chemistry; or lack thereof.

No matter if the stars align, or the mood at the restaurant or other chosen venue is perfect for a budding romance, sometimes it just doesn’t happen.

Again chemistry.

Recently, I was a front row witness to such an event. A seller practice had been in meetings with two firms - let’s call them Firm A and Firm B – both with stellar reputations in the profession and to borrow a terribly clichéd phrase, it was win-win for the mergee no matter which practice they selected.

Sometimes it doesn’t add up

More years ago than I care to remember, I toiled at a local newspaper covering high school sports – and I mean every sport – from football to field hockey. I staffed games in wind chills of 10 below zero and others in drenching rains.

But my most frustrating undertaking in that job encompassed basketball game coverage because you had to rely on a school’s official “statistician” to provide the correct information.

So the basic accounting function of reconciling the box score was often an adventure in itself. Too many times, the players’ scoring did not recap to the actual game result. So, just to balance the books – especially if there were 10 games on the schedule that night- you would award free of charge, a foul shot or field goal here and there to a random, but nonetheless, deserving player.

I recalled those episodes of numerical futility recently when the managing partner of a Northeastern CPA firm said he was interested in merging with a neighboring practice which had two of the three partners ready to exit within a year.

The owner estimated that pending due diligence and the seller’s acceptance of the term sheet; the deal would be consummated in six to nine months.

Excuse me?

Arguing Influence

At one time or another we’ve all participated in what I call “bar arguments.”

Whether debating over who was the best centerfielder or quarterback of all time, to who was the worst (add your own noun here – i.e. athlete, politician, musician).

As a 25 year veteran of the publishing industry, I’ve participated in compiling a number of issues in several industries that attempted to rank spheres of influence usually in groups of 50 or 100. They ranged from companies to individuals to products and, as with any ranking, it was admittedly part concrete and other parts subjective.

At my former stop before landing here, we put out an annual ranking of whom we considered the 100 most influential people in the accounting profession. Those selections were drawn from fairly diverse fields of pursuit from practitioners to vendors as well as politicians and educators.

On Demand: Cyber Security

As someone who has been a member of Facebook since 2008, one of the most oft-asked questions on that interactive site is “What film have you watched at least five times and are still entertained?”

Now I could go on for an hour minimum on that subject, as I’m sure we all could but one movie that ultimately ceases my incessant channel surfing is “War Games.” For those too young to remember that perhaps forgotten 1983 gem, a teenaged Matthew Broderick (this was pre-Ferris Bueller) is a high school computer nerd who, when attempting to hack into a California-based software gaming company, accidently penetrates the NORAD missile defense system and nearly triggers a nuclear Armageddon with pre-Glastnost Russia.

Now I’m sure not more than a handful of those who saw the movie envisioned the scale and scope of what online hacking would eventually become years later in terms of online thieves stealing personal information, accounts and Social Security numbers.

But over the past five years or so, we’ve seen too many examples of online piracy of personal data at retailers such as Target and Home Depot, health care conglomerates Blue Cross and Anthem and financial concerns like JP Morgan.

In fact since 2005, there have been some 75 data breaches where more than 1 million or so personal records were compromised. Let that number sink in for a while.

As if Hiring Wasn’t Hard Enough!

There isn’t a week that goes by where I don’t receive at least one call from a firm owner bemoaning the degree of difficulty and frustration he/she has endured to hire good young people and to get them to remain.

Yes, I get it. Believe me I do.

But then again as I’ve warned them, oh, about 2,000 times, you can’t pin a serious succession plan on the chance that some young high performer will show up at your door ready to lead the practice into the future. And it still amazes me how that advice is treated as seriously as asking my daughter to clean up her room.

But I digress.

I bring up the often painful subject of hiring because I came across an article the other day about a hiring scam that has wended its way into the accounting profession. 

Going Past the Expiration Date

As someone who once covered sports for a brief time, I’ve seen what happens when athletes stay in the game far longer than they should. And in sports such as boxing, the consequences of remaining past your expiration date are far dire than say in baseball or basketball. 

As you can imagine, I see it quite often in our line of work – people who have stayed too long and are left floundering for a succession plan or those who buck the Einstein theory of repeatedly doing the same thing the same way and expecting different results.

Today’s missive – the last one before we say goodbye to what has been an all-too-accelerated summer - sort of touches on the concept of knowing when to pack it in.

Question of the Week: Is Good Help Really That Hard to Find?

Those of you, who know me, know that it’s a rare occurrence when I find myself completely flat footed and unable to answer a question posed to me. At the very least, I’ll stall with a quasi-response until I can regroup and become better informed.

But in full disclosure I found myself in that exact position earlier this week when a client of mine – who was in the throes of an unsuccessful search to hire a tax manager – asked me why so many recent college graduates and even those with 3-5 years in the profession prefer to remain with the large firms - those residing on the super-regional and Big Four tiers- rather than opt for a position with a middle market practice?

Um, I don’t know I responded.

A menu with two choices

This week I struck gold – sort of.

Well, maybe silver.

My youngest who graduated from college in May received not one but TWO job offers. I advised her it’s now a matter of vetting which one not only offers the best overall package (not just salary) but in essence which one she feels more comfortable with.

Hopefully she will go with her instinct and make the best selection. And from a purely selfish standpoint begin to gradually wean off my payroll.

I understand her predicament, although in full disclosure, that never happened to me nor is it likely to in the near future at my rapidly advancing age.

It is sort of similar to a situation we currently are managing. A seller firm in the Northeast is being courted by two much larger successor practices – each with stellar reputations throughout the profession.

Parting is such sweet – well you know

Over the weekend I sold our 2004 Honda Pilot. It was not an easy decision, since there are four drivers in the family and now only two cars. But it was time. The odometer was approaching 180,000 miles and there were some rather costly repairs needed in its immediate future. It was simply a matter of diminishing returns.

But it was not just a basic business decision but an emotional one as well. It had taken us on uncountable trips and mini-vacations, and transported two children to college while defying all known laws of spatial relations of how many clothes, entertainment equipment, and furniture could be sardined in there for an academic year.

And last year it survived a brutal upstate New York winter while transporting my daughter to and from her classes as she decided to live off campus for her senior session.

So I get it when practitioners get emotional when it’s time to let go of their firm. Folks look at me disbelievingly when I tell them that it’s often easier to merger in a 5-partner firm than a sole practitioner.

Why?

Sometimes We Just Can’t Help

After more than a quarter-century advising firms on succession and ownership transition and roughly 900 mergers of CPA firms, we’re pretty confident we have the playbook down pat. We’ve certainly helped more firms who asked for our consult than those we couldn’t.

But sometimes as hard as you try, you just can’t help some firms – especially when trying to save them from themselves. There are those who think they know more than we do, and that’s certainly their prerogative.

Is this a good place to work?

As I’ve stated many times in this space, we’re not executive recruiters, although it’s astounding how many calls we receive on a weekly basis from folks looking for accounting talent of any age.

So when a friend of ours said their daughter, who just passed her CPA exam, was beginning to circulate her resume, they solicited my advice on which firms she should steer her attention toward – specifically those who didn’t operate like slave labor camps.

Which I suppose was another way of asking about their culture of work-life balance or if it was one of those “best places to work.”

Again, I reiterated our “we’re not headhunters” mission statement, which did exactly nothing to discourage them from pursuing the subject.

Better Late Than Never

When I was in high school I trained for months to do one of those gymnastic moves called a “kip.” Try as I might I kept landing on my back, but despite the aches – not to mention embarrassment of looking like a beached whale flopping around – I persevered until one June day of my senior year I actually performed my first and only successful kip.

I harkened back to that exercise of near futility recently when I received a call from a CPA firm that I had been trying to get in and see for five years. Each year right after tax season I would place a call to the firm that ultimately went to voice mail and then followed up with an email that was opened and then, I can only assume, quickly discarded.

Needless to say I was stunned. They wanted our help with a succession plan as they had no one internally capable of leading the firm to the next generation. But as it turned out it was hardly a winning lottery ticket that just happened to fall into my lap.

A decade of accounting and social media

Some 10 years ago, when I was at the helm of a national accounting magazine, two of my Millennial staffers came to me with an idea. They wanted to start a section of the publication that would be geared toward young accountants and diversity, since the profession long held a reputation of being older, white and decidedly male.

One of the foundations for the new offering would be a high-profile presence on what was then a burgeoning social media platform – Facebook. Since I was several years past their generation and knew they were far closer to what piques the interest of young CPAs than me, I told them to run with it, the only stipulation that I had the final say on the business plan and that the IT department would agree that it was doable.

We got a bit of a pushback from the technology folks who insisted that the social media aspect be another fast-growing platform – Twitter – but my staff stuck to their guns and a few weeks later, the section was on Facebook and we were printing out various iterations of layout design.

A decade later, it remains one of the magazine’s best read sections. Like the Hannibal character was fond of saying on the A-Team, I love it when a plan comes together.

Shortly thereafter I began my own page on Facebook and later on LinkedIn as well.

I harken back to that successful venture into social media when I saw that as of June, Facebook had exceeded the 2 billion mark in monthly users. Let me repeat that – 2 billion! To put that figure in perspective, if you combined the populations of North and South America, Europe and Africa it would still fall short of 1 billion people.

On a daily basis, Facebook as 1.32 billion users. Its Instagram unit has 700 million monthly users while it houses some 15 billion business profiles.

But enough eye-opening statistics.

Here’s Your Sign!

The late comedian David Brenner used to perform this routine called “the worst doctor.”

The skit was based on the premise that somewhere in the world and of all the people who held a license to practice medicine, someone logically had to be the worst doctor.

I suppose that tragi-comedic theory could be applied to any profession although I would think that it would be somewhat safer physically to be the victim of the world’s worst CPA than the worst doctor or engineer.

Conversely, sometimes good professionals make the worst decisions. Like the owner of a firm in Michigan who was looking to merge up and confided to me that his landlord just offered him a terrific deal on a 5-year lease renewal.

Along those lines, another comedian, Bill Engvall, used to joke about giving people who did idiotic things or asked asinine questions to which the answers were painfully obvious, a sign that said simply “I’m Stupid.”

So I told the practitioner that what he did to save a bit of money effectively eliminated about 90 percent of the firms who may have been interested because now any successor firm either had to eat the lease or try and sublet the space.

By the way, here’s your sign.

It’s all perception until it’s not

Perception is a quirky thing.

As a lifelong boxing fan, I’ve witnessed decisions in bouts that today still defy reality. I’ve seen car accidents where one person is clearly at fault but contended however preposterous, that it was the other guy’s fault for being there.

How about CPA firms with a 90-plus percent realization rates? On a perception level that might seem outstanding, but one might ask, are their billing rates too low?

How about at the end of a meeting with a sales or a client prospect? Whether it went well or not often depends on whom you ask – or for that matter who dominated the conversation.

Which brings me to today’s topic.

Two types of people that have always impressed me are great bartenders and great salespeople.

You know why?

Overcoming the Big “O”

If there’s one thing I never seem to run out of as a consultant who advises CPA firm owners and partners for a living it’s objections.

Everything from compensation to relocation, it’s a given that at least once you will encounter what I have come to label the big “O.”

More often than not, most objections can be overcome with common sense and a bit of reasoning. While other times you feel like you’re pushing against a stone wall with a dust mop.

Case in point. We are currently working with a firm in the Northeast whose owner makes a frightening high salary – enough so that most potential successor firms would quickly review the summary sheet and say no thanks.

But we did however find one willing to work around it – provided the seller firm’s owner agreed to consolidate under one roof – a distance of about 25 miles. Now I realize that in the New York-New Jersey area, 25 miles isn’t exactly like driving in central Nebraska as it often can take over an hour depending on traffic.

He responded with a succinct and terse, “no.”

 So the ensuing conversation went something along these lines…

Back To the Future

In full disclosure, I’m not one for accurate predictions.

Years ago as a young impressionable junior in high school, I wrote  a letter to William Paley, the legendary head of CBS on why his network would possibly try and make a television show out of the classic movie M*A*S*H. I warned him that the show would fly as well as a one-bladed helicopter.

Several years later, my college roommate turned investment banker told me about a ground floor IPO of a software company just outside of Seattle that was co-founded by a Harvard dropout that was about to debut a new operating system. I told him that computers were so expensive no one would be able to afford one in their homes.

Need I say more?

When I was invited to give a lecture in the early 1990s at Florida Atlantic University, the professor who hosted me said afterwards that within 15 years, millions of people would be working in home-based offices and ordering products via computers. I dismissed it as material for a “Future Shock” sequel.

You think by then I would have learned.

So currently, I am in my fifth year of working remotely, as are 60-65 million others in the U.S. according to Gartner Research, and like those millions of others was stunned at the news of online retailer Amazon purchasing Whole Foods.

Yet despite the mounds of statistics to the contrary on the quantum changes impacting the workplace and overall marketplace, there are those who stubbornly cling to the mindset and traditions of past generations.

Case in point.

E-Verbosity

Some people just love to hear themselves write.

In this age of myriad electronic communication avenues, some of which I can’t even pronounce much less explain what they are and how they work, there is still something to be said about brevity.

Tell me is there anything worse than what happened to me at the recent AICPA Engage conference in Las Vegas, where I somehow got corralled into listening to a vendor drone on endlessly about his product and how it would absolutely, positively revolutionize the profession as we know it. With 4,000 or so attendees, I’m fairly certain I was not the only one on the wrong end of a Sominex pitch.

But you know what made it worse?

Two days later I received an opus from him in the form of an email, regurgitating every aspect of my eye-rolling exhibitor booth entrapment.

Needless to say, the message quickly found its way into the e-circular file.

Sorry, that’ll cost you

When I speak to a prospective client, I not only explain what we do here, but perhaps more importantly, what we don’t do. For those keeping score at home, we don’t offer the following services: technology consulting, sales training and with rare exceptions, executive recruiting.

There are other companies and persons that are far more knowledgeable and experienced in those areas and we frequently give referrals when it’s obvious we can’t provide someone with the help they need. For now at least we’ll stick with what has propelled us for the past quarter century – ownership and transition assistance.

You know what else we don’t offer?

Unpaid consulting, with the emphasis on “unpaid.”

For those who may not be in sales, unpaid consulting officially begins when you cross that line of demarcation between trying to determine a client’s problem and then blurting out a number of possible solutions.

Replacing the Role Not Just the Body

In one of the great “Dilbert” cartoon strips of all time, the hapless crew of his fictional company is seen giving a product demonstration to a potential buyer. When the client hopeful asks for more information on a particular feature, one of Dilbert’s crew sheepishly admits, “We didn’t bring the guy who can explain that.”

I harkened back to this timeless parody of all-too-frequent corporate culture, when I spoke recently to a managing partner of a small-to-midsized firm in the Northeast who announced plans that he wanted to exit from full-time work in two years or less.

His plan was to have his two younger partners lead an internal succession strategy and assume the reins of the firm.

Okay, sounded doable enough until, like an onion I began peeling back the layers to expose some inconvenient truths.

After Pomp and Circumstance, What’s Next?

Years ago, I went to a local comedy show where one of the performers remarked, “look at me, I’m ashamed to admit that I’m 30 and my parents still live with me.”

Ba-dum-pa.

Actually, according to a recent survey by the financial concern TD Ameritrade it only takes until age 28 when a child finally becomes embarrassed that they’re still living at home.

I thought a lot about that this weekend when I sat through my second (and thankfully, last) graduation from college as my youngest received her diploma from Binghamton University – Magna Cum Laude – I may add (read: brag).

Just when the Mrs. and I were becoming used this empty nest thing.

Our eldest moved out last year – three years earlier than the Ameritrade tipping point for those keeping score at home and now we’ll see how long her sister decides to remain. By the amount of clothes and traditional hoarding of collegiate collectibles, I will give her at least a two-week grace/rest period to put everything in its proper place.

Then hopefully she’ll embark in earnest on that career thing.

By contrast when I left college, I had exactly one regulation Army footlocker that easily contained all my worldly possessions.

But I digress.

A Little Vetting Goes a Long Way

A while back some psychologist came up with a theory that for many of us, our worst nightmare is being caught naked in public.

Now I guess that would all depend on who was being observed sans clothes.

That, I would assume, is like performing a basic pre-due diligence fact check on a potential merger partner and discovering their background more resembles Bernie Madoff than the little unassuming CPA practitioner down the block.

Case in point.

Recently, we were working with a seller in a large Midwestern city and the dialogue between him and who we hoped would be the successor firm was going smoothly until the larger practice ran a search.

Management by Objection

How many times have you stopped and wondered how some people find their way into a top management post?

If you’re like me, meaning someone who has worked for a number of mid-sized companies during their career, I would think it was probably on more than one occasion.

Some attain it through birth like the CEO of a publishing company I worked for some 20 years ago whom we nicknamed “Florsheim” after the shoe brand. Because, had his father not founded the company, his career would have entailed asking folks if they wanted to see a particular style in a size 9.

Others just get lucky and throw in when the market is ripe for a service or need.  Yet despite their success many have no clue what to do afterwards. Like the founder of my wife’s company who, to this day, continually denies employees access to work remotely despite losing a cadre of good and efficient people because of it.

This brings us to the topic de jour.

The “Village” Idiot

You know what’s worse than getting no help in a bad situation?

Getting the wrong help.

Sort of like the friendly guy who helps you change a flat tire and forgets to tighten the lug nuts.

I’m sure we’ve all been there.

Sadly, I found it’s often no different in the CPA profession.

Case in point.

I was speaking to a two-partner firm in the Northeast recently about succession, which was not even a blip on either’s respective radar although with no discernable alternative with regard to an internal transition, it certainly should have been.

In any event, one of the owners said they had retained a consultant to lead their firm retreat the year before and said consultant recommended that they build a “village” internally rather than look toward an upstream merger.

Yes, you heard correctly – he advised them to look for young talent and stock their bench with high-potentials who would someday take the leadership reins.

Again, stop me if you’ve heard this before.

CPA Insomnia

As I have gotten older this strange nocturnal phenomena has sort of manifested itself. At roughly 2 a.m., my body gets this peculiar urge to rise from a deep sleep and see what’s playing on HBO or Showtime.

Let me tell you, the cable programming at that hour is, well, shall we say, far different than what you see during the average family viewing time slot.

In medical parlance I think this is referred to as insomnia. I prefer to label it a change in circadian biorhythms.

But I digress.

I can only imagine that condition worsens if you’re a small to midsized owner of a CPA firm.

There Ought to Be a Law!

My stunning lack of expertise in technology has been well documented, so when I need assistance in that area, I almost always defer to far brighter minds than my own.

And more often than not, I get the help I need, no matter if it’s software or hardware related – and sometimes both.

Unfortunately this was one of those “than not” occasions.

I thought my problem was fairly simple to diagnose – I needed a larger screen for my PC. For nearly two years, I have labored under a 13-inch display which to be honest, has not worked wonders for my neck and back. On occasions, my morning rise from bed has sounded like a bone-cracking contest at a county fair.

“No” is the second best answer you can give me

This week I received a call from a CPA firm owner who had sat in on a presentation I gave a while back before one of the state societies.

If there was ever a Webster’s unabridged definition of a firm owner who should be planning for succession it was this man.

He was in his late 60s, a sole owner and no one within three area codes who worked for him had the desire or the wherewithal to assume the reins of the practice. Therefore, he had two choices, merge or eventually turn out the lights.

So I sent him the requisite paperwork and explained in detail how our M&A process worked.

Everyone who’s ever spent a day in sales knows that yes is the best answer you can get and no comes in second. His answer was a distant third – “let me think about it.”

A very distant third.

Does Uncle Sam need a CFO?

Over this past weekend, my better half and I spent two days in the Berkshires, the majestic mountain range located in Western Massachusetts and home to a number of artsy and history-laden towns such as Stockbridge, Lenox and Great Barrington.

We did the requisite tour of the famed Norman Rockwell museum as well as a number of other galleries and relaxed on the rows of rocking chairs on the gargantuan porch of the landmark Red Lion Inn.

But as has been my custom of late, I tend to run into people I know in such far away venues and this was no exception.

While filling my coffee cup back at the hotel I found myself standing next to one Joseph DioGuardi, a two-term U.S. Representative from New York and former partner at Arthur Andersen.