Negotiating the terms for a CPA practice transfer or merger is the most important step in setting the stage for a successful transaction. Nearly as important, but often overlooked, is having a well-designed integration plan.
Depending on the practices involved and their operational comfort zones, an integration plan may need to be very detailed. It must be developed collaboratively and customized to the firms involved.
Typically, firms are on top of their game with the administrative transition (technology, vendors, payroll, etc.). Areas that are worthy of more attention than they often receive include staffing, clients, external communications, and leadership.
The members of each firm’s staff have never worked together, and dealing with the unknown will be unsettling.
Bring in members from each of the firms to craft job descriptions for the members of the combined organization. This will achieve better consensus and unity, and often translates to more buy-in for any changes. This likely will lead to smoother team integration and, possibly, better employee retention.
Synchronizing benefits, compensation, and personnel policies is important and sensitive. Use a system for questions and support during the transition, and schedule internal focus groups for post-closing to ensure two-way communications between management and staff. In addition, a merger may be the right time to implement a mentoring program or staff buddy system. Everything you can do to foster a “one firm, one team” vision will pay off.
Clients will be concerned with any transition, especially if they think the level of service will drop and fees will increase.
Each firm should create a list of its top 20 clients with information about longevity, what’s important to the client, and prominence in its industry or market. Share that information among client-facing team members. A deeper understanding of each top client’s needs ensures members from both firms are keyed into any possible client dissatisfaction.
Top clients should be notified and welcomed personally by the leadership of the newly combined firm. Emphasize the benefits to the client of the merger. Stress accessibility to leaders of the firm and how your level of service will be equal to or greater than it was in the past.
Create a client welcome letter to be issued within two weeks of any public announcement. Introduce key members of the firm, pertinent service areas, billing and collection policies, and contact information. Institute an outreach plan so every client is contacted after the letter.
There needs to be common and consistent messaging around the purpose of the transaction, the vision for the future, and the near-term action plan.
Prior to solidifying the deal terms, define the goals, milestones, and vision for the combined firm. Consensus on the strategic intent and process will not only bolster the quality and transparency of your messages externally, it will enhance management of the integration.
Time lines for communication, methods of communication, follow-ups, and touch points should all be worked on through ongoing conversations between the firms. The communications plan can’t be restricted to an event or series of events; it must include check-ins and follow-ups to measure the reception to the message.
Partners and top executives set the tone. The happier the leaders of the two firms are, the better the viability of a successful integration. Owners must build consensus around a common set of processes and policies to ensure firm unity.
The job descriptions of leadership should be updated. If the transaction is centered around succession, then an outline of the timing and steps to implement the succession needs to be designed ahead of time. Succession is a two-way street. The exiting party and the successor must both be held to certain criteria and certain consequences.
Future leaders of the combined firm need to understand their place and expectations for progress. Setting core objectives for advancement will help. Setting a process to establish milestones, goals, and accountability with input from the candidates will go a long way toward building trust and solidifying practice continuity.
Higher level policy issues need to be resolved ahead of time. These would include, but are not limited to, requirements for tax return review, client acceptance, engagement letter protocols, time management and cash flow controls, and collection controls.
Successful practice integration is highly dependent on people and communications. When all of the people involved – including the clients – are aligned, and when the communications are consistent, the results will be better. Planning and creating a process to manage setbacks will enhance the outcome and make the vision a reality.
Ira S. Rosenbloom, CPA (inactive), is chief operating executive with Optimum Strategies LLC in Spring House. He can be reached at firstname.lastname@example.org.