Building a Sustainable Future: A Case Study

We’ve had the pleasure of working closely with a firm over the past several years. This case study illustrates their issues, our approach, and the outcomes. We hope that this helps other firms see what the path to growth and sustainable success can look like.

Initial Situation

When we first met the three partners of this CPA firm with $3.8M in revenue, they were facing immediate challenges. They were managed informally by a dominant founder with no defined systems for running the firm. They had opportunistically purchased another firm with $2.7M in revenue, almost as large as they were. This firm had a different location, a different culture, and lower pricing, so integration was going to be a challenge. None of the partners from that firm were continuing long term, so there would be a significant leadership gap. We were brought in to help bring the two firms together, strengthen the culture and operations, and set the firm on solid ground for growth and sustainability.

Our Approach

We started with strategic planning, bringing together all members of the two firms. We discussed shared values and strengths for the firm and created a compelling vision for the future. This opened dialogue and revealed common ground between team members who hadn’t previously interacted much, if at all. We also established strategic priorities that addressed hiring, training, client mix improvement, and the creation of a COO role.

Later that year, we created the foundational systems they would need to scale the firm:

• A performance-based partner compensation system
• Partner buy-in and buy-out plans
• An updated partnership agreement

With the groundwork laid in year one, we moved deeper into execution during quarterly implementation calls and by creating a governance structure that would work well into the future. We also went to some very memorable fun sports events and dinners along the way – not all our time was spent in business meetings!

As the partners got the hang of the new systems, we supported their growth as executives through individual partner coaching and an anonymous upward feedback survey.

Year two ended with another strategic planning meeting, where we reaffirmed the vision and reset strategic priorities around standard operating procedures, organic and inorganic growth, new service lines, and a repeatable recruiting strategy. The partners also successfully moved away from a pay-equal compensation system.

In year three, we continued our implementation and partner development work. We assisted the compensation committee in functioning confidently, and the firm brought in two new partners successfully. We held our annual strategic planning meeting with the leadership team to redefine the five-year vision, which included the founder’s potential retirement date.

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Key Outcomes

• The acquired firm was successfully integrated into the culture and processes of the buyer’s firm.
  • Core values were formalized and shared often.
  • Staff turnover was in the low single digits throughout our work – no small feat post-acquisition!
  • Partners from the purchased firm were successfully transitioned out.
• Two new equity partners were created.
  • Income per partner increased.
  • Billing rates, utilization, realization and client mix significantly improved.
  • Revenue reached $7.2M – with clear goals and strategies in place to support future growth to $10M.
• The firm transitioned from being an informal, founder-led environment to having a clear, professional style of governance.
  • The firm hired a COO who helped the partners build out systems for hiring, training, and retention, while also taking many administrative tasks off their shoulders.
• Partner compensation was tied to clear, meaningful performance goals, creating a more accountable and constructive environment.
• Ongoing strategic planning and implementation work led to many of the firm’s goals being reached, often much sooner than expected.

Takeaway

As the founder of this firm now begins to contemplate a retirement date, the firm has transformed into an efficient, growing, sustainable operation. The blood, sweat, and tears invested by the founder for many years launched the firm to where it was, and their legacy is now protected for many years to come.

We’re experts at helping firms overcome these kinds of challenges. Some firms need a little help – some need a lot. Contact us to discuss your firm’s situation and how we can help you achieve your future success.