TUESDAY, JUNE 20, 2000 10:00AM EDT
[Session Moderator] Good morning, and welcome to SS&G Financial Services first press conference over the Internet. I would like to start off by thanking AccountingWEB for allowing us to use their workshop room for this meeting. The purpose of this press conference is to provide an interactive forum for discussion regarding the upcoming announcement with participation by national press and local press throughout Ohio.
[Session Moderator] The hosts will be making a few brief statements, and then we will open the floor to questions. Please feel free to type in your statements at that time and we will do our best to respond in order.
[Session Moderator] As you may or may not know, SS&G Financial Services is currently the 88th largest accounting and financial services firm in the United States, with offices in Cleveland, Akron and Cincinnati Ohio. It is a very entrepreneurial firm, known throughout these markets - and throughout the industry - for its forward-thinking strategies and innovation. Among other areas, the firm has been honored for being a great place to work, for its achievements in revolutionizing client service, for its tremendous growth and for its dedication to community service.
[Session Moderator] At this time, I would like to introduce Mark Goldfarb, a managing director of SS&G Financial Services (encompassing Saltz, Goldfarb & Goldfarb, CPAs, SS&G Technology Consulting, SS&G Payroll Processing, SS&G Investment Services and SS&G Healthcare Consulting). He has been a major factor in the growth and development of SS&G over the past 13 years. Mark is joining us from his office in Akron, Ohio.
[Mark Goldfarb] Thank you for taking the time to attend this conference. I am very pleased to be here today to announce the biggest merger in our firm's 32-year history. We have worked very hard to build a strong presence throughout Ohio, and determined quite a while ago that we lacked coverage in one strategic location - the state's capital, Columbus. After months of research and inquiries, we finally met with the management team of Greene & Wallace Certified Public Accountants, the ninth-largest firm in the city. It was then that we knew that we had found the right candidate to be our Columbus partner.
[Mark Goldfarb] Greene & Wallace's practice is very traditional, upholding many of the CPA services - accounting, audits/compilations/reviews, tax compliance, bookkeeping, financial statement preparation, etc.- not unlike where our firm was several years ago. The partners recognized that they needed to expand their capabilities in order to compete, but didn't want to sell to one of the industry consolidators. By joining SS&G Financial Services, Greene & Wallace will be able to maintain their high-quality attest services while adding a variety of business consulting options to assist their client base. They will also be part of what is now the largest privately-held accounting/financial services firm in Ohio.
[Mark Goldfarb] As of yesterday, June 19, Greene & Wallace's name has changed to SS&G Financial Services. While this is always a difficult transition, we will do our best to make the change go as smoothly as possible for all involved, particularly clients. I believe that I also speak for the partners in our new Columbus office when I say that we plan to continue their high level of client service and add features that will ultimately be a great benefit to many of their clients.
[Session Moderator] At this time, I would also like to introduce Jim Warburton, former managing partner of Greene &Wallace Certified Public Accountants and now the managing partner of SS&G Financial Services' Columbus office.
[Session Moderator] The floor is now open to questions with both Mark and Jim providing the responses. Please type your questions and comments in the box provided at the bottom of the screen and hit the return key.
[Cindy Ludlow] Will Greene & Wallace lose employees or will it find the need to increase staff?
[Jim Warburton] We do not plan to lose any employees and we certainly hope in the near future to increase our staff size.
[Michael Kieffer] How many employees does Greene & Wallace have currently?
[Cindy Ludlow] How does this merger change the company's ranking among accounting firms in Columbus?
[Michael Maurer] On Mr. Kieffer's question, both in the Columbus office and statewide, in addition to outside the state.
[Jim Warburton] Greene & Wallace now has 40 employees.
[chris serres] Jim, among all the accounting firms that are out buying firms, why did you choose to partner with SS&G?
[Joseph Kelly] Mark said that SS&G was the 88th largest firm in US, what will be the ranking after the merger?
[Julie Lindy] What is the FY00 net revenue of G&W and SS&G's anticipated FY00 net revenue?
[Laura Bardey] How many partners does Green & Wallace have?
[Mark Goldfarb] We will now be largest privately-held accounting/financial services firm in the state of Ohio, and rank at approximately # 50 in the US.
[Jim Warburton] We did not want to part of a non CPA consolidator and felt that SS & G's approach to surrounding the traditional accounting practice with ancillary services was exactly what our client base was looking for.
[Michael Kieffer] To follow up on Ms. Bardey, will the Greene & Wallace partners stay with the firm? If so, will they have a say in how the office/firm is run?
[Mark Goldfarb] Julie, we anticipate to do $20 million in '00 in annualized revenues.
[Cindy Ludlow] Is Greene & Wallace's current client base individuals as compared to businesses? If so, do you anticipate this changing?
[Julie Lindy] And Green & Wallace's most recent pre-merger revenue?
[Jim Warburton] Greene & Wallace currently has 4 partners
[Mark Goldfarb] The partners of G&W will stay with SS&G and will run the Columbus office. We plan to have them very actively involved in the management of SS&G.
[Jim Warburton] Cindy, our current client base is primarily businesses, most of the individuals that we serve are associated with those businesses.
[Jim Warburton] Julie, our premerger revenue was 3 million.
[Michael Kieffer] Jim, how does the general staff of Green & Wallace feel about the change?
[Julie Lindy] Thank you, Jim.
[Joseph Kelly] How will this affect other accounting firms in the Columbus area?
[chris serres] Gary, what was SS&G's pre-merger revenue?
[Jim Warburton] Michael, the G & W employees are very excited about the new opportunities which may develop in the Columbus Office. Our people think we made the right decision.
[Cindy Ludlow] Do you intend to change your marketing strategies for attracting new businesses?
[Mark Goldfarb] Chris, including all of our affiliated entities, SS&G Financial Services is currently at $17 - pre merger.
[Mark Goldfarb] million, that is!
[Michael Maurer] Where does SS&G fall in the service continuum between Ernst & Young and the home office sole proprietor?
[Mark Goldfarb] To address the answer to Columbus, none of the other firms has gone into non-traditional services like we have.
[Mark Goldfarb] When we went into Akron several years ago, we were small, but now we've become the largest non-national firm in the city.
[Jim Warburton] Joseph, we'll be an entrepreneurial firm and we will be able to provide services that other firms have not been able to. In other words, offering our clients and potential clients a one stop shopping approach.
[Mark Goldfarb] Also, with our ESOP and employee programs, we feel that we will be more competitive in hiring professionals in the Columbus market.
[Julie Lindy] When can G&W employees participate in SS&G's ESOP? Also, what are G&W's niche specialties?
[Laura Bardey] Mark, you said you anticipate $20 million in '00 annualized revenue. So, that includes the Greene & Wallace merger? What is your FYE?
[Michael Kieffer] Jim, you said that your client base is primarily businesses. What industry sectors does the firm serve, and are there plans to focus on new areas now that you have state-wide coverage?
[Mark Goldfarb] Cindy - in regards to marketing: we plan to utilize the multi-dimensional marketing strategies that we used to grow our other offices.
[chris serres] Jim or Gary, when and how did you two first meet?
[Michael Maurer] Could you expand on the nature of non-traditional services SSG will be offering?
[Mark Goldfarb] We will encourage the Columbus staff members to participate in community, civic and professional organizations as much as possible to get our name out in the communiity.
[Jim Warburton] Julie, G&W employees can enter the ESOP in 2001. Our niche specialities include construction, real estate, non-profit, medical, distribution and other service groups.
[Cindy Ludlow] Can we discuss purchase price?
[Mark Goldfarb] Laura - $20 million includes Columbus. Our FYE is December - calendar year.
[Mark Goldfarb] Julie - the ESOP will be available on 1/1/2001, just as it is for new employees joining any office of SS&G.
[Jim Warburton] Michael, we would like to expand into the hospitality and healthcare areas given the additional resources now available to us through S S & G
[Michael Maurer] Does the firm perceive the accounting market to be "shaking out" or otherwise changing, and how does the merger reflect this market change?
[Julie Lindy] I guess I'm confused -- If G&W had $3 million and SS&G had $17 million and you project $20 million for FY00, it seems you are anticipating no growth. Can you clarify?
[Jim Warburton] Chris, Gary contacted me to see if we had an interest in exploring the possibility of a merger with S S & G .
[Jared Hogue] What is your growth strategy right now? Are you looking to expand to any other areas of Ohio?
[Jim Warburton] Cindy, it was a merger, not a purchase.
[Cindy Ludlow] Thank you, I just needed to clarify the type of arrangement. Also, I know you've unveiled a new logo, can that be e-mailed to us?
[Mark Goldfarb] Michael - we've worked hard on developing services around our traditional accounting & tax services. The services we've developed include: investment services, (including money management services and insurance products and services), payroll processing services (from our affiliated company Paytime), SS&G Healthcare offers medical practice management and consulting services to the hc industry, employee benefit plan administration and consulting, SS&G Technology Consulting, human resources recruiting and consulting, capital markets (valuation, lit. support, business planning.), operational consulting for the restaurant industry, e-commerce business planning, etc.
[Joseph Kelly] you mentioned that SS&G has other services that it plans to offer to GW clients. What are those services and will they be located out of the Columbus office?
[Michael Kieffer] Mark, you speak quite a bit about the consolidation in the industry. How is this transaction different from what the national accounting firm consolidators are doing?
[Mark Goldfarb] Michael - there are over 44,000 accounting firms in the country, only 2,000 of them have more than 10 professionals. Therefore this is a very fragmented industry. Ernst & Young represents the "Fortune 1000", while we as a large regional firm represent mainly privately-held businesses throughout the state of Ohio (as well as some national) and can provide a one-stop-shop for financial services that a sole proprietor can not.
[Jim Warburton] Joseph, we will be able to offer information technology, consulting, payroll processing, investment management, healthcare consulting, hospitality industry consulting and human resources and employee benefit plan administration. All of these services will be available out of our Columbus office.
[chris serres] Gary, can you give us an example of a product or service that GW offers that you don't have at SS&G?
[Mark Goldfarb] Michael - Being that it is a fragmented industry, the clients are looking for the ease of "one-stop-shopping", and we believe that the consolidation will continue. Because of the shortage of professionals in the industry, firms will continue to look opportunities to merge.
[Mark Goldfarb] Jared - Our goal for years has been to go into Columbus, because it would give us a presence in the three largest markets in the state.
[Laura Bardey] Jim, did the difficulty in finding qualified professionals influence your decision to merge? What impact will the merger have on your recruiting?
[Mark Goldfarb] I believe that our growth strategy going forward is to build upon our four office and to integrate services on a state-wide basis.
[Jim Warburton] Chris, G & W has a significant background in serving non-profit clients.
[Mark Goldfarb] Cindy- in regards to the logo, we would be happy to send one to you. Please send an e-mail to firstname.lastname@example.org and she will take care of it.
[Michael Maurer] Re trends to increased mergers, are there countervailing forces (perhaps the Internet? Other market/business forces?) pushing to small firms? Is the middle being squeezed?
[Jim Warburton] Laura, the difficulty in finding qualified professionals was not a significant factor in our decision to merge, however SS&G's strong track record in attracting and retaining professionals certainly was a plus.
[Julie Lindy] How will the Columbus office learn to cross-sell services now available to their clients that they previously didn't have access to?
[Mark Goldfarb] Michael, I hope that this answers your question. The consolidation in the industry was driven by the small practitioner's need to find a succession plan and to fund partners' retirement. Staffing issues and cost of capital to build the competencies to compete are also important factors.
[Joseph Kelly] Pardon me if this was answered already but...I understand the remarkable rankings of SS&G, where there any significant GW rankings or how did they rank in the Columbus area?
[Mark Goldfarb] I'll get this one -- GW was the ninth largest firm in Central Ohio.
[Jim Warburton] Julie, SS&G plans to give special training on all of the products and services to all of the Columbus employees as part of the merger transition.
[Julie Lindy] To partners only, or all staff? also
[Julie Lindy] Can you clarify my earlier question about revenue?
[Jim Warburton] Julie, the training will be provided to all staff in Columbus, not just partners.
[Mark Goldfarb] Everyone in our firm gets training on cross-selling. We have culturalized all of the different services in the SS&G organization. We also intend to do that in the Columbus office.
[chris serres] Perhaps a stupid question, why are you holding this press conference online?
[Mark Goldfarb] Julie - we are definitely planning on growth. To clarify we are planning on 17 for FYE 2000, plus the 3 from G&W. We haven't had a year in the past 13 years of business that we haven't had significant growth, and we don't see that changing in the near future!
[Julie Lindy] I guess I didn't have a clear picture of SS&G's fy99 net revenue. I see 98's was appx. $11 million.
[Mark Goldfarb] Chris - First of all, we are known for being innovative!!! Secondly, we have four markets, plus national press to cover, and we felt that this was the best way to communicate with them all at once without giving favor to anyone.
[Julie Lindy] So what % increase would FY00 be over FY99?
[Mark Goldfarb] Julie - 99 was about $14 million.
[Julie Lindy] Thanks, Kathy.
[Mark Goldfarb] Julie, we foresee a 20% increase from 99 to 00, exclusive of G&W.
[Julie Lindy] That's exactly what I needed to know. Thank you.
[Mark Goldfarb] Are there any more questions?
[Julie Lindy] OK if we follow up with phone calls, isn't it?
[Session Moderator] If there are no more questions, thank you for joining us! If you have additional questions, please don't hesitate to call SS&G at 1-800-869-1835 (Kathy Sautters) or GW at (614) 488-3126 (Susan Brown). We will also be sending out press releases via mail.