Succession Planning: Preparing for Success

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By Liz Gold

Jeffery Mowery describes his firm, Mowery & Schoenfeld LLC, as an attractive and viable exit strategy for smaller firms who don't have a succession plan in place. 
 
He has his reasons for this.
 
"For one, we have an excellent team who can execute the plan," he said. "Two, firms know if they come into our firm they can expect to be fully paid over a number of years. Lastly, we can retain the clients and expand the services offered. Those clients are going to be served at a very high level and will enhance the relationship."
 
Based in Lincolnshire, Illinois, Mowery & Schoenfeld, was created fifteen years ago when Mowery and his partner Keith Schoenfeld decided to leave the firm where they were both working to start their own. The move was made to align their values of using a team approach to client service and firm management, rather than an "eat what you kill" approach, as well as to focus on helping clients grow their business.
 
"The best way to have a successful firm is to have successful clients," Mowery said. "So if we can help our clients become more successful, we're going to have a great firm."
 
Being a firm with more "generalist" tendencies has served them well. They work with the manufacturing, distribution, technology, and health care sectors and plan to develop those niches in the future.
 
The firm currently has three partners (with another soon to be brought on board), thirty-five employees, and $8 million in revenue.
 
In 2009, the firm acquired Katch Tyson, a local and well-established firm without a succession plan. Effective July 1 of this year, Mowery & Schoenfeld is merging with Baerson Witonski Berkowitz & Rubin, another local firm in Northeast Illinois. With this merger, the firm will gain another eleven employees. 
 
In both cases, the firm engaged Transition Advisors LLC, to help facilitate the mergers. Transition Advisors, consultants for the accounting industry, provided them with different alternatives to structuring the transaction - but Mowery said transitioning in the acquired firm was something his firm took on themselves.
 
To prepare for the first merger, Mowery created what he calls an "integration plan," which is an Excel spreadsheet and that covers all the moving parts of a transition. Relocation of Katch Tyson, office-related matters, human resources, staff orientation, accounting and audit procedures training, tax, technology, practice management, database, marketing, professional requirements (such as Illinois CPA Society and AICPA notification and peer review), and miscellaneous items like a firm-wide summer event. Each category includes a list of tasks that are assigned to a lead staff member, a due date, and comments on how to move forward.
 
"We have our own internal succession plan as well. It's not really a written plan, it's a theme that we consistently apply," Mowery said.
 
Mowery said his firm's internal succession plan is easier to implement because of the strong partner alignment within the firm. 
 
"We have a high degree of trust and generally all agree on what we're trying to do as a firm," he said. Because of the new partner coming up, it was only recently that the firm leadership looked at the partnership agreement after ten years. "That alignment is very important, and we consistently communicate that we want the people who work here to take over the firm. That has been the vision from day one."
 
Their decisions have reflected this vision. In 1999, Mowery said firm leadership actively started recruiting college students ‒ a strategy that was challenging at first due to the firm's small size. However, Mowery said it's gotten a lot easier because of the opportunities and positive culture they've created.
 
Mowery said his firm spends a lot of time and resources on hiring and developing people, along with on-the-job training. They've brought in outside consultants to develop programs on self-awareness, leadership, and marketing skills. 
 
"We have a pipeline now, and probably within the next five years, I could see us making five more people partners in our firm - all of whom we've developed internally," Mowery said. "When we do our partnership agreement, the main partners will have the Class A units, but we also want Class B units, which are basically deferred compensation plans for some key people who are coming up the ranks."
 
And, of course, the employee-friendly environment helps with the transitioning of new staff members from the newly acquired firms. One of the challenges, Mowery admits, is that with the firm's fast pace and use of technology, some new employees coming from a different culture have trouble keeping up. 
 
For Mowery, the most important thing for a firm going through a merger is to have strong partner alignment and to transition the clients in as soon as possible. 
 
"Something I learned and embraced is that in a local firm like ours, the focus must be servicing the client," he said. "But sometimes [accountants] don't pay enough attention to the people in their firm, and they're your most important asset. They make all the other things possible."
 
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About the author:
Liz Gold owns Rhino Girl Media, offering writing and editing services to companies of all sizes. A published journalist for sixteen years, Liz writes about business and culture. She can be reached at rhinogirlmedia@gmail.com.
 

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Jeff let's be honest. The Katch Tyson merger the new firm lost over 25% of the clients in the first quarter which led to a layoff of many of the acquired firms long-time staff. I do not consider that a successful merger. Also after spending thousands of dollars on recruitment the majority of staff leave on their own within 3 years. Management positions in the tax department have a revolving door. My advice to anyone is stay away from this disaster waiting to happen.

Haha Jeff using a spreadsheet. What a joke!

This is just a false statement. We did not lose over 25% of the KT clients. It has no basis in reality. After hiring everyone from KT, we did layoff three underperformers (not "many") from the prior firm after the first busy season. You sound a little bitter.

Don't lie I was at the firm meeting you held after the layoffs. You told everyone the layoff was due to reduction In expected revenues not performance related.

I remember the story the way Jim did, loss of clients and revenues caused the layoffs,

I am not sure who posted this comment but it wasn't me.

Who's bitter. I'm happy you screwed things up and the clients came back to me. That's why I never decided to join your firm in the first place. I actually got about 1/3 of the clients you upset and left.

Clients don't like change and higher fees so they left, and older workers were all replaced with young recent college grads at lower pay.

I disagree with some of the other comments. I worked for Jeff for 3 years and was part of Mowery & Schoenfeld when they merged with Katch Tyson. And honestly, I probably worked more hours than anyone at the firm (I worked about 1200 hours from January - April, 325 admin/training and 875 chargable). It is my opinion that Mowery & Schoenfeld is a firm that is going places. They have a great long-term vision for the firm, and especially its clients. Every public accounting firm that continually advances and grows loses staff due to the natural stress of M&A(s). However, M&S truly cares about its employees and clients and does quality work which I believe often exceeds that of the Big 4 (believe me, I'm in corporate now and work with all of the Big 4. M&S's work compares with and often exceeds that of the Big 4). I no longer work at M&S for family reasons; however, if I were to have a career with a firm in the Chicago area, my first choice would by far be M&S. I loved the 3 years that I spent there and truly miss the team and clients. I honestly enjoy watching the development and growth of M&S and look forward to their continued success in the future! And let's be honest, the average loss of clients in any CPA firm merger is usually around 33% within the first year. As for the layoff, I personally know how hard it was for the partners to layoff some of its staff. Let's face it, most firms had layoffs during this recession and the layoffs done by M&S were not very substantial.

Ok a couple of things you said make no sense. If you had less than 3 years experience why did you have so many unbillable hours? What were the tax managers doing. Oh that's right they all jumped ship on this sweatshop after working 100 hour weeks.

Alpha... situations can appear unsensible to those who do not understand the context, and especially to those who form conclusions based on little understanding of the facts. I was a very advanced senior (FYI... I left MSLLC and ran the compliance/research/FAS109 function of a large manufacturing company with >$2billion in annual revenues with >110 legal entities operating in >30 foreign jurisdictions). Most of my unbillable time was spent on training the Katch Tyson employees on the new ProSystem Fx software. I didn't charge this time to the client for the learning curve of higher level employees. I also spent a lot of time training the new hires. I stand by my statement made before that M&S is a great firm. There will always be bitter ex-employees and current employees that don't want to put in the time and effort to make the firm a success.

Tom always told us to charge.those hours as billable and the partner in charge would write them off if needed. You just may have cost us some revenue.

I was told not to charge the time to the client.

If you didn't change the software 3 times in 4 years there wouldn't be the need for so much training on new systems.

You've been back in the area over a year and didn't even try and get your job back???

I wanted to go back to MSLLC; however, my wife just didn't want our lives to go back to the long hours of tax season. It wasn't a choice of not going back to MSLLC, it was a choice of staying out of public. Please understand that the choice was hard to make, but all of the choices I've made professionally have always been what I've thought to be best for my family.

Hey buddy, don't base public accounting on one firm. Mowery is a sweatshop. Most firms don't require more than 60 hour weeks. You were working over 80 a week. A quality firm would never burn out staff like that. It's a deservice to your clients.

Thanks for the advice Mark. I appreciate it. It's nice to hear other opinions. Unfortunately, my family and I only have the experience of working with one firm to base our opinion on public as a whole.

Someone woke up on the wrong side of bed.