TIAG Spring Conference

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TIAG Spring Conference

• Thursday, May 19, 2005
• New Orleans, Louisiana

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Accounting Firm Best Practices Succession
Planning

• Presented by
• Allan D. Koltin, CPA
• President CEO
• PDI Global, Inc.

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Ground Rules

• 1.00 to the middle if
• Side conversations while someone is talking
• Coming late at start or after breaks (1.00 per
  minute)
• Snide or offensive remarks about someone or
  something (or obscene gestures!)
• Work stations clear except for agenda, handouts,
  paper and pen
• No cell phones on during meeting times
• No use of Blackberrys, Palm Pilots, etc. during
  meeting times
• Only one out at a time (5.00, except for
  emergencies)
• Everyone participates
• Attack the issues, not the person
• Think in terms of Must do/ Should do/ Nice to do

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2003 Top Five MAP Issues for Firms with 21 CPAs

• Succession planning/identifying and developing
  future owners
• Finding and retaining qualified staff
• Marketing/practice growth
• Seasonality/workload compression
• Establishing accountability for compensation for
  partners

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A Look Back on ChangeHow did Andersens Demise
and Sarbanes-Oxley Affect the Profession?
Firms of 100 million or more Firms of 10
million up to 100 million in fees Firms with
fees of 2 million up to 10 million
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The White Gloves Are Off(when it comes to
recruiting)

• If the Vice Chairman of a Big 4 accounting firm
  could do it, why couldnt you?
• The Generic Search Letter
• The Trojan Horse could this have happened to
  you?
• Ill give you a 10,000 - 15,000 increase in
  salary, a 10,000 - 15,000 signing bonus, and if
  youre still with us on April 15th, Ill give you
  another 10,000 - 15,000 bonus.
• I would hire 1,000 auditors tomorrow if I
  could. James Quigley/Deloitte

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What Characteristics do Over-Achieving Firms
Possess?

• Outstanding Leadership/ Management
• Common Focus/ Culture
• Specialization/Niche Market Dominance
• Sustainable Momentum
• High Leverage
• Spoiling the Client

• Performance Discipline
• High Billing Rates/ Low Write - offs
• High End Clients/ Value CPA Services
• High Level Confidence in Self Worth
• High Work Ethic
• Partners Perform Surgery and Farm Out Pre- and
  Post - Op

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Common Success Characteristics of Great CPA Firms

• The partners get it when it comes to building
  relationships with their staff
• The 3 levels of staff relationships
• Cheerleaders (They sell for you!)
• Clients (Valued relationship)
• Customers (Vendor relationship)
• Results of recent Beta Alpha Psi survey
• Flexible Scheduling is high on the list
• Making Partner is not mandatory
• Firm Culture is important
• Making a lot of Money (is a given!)

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Vintage Trash Talking

• Partners (on managers)
• Not committed enough
• Wont make necessary sacrifices
• Dont relate to the client
• Need to take ownership
• Not problem solvers
• Dont lead and mentor staff
• Dont act like future partners
• Need to work better as a team
• Need a personality adjustment
• Wouldnt make that kind of money elsewhere

• Staff (on partners)
• They should be committed
• We call it quality of life
• Dont relate to you
• Start acting like an owner
• They create most of the problems
• At least we have something in common
• Dont act like current partners should
• Repeat what you just said, but in front of a
  mirror!
• At least we have one
• Youre right, wed get paid more!

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Recent Beta Alpha Psi Survey on Accounting
Student Goals

• Flexible schedule leads the list of desired
  benefits
• Ownership is the goal for only half of the
  respondents
• Students are most curious about the true culture
  and expectations of the firm
• Earning a lot of money is simply a given, but
  certainly not at the trade off of long hours

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• Agree on worth
• Doesnt always make sense
• Values can change annually

• Occasionally have to over pay
• Individualized off-season training
• Individual goals measurements
• differ

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The Firm is (or is striving to become) the
Employer of Choice in their market
Common Success Characteristics of Great CPA Firms

• They have a great signature story to tell!
• Great job of connecting the business and personal
  sides (Wine Bottle Concept)
• Staff look forward to the State of the Firm
  meeting
• Firm scores high on Employer of Choice
  criteria
• Benefits Recruiting
• Communication Retention
• Community Service Training Development
• Compensation Health Safety
• Diversity Fun

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Mergers Acquisitions As A Growth Strategy

• Succession Planning
• Where did all that talent go between 35 45
  years of age?
• Over 50 of partners in CPA firms are over 50
  years of age
• Heavy Artillery
• The cost to develop the stuff
• Leadership/Management Void
• Would someone leave the room so we can vote you
  in as our next managing partner!
• The System and the Infrastructure
• Are we a country or a country club?

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Why do Firms Merge?

• Fix a problem
• Expand into new markets
• Geographic expansion of services
• Leadership
• Country v. Country Club
• Improve profitability

• Service larger clients
• Unfunded retirement obligations
• Succession planning issues
• No longer having fun
• Better service clients
• Upgrade firm weaknesses

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The difference between success and mediocrity
is very little when you look at it in terms of
each day. But when you look at it in terms of a
week, a month or a year, it all adds up. That
little extra effort makes a world of
difference. Heres to your success!
Allan D. Koltin, CPA
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The Who, What and Why of Succession Planning

• The Challenge If only we didnt have to worry
  about our people.

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The Who, What and Why of Succession Planning

• What will we look like when we grow up? (Oops,
  we already have!)

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The Who, What and Why of Succession Planning

• Talent, talent and talent! What is our
  Signature Story?

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The Who, What and Why of Succession Planning

• Where have all my (future) partners gone?

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The Who, What and Why of Succession Planning

• Dont forget to close the door on your way out!

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The Who, What and Why of Succession Planning

• The Payout It looks good on paper, but it will
  never fly!

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The Who, What and Why of Succession Planning

• The Challenge If only we didnt have to worry
  about our people.
• What will we look like when we grow up? (Oops,
  we already have!)
• Talent, talent and talent! What is our
  Signature Story?
• Where have all my (future) partners gone?
• Dont forget to close the door on your way out!
• The Payout It looks good on paper, but it will
  never fly!

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Thank You

• To Contact Allan D. Koltin
• PDI Global, Inc.
• 455 N. Cityfront Plaza Drive
• Suite 1000
• Chicago, Illinois 60611
• 312/245-1930
• 312/245-1935 (fax)
• akoltin_at_pdiglobal.com