What Happens When Your Accounting Firm is Acquired?
In recent years, accounting firm mergers and acquisitions have found their way into the headlines of many news websites and accounting communities. Firm growth strategies have changed from slow and steady organic growth to mostly acquisition based strategies. So what happens if your firm happens to be the one that gets acquired? I spoke to a few of my friends that have been in that exact situation to tell you! Here are the top three responses that they gave:
Names Change Immediately
In most cases, the old accounting firm will cease to exist as of the date of acquisition. This means that everything from offer letters to engagement letters will need to be redone for the new firm. Generally, these letters will reflect the same conditions that were present prior to a transaction. Changes in fees for clients and compensation for employees tend to get layered on at a later date.
Some Systems Change Immediately
System integration is one of the more difficult aspects of the acquisition process, and it is especially difficult for professional services firms. Between all the tax software, audit software, and professional subscriptions, it simply is not possible to change everything on day one. However, the one thing that tends to change pretty quickly is human resources. Acquiring firms want to have everyone included in the same human resources information system as quickly as possible to properly administer payroll, most benefits, and other key firm operations such as timekeeping. The systems and processes that don't change on day one typically include:
Insurance - depending on when current coverage ends for the acquired entity, this might not change immediately.
Retirement Plans - these plans will continue to exist for up to a year. During this time, current employees will have their balances rolled over into the acquiring firm's plan, and former employees will be contacted to have their funds distributed.
Client Service Usually Doesn’t Change Immediately
The acquiring firm bought your firm for a reason, and that reason is usually to make money on the existing client relationships. In most cases, the acquiring firm will want to avoid disruption to current client service as much as possible. This means that your existing client relationships and engagement teams are likely to not change for a while. If anything, the acquired firm will be offered additional resources (like an offshore office) to help support those relationships. From what I have heard from my colleagues, it can take about a year for an acquired firm to properly integrate its staff management and internal relationships with the rest of the firm and until then, it generally acts as its own silo.
If you happen to find yourself on this side of an accounting firm transaction, congratulations! Most of the time, growth of the firm that you work for is an opportunity for you to grow as well. Even if your clients don't change, you just magically moved up the top firm ranking list by doing nothing! The firm acquisition process is scary for a number of people who don't properly understand what's going on. As these acquisitions occur, you will have plenty of opportunities to ask questions and I challenge you to ask good ones so you can stay informed and make informed decisions about your future with your new firm.