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Optimize Your CPA Firm for M&A Growth Transactions


By Kate Krupey, Netgain Consultant and President of CoreBlue Advisory, LLC 

As CPA firms look at their future, many are considering how mergers and acquisitions might play a part, particularly post-COVID. Indeed, in separate, recent remarks, M&A consultants such as Allan Koltin, CEO of Koltin Consulting, and Robert Fligel, founder and president of RF Resources, predicted an increase in M&A activity over the next year, likely fueled by a pandemic-driven economic downturn.  


Firms often look to make an impact on securing their future in times of great uncertainty. Mergers can help by adding talent, diversifying service lines, and securing succession planning. However, not all acquisitions are successful, and many take more time and effort than expected to realize the ROI originally planned. 

One of the most common areas that firms neglect in preparation for an M&A opportunity is the optimization of their own internal processes. Optimized, documented, well-communicated and trained processes, in both the service lines and in the administrative work that supports the service lines, is a key factor in driving the value of the merger. When two firms come together without that level of organization and commitment to continually improving their processes, the deficit shows up in culture. The two cultures will come into conflict when trying to put those processes together, and that will slow down the realization of ROI. This takes significant focus, so to avoid trialing this in the first few acquisitions, it is best to prepare ahead of time! 


To get started, develop an M&A team to evaluate your firm’s strengths and weaknesses. Where do you struggle in your own firm in following an efficient and effective set of processes? Assign key project leadership and partner-level sponsorship for your improvement projects. Consider your internal resource capacity for smaller projects and consider industry process consultants for some of the heavy lifting. The key to success here is making sure there is enough executive sponsorship and that those sponsors are ready to stand behind this work when it comes to the people side of change. That said, doing the work upfront will go a long way toward setting the stage for success. 


Historically, IT has been brought in after the M&A deal was done. This has led to difficult and sometimes nightmarish scenarios when systems and standards were not aligned, and IT is left to sort out details. Those details can have a negative material effect on both the ROI and the fledgling newly combined culture. We see these risks mitigated when IT is brought in early in the deal so that system and standard differences can be factored into the planning up front. 

Cloud’s role in M&A

Recently, Deloitte published an article, Mergers and Acquisitions Love the Cloud, that said, “Cloud technology now gives executives the opportunity to simultaneously transform not only their cost structure but also their capabilities by replacing aging, capital-intensive technology with a more flexible, subscription-based operating model that can ramp up or down as business needs dictate, as well as accessing advanced cloud-based capabilities based upon best practice.” 


Firms that centralize their technology platforms and service delivery in the cloud can leverage these capabilities to explore firms outside of their local region or evaluate key opportunities in new business services. Once your firm has transitioned to cloud infrastructure, it does not matter where employees are when they connect to resources. This model allows IT to quickly onboard the new employees so they can turn their focus to the task of integrating systems and data.


Ultimately, it is all about centralization and commonality. There are basically two different methods for integrating the processes and technology of newly merged firms.

First is the “let’s leave them alone” approach. This allows for each firm to continue using their current technology and processes. This may seem like the best way to appease everyone in the beginning. Depending on the time of year in relation to Tax Season, it may in fact be necessary for a short time. But the drawback is that the longer firms remain in their own technology and processes, the longer it will take to create one culture and to in turn realize the anticipated ROI.

The second approach is to integrate early. While this does take that upfront planning, this method creates a culture of collaboration while stakeholders from both firms come together to select or modify processes so that there is as close to one way to do things as possible. Agreeing on significant applications and processes upfront will allow for the progression of change management (with all of its ups and downs) to happen in a timely fashion.


Having a cloud-centric model dramatically eases the transition. By delivering all your technology needs from the public cloud, the ability to scale quickly to meet the new demand is almost instantaneous. Moving data, adding new applications if needed, and providing a centralized delivery point allows users to work from anywhere immediately. No waiting on telecom for connections and configurations.   


When looking at the firm’s application inventory, it is important to have a solid strategic vision. Some firms take a best of bread approach, others take a single-vendor solution approach. Both have pros and cons, but whichever direction you take, moving a firm’s staff to any new applications will be an effort. Make sure you consider training and support time from the application side in your calculations.   

Be mindful too of application and data history. Many times, if the acquired firm is running different applications, you may need to support them for their historical view or go through the historical data conversion to the different platform. Understanding the costs of such an endeavor is important to the overall impact on ROI.  

If extensive M&A is in your future – or if you just have your eye on one or two core acquisitions – taking the time to build and create a strong plan before the acquisition will go miles toward gaining the ROI you expect faster.  


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