Greg Skoda fondly reflects upon his two-year stint at CBIZ as the ultimate learning experience. He has no regrets about his time as the company’s first CFO and executive vice president, and there’s no reason he should.
In 1996, Skoda linked up with billionaires Michael DeGroote, founder of Laidlaw Inc., and Wayne Huzeinga, who built Waste Management and Blockbuster Video and who now owns the Florida Marlins, to merge his then-75-person accounting firm, Skoda Minotti & Reeves, into insurer CBIZ Surety Group and public company Republic Environmental Systems Ltd. The combination created the original accounting firm foundation on which CBIZ was built.
Over the next two years, Skoda’s efforts as CBIZ CFO helped change the face of the accounting industry by incorporating consulting, insurance and investment services into traditional accounting firms. And, as if working with accountancy boards, states’ attorneys general and the American Institute of Certified Public Accountants to get approval for the new business model weren’t enough, Skoda also spearheaded CBIZ’s acquisition efforts.
“We began a process (in early 1997) where we looked at between 1,500 and 2,000 acquisition candidates,” he says. “We ended up doing some form of due diligence on between 900 and 1,000 companies. And we ended up acquiring, while I was there, about 130 companies. We spent about $650 million acquiring those 130 firms.”
Skoda left CBIZ in December 1998, near burnout after a seemingly endless 18-month roadshow of meetings with prospective acquisitions and institutional investors that took him around the world. He spent the next two years semi-retired, “recharging my batteries,” he says. “I was physically and mentally exhausted.”
But in early 2001, a fully recharged Skoda got the itch again to help business owners build their companies, and cut a deal with DeGroote to hire approximately 20 of his original accounting firm’s employees away from CBIZ to help him launch Skoda Minotti & Co.
Today, Mayfield Village-based Skoda Minotti & Co. employs more than 90 people and is among the fastest-growing accounting firms in the United States. Smart Business sat down with Skoda to discuss the art of acquisitions, his time at CBIZ and how he rebuilt his accounting firm.
What did you discover about acquisitions that you’ve been able to bring back to help your clients grow their businesses?
We learned how to tear a company apart, put it back together and figure out if it can be integrated into a larger business. That’s always the challenge, and therein probably lies the secret of success in the whole acquisition process — can you put it together?
Integration comes on a lot of different levels. It’s not only do the people fit — how does senior-level management match up agewise, from an expertise perspective and from a talent perspective to what you have in place — but how does that second level and third level match up?
It’s also, how does the way we process orders, services and whatever it is that company does match up? Is the management team under contract and, more important, of the same mind? Can you get everybody excited and bought in to take this thing to the next level?
There are also information technology issues to consider. If I take these two organizations, and maybe add a third and a fourth and a fifth, how many IT platforms are you going to end up with? And how fast can you get to one?
If you buy two or three companies and end up with two or three IT platforms, and none of them talk to each other, it could be a critical point in your business career. If we can’t figure out the logistics efficiently –where inventory is, how it has to be shipped, how we manufacture, where we have to get it to — we’re going to shoot ourselves in the foot. There were many times that the transactions weren’t going to work.
It’s often a struggle to explain that to business owners because people want to get the deal done. They don’t want to risk the deal. They’re thinking three or four steps down the road. There’s nothing wrong with that, but you also have to think about the first step and figure out if you can put the two companies together. You don’t want to find out that you just bought air.
As part of CBIZ, you helped create a new business model. How did that happen?
It was essentially changing what had been done in the accounting industry, where we could bring non-CPA owners into the business and create a business model that allowed an accounting firm that issued financial statements to have an economic relationship with insurance products, investment products and payroll products. No one in the country had yet to receive that approval. We were the case of first impression.
There’s much more interest in making one phone call to take care of all a business owner’s headaches. In the smaller company, they don’t have a lot of time. Our thought back then was that if they could come to us and get all those things done in one package, that they’d be a whole lot happier.
What was happening instead was that you were getting an accountant who may or may not be trying to get his insurance friend, payroll friend and investment friend involved. You looked at each of those disciplines, where everybody was tugging at the client in a different way with a different agenda. What’s happening now is that you get a client inside that envelope of service, and everybody’s only interested in moving that client forward.
The client can do things much more efficiently and grow their business meaningfully different. That was our concept back then, and it’s played out real well.
What are the most important lessons you’ve learned about building a business?
That it’s critical to have a vision, so that you can figure out what the next two or three steps are. It’s critical to understand what your values are, where you place integrity in the whole process, how you’re going to deal with customers and clients and how you’re going to deal with staff and families. If you’re going to be successful, there needs to be a discipline about what you do.
If the vision brings in the energy and excitement, the values sort of ground you, and the discipline makes you ready to go to work. The quicker you can get to a structure — this is what we are and what we’re going to be — and have the strength to say no to everything that wants to pull you outside of it, the more successful you will be. If you can model a business around those kinds of things, there’s a good chance you can get to where you want to go.
What parallels have you found between growing CBIZ and starting up Skoda Minotti & Co. for its second go-around?
When we started the business in February 2001, like the early days at CBIZ, we didn’t have the infrastructure. We started with no systems. We had the opportunity to recreate every single system we would use. There’s a lot of time, effort and energy you have to spend to bring the process and systems together. We’re still doing it, and will be doing it five years from now. For example, today we’re working on document imaging. We’ll be a paperless firm during 2004 and won’t have a paper file room anymore. That will exponentially move us down the road.
When we were private last time (as Skoda Minotti & Reeves), we went from two or three employees in 1980 to, when we became part of the public company, 75 employees. Then in two years, we went to 5,500 employees. So the 20 to 90 jump is not really a big deal.
That said, we need to get better at what we’re doing. I love working with the clients and working on the inside of the business — ours and our clients. Our first cut with clients is to ask them, ‘Where do you want to be in five years?’ We’re doing that for our own business, too.
Clearly, we need to be bigger than we are. At 90, we can’t do all the things we want to. So we expect to grow meaningfully, just like our clients. How to reach: Skoda Minotti & Co., (440) 449-6800 or skodaminotti.com
