Mergers are not easy, but Jeffrey Neuman, president and director of Barnes Wendling CPAs in Cleveland, has become a pro at them over the last few years.
Barnes Wendling merged with Mitchell Zunich and Co. in 2001 to create a Sheffield Village office; merged with Jenkins Hakes & Associates in 2004, creating a Norwalk office; and most recently, merged with Sandusky-based Koby & Co. Inc. CPAs in January.
“Bringing quality people and quality clients across really helped jumpstart the growth of this firm,” he says. “Accounting firms advise clients how to do these things but they often don’t tend to take care of their own house. … A lot of accounting firms have no plan.”
Neuman says the most important aspect of managing mergers is for the firm’s owner to research the compatibility of the cultures at the onset.
“Owners on both sides have to have similar service and long-term objectives. … If the culture doesn’t work, it’s doomed to fail from Day One,” he says. “You could just look around at how many very large accounting firms have gone out of existence in the last 10 years. Virtually half of the top 100 firms are gone. They’ve all merged or gone away.
“There probably wasn’t proper planning for retirement, proper training of the new executive team and transition of running the organization.”
Once you find a firm with a compatible culture that you’re interested in merging with, Neuman suggests looking at the software systems used by both firms.
“There are all kinds of specialized software systems that accounting firms utilize,” he says. “Some firms have made big investments in certain types of technology that may not be compatible with the firm that’s coming in.”
And keep in mind that bigger financial investments don’t necessarily equal better software systems.
“The firm that’s merging in may be a smaller unit, and some of the things they’re doing may be better than what we’re doing, so you’ve got to have an open mind,” he says.
During his company’s decision-making process, Neuman assigned a technical discipline team from Barnes Wendling’s Taxation, Assurance Services and Information Technology Group to analyze those facets of the merging entity to identify best practices.
“None of our (merger) transactions took less than a year to accomplish,” Neuman says. “From the first time we started having a discussion, we had the opportunity to meet each other in different situations and really get a good idea of what each side was about. I can’t emphasize enough how important that is.”
Neuman also says executives of merging firms have to set realistic timetables.
“Anybody who says, ‘I’m going to transfer everything across, and we’re going to get this all done in a month,’ is crazy,” he says. “Maybe if you’re lucky enough to all be on similar operating systems, but that usually doesn’t happen.”
And he emphasizes an executive’s responsibility to be sensitive to the needs of the employees of the incoming entity.
“If you haven’t been the person who has had to move their office and come into a new organization, it’s real easy to forget how difficult that is. Make sure you go out of your way to make people feel comfortable and wanted,” Neuman says.
“Let them know, ‘If you have a problem or if you have a question, here’s a list of people that you see.’ Take the mystery out of it.” HOW TO REACH: Barnes Wendling, (216) 566-9000 or www.barneswendling.com
Consistency and comfort
It’s easy to get caught up in the whirlwind of a merger but decision-makers should remember to pay attention to the concerns of their clients and their employees as well, says Jeffrey Neuman, president and director of Cleveland-based Barnes Wendling CPAs.
The company that is merging in may be losing its identity or its name in the transaction and may choose to inform its clients before the formal announcement. But once the merger is signed, Neuman says executives from both companies should meet with key clients in a timely manner to keep confidence levels high, as well as respond to any concerns.
“Let them know that the people servicing them aren’t changing; they’re just being supported by a larger group,” he says. “Let them know, ‘If you’ve dealt with Rob before, you’re still dealing with Rob. He may have a different phone number but nothing is going to change … from your perspective in our service model.'”
Based on his history of managing three Barnes Wendling mergers since 2001, Neuman says one of the biggest issues with employees is fear of the unknown.
“A lot of times in a merge situation, some people may be afraid that they’re going to lose their job,” he says. “So if there are going to be any positions eliminated or anything like that, come right out with it. Take the fear out of the equation.”
After the merger occurs, breaking the ice among employees and creating a team spirit can be challenging. Neuman says the firm’s executive team should organize a social function in which employees can meet each other in a casual environment. His four offices have played host to firmwide bowling parties in the winter and golf outings in the summer.
