Is the M&A Trend Right for Your Firm?
What would it be like to create a firm sought after by competitors, clients, peers, and even industries outside of the accounting profession?
A firm that is nationally recognized for its ability to innovate and go above and beyond for its clients and its workforce? Great firms are constantly exploring opportunities to thrive because they want to be relevant not only today but into the future.
One way many firms address this challenge is through mergers and acquisitions or “business combinations,” as some firms call them.
The imperative to grow and gain market share is intense in today’s accounting marketplace, and increasingly more firms are achieving their goals through a combination of mergers and organic growth.
The 2020 High Growth Study from Hinge Marketing reports that nearly 60% of professional services firms with revenues of $50 million or greater acquired or merged with another firm in 2019, illustrating that mergers are a significant driver of firm growth.
When and Why the M&A Trend Works
To a large degree, the M&A trend among accounting firms is driven by the rapid shift from compliance to consulting services. Emerging technologies such as automation and artificial intelligence are impacting the way accounting firms deliver many services, including compliance. From automated audits to tax software and data visualization tools, the growing implementation of blockchain and machine learning, emerging technologies place accountants and auditors at a 93.5% chance of seeing their jobs automated, according to a 2018 Accounting Today report. So, if compliance services constitute the bulk of a firm’s work, expanding advisory services through strategic mergers is a path toward building relevance and growth in new markets.
While an M&A strategy can complement organic growth strategies, firms must consider what makes the most sense for them. How will an M&A strategy tie into your strategic plan?
What’s Your Criteria?
If you’re considering an M&A strategy, it’s key to develop a list of criteria that tie directly into your firm’s strategic plan. These criteria will help determine if you’re a good fit for the new firm and if they are a good fit for you. How will the opportunity result in a mutually beneficial relationship?
About Jessica Hekmatja
Jessica Hekmatja is the director of marketing and corporate development at BPM LLP.
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