IPA asked several consultants, thought-leaders and influential members of the accounting profession their thoughts on the 1991 debut of the Bowman 100. As part of our 30th anniversary celebration, we will be highlighting some of the responses.
August Aquila, CEO of AQUILA Global Advisors, LLC
IPA: What are your initial impressions are when looking at the 1991 Bowman 100? What stands out, what’s of most interest to you, what do you see in that listing that reveals something about where we are today? What was behind the consolidations of the 90’s?
August Aquila: The driving force behind the consolidation of the 90’s was the realization that firms could be sold. American Express Tax & Business Services created a new paradigm in the accounting market by beginning to acquire accounting firms from 1988 until 2000. Firms from $100,000 to $55,000,000 were acquired by TBS. When an individual left American Express and went to H&R Block, he started the process again and this was the birth of the consolidation movement in the US. Consolidation was also common in other markets, think of stationery stores (Staples, Office Depot, etc.), medical practices. The timing was right for these “roll ups” because those accountants who were born in the 1930 were looking at retirement. Twenty years later, we have the baby boomers doing the same thing. It was the right time for the consolidation to happen.
When I look at this list what strikes is that not too many things have really changes other than a lot of the firms have gotten larger. Firms are still lacking strong strategic leaders, the very largest of the firms continue to burn out people who then leave the profession, firms talk about hiring the smartest and the best but then have no real program for keeping them or creating an open environment that lets these people shine.
Those firms, such as Moss Adams and Larson Allen, that are still on the list had leaders who realized that it does take many different types to build a successful firm and were more patient in executing their strategic plan. These firms live their values.
IPA: How would you complete the sentence, “What’s most interesting to me when I review this list is . . .”
August Aquila: “The main thing that strikes me when I look at the firms that are no longer there is the common elements of (1) very dominant managing partners who kept the firms together or not, based solely on their personalities. They weren’t necessarily good or great leaders, they simply ran the firm like a benevolent or not so benevolent dictator. (2) As a consequence of number 1, these firms did not build a firm but rather fiefdoms. Partners who would bring in business were rewarded to the detriment of client relationship and production partners. (3) Many of these firms were forced to sell to a consolidators (American Express Tax & Business Services, H&R Block, CBIZ, etc.) because the majority owners did not believe their partners would and want to pay them the large deferred compensation amounts they had coming to them.
In part two of this series, we will hear from Allan Koltin, Koltin Consulting Group.
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August Aquila was the Vice President of M&A at American Express Tax & Business Services in the 1990s. He is currently CEO of AQUILA Global Advisors, LLC and continues to advise firms in the areas of M&A, compensation design and partnership issues.