Cracking the Code to M&A Growth

John Bly Aprio

Mergers and acquisitions can sometimes feel daunting for entrepreneurs, but they don’t have to be. In fact, growth through M&A can yield huge rewards if you are willing to accept some risk and remain open to opportunities. Today, we are joined by John Bly, the South Atlantic Regional Leader for Top 35 CPA firm, Aprio, as he cracks the code to M&A growth with us, sharing some of the lessons he has learned throughout his career journey and offering his advice for anyone considering M&A as a growth strategy.

You’ll gain insights into John’s trajectory, from the beginning of his career in public accounting at the Big 4 to starting his own CPA firm, completing more than 15 M&A transactions, and ultimately merging his firm with Aprio. John also shares the importance of being clear about how you drive value, the benefits John has seen from treating both sides of a transaction with fairness and respect, and the value of establishing appropriate expectations upfront.

Key Points From This Episode

  • A look at John’s career trajectory, from big-four CPA to entrepreneur to regional manager.
  • What starting his own firm taught John about working with small business owners.
  • How John’s firm grew exponentially thanks to M&A between 2006 and 2009.
  • Why he believes in doing what you’re passionate about, even if that means pruning clients.
  • Lessons John has learned about the importance of taking your own advice.
  • His experience of growing his business through a global financial crisis.
  • What made John realize that his firm was unique when it came to M&A growth.
  • Insights that came from making 15 acquisitions in 15 years, followed by the decision to ultimately merge with Aprio.
  • What John means when he says “a CPA does not equal a CPA.”
  • Key takeaways from John’s M&A growth strategy, including the importance of having clarity about how and where you drive value.
  • Why it always pays off to treat both sides of a deal with the utmost respect and fairness.
  • The value of establishing expectations and ensuring those expectations are appropriate.
  • Questions to ask yourself to determine what is important to you going into an M&A deal.
  • Why you should be thinking about M&A (and stay open to opportunities).
  • How ego can get in the way of profound M&A growth.
  • Advice for those considering M&A as a growth strategy: be open, listen, and make friends!

John Bly on LinkedIn
John Bly Email
Cracking the Code


[00:00:01] ANNOUNCER: Welcome to Branch Out, a Connection Builders podcast. Helping middle market professionals connect, grow, and excel in their careers. Through a series of conversations with leading professionals, we share stories and insights to take your career to the next level. A successful career begins with meaningful connections.

[00:00:21] AD: Hey, everyone. Welcome to the Branch Out podcast. I’m your host, Alex Drost. Today I’m joined by John Bly, the South Atlantic Regional Leader for Aprio, a Top 35 CPA firm headquartered in Atlanta, Georgia. John shares his journey from beginning his career in public accounting at Big 4, to starting a CPA firm and completing more than 15 M&A transactions, and then merging his firm with Aprio. John and I discussed the lessons he learned through this journey and advice for anyone considering M&A as a growth strategy. I hope you all enjoy!

[00:00:56] ANNOUNCER: Connect and grow your network. We are on LinkedIn. Search for Connection Builders.


[00:01:04] AD: John, welcome to the Branch Out Podcast. Excited to have you here today.

[00:01:06] JB: Thanks, Alex. I’m looking forward to some fun this afternoon.

[00:01:09] AD: So, let’s start the conversation off for our listeners, John. Why don’t you share a little bit about yourself, your background, and I think that will tee up our conversation pretty well.

[00:01:16] JB: Sure. So, I’m John Bly. I live in Charlotte, North Carolina. Daughters, three teenage daughters. Married 20 years this year, which is exciting. And a CPA by trade. I got a college degree in it. I spent some time at the Big 4 and started my own firm. Currently, I’m the regional managing partner and sit on our board of directors for Aprio, which is a top 35 firm in the country, headquartered out of Atlanta, but a national firm and loving what I do.

[00:01:43] AD: John, let’s talk a little bit about your story behind that, because you are – to jump back to what you said, you started in Big 4, worked for yourself, and then now you are a regional managing partner for a top 35 firm. Those are all very different, very unique elements of a career path. So, how’d you get there? Let’s start with you, kind of, your big four. What happened from there? Take us through it.

[00:02:02] JB: Yeah. So, I’m one of the few, I think, maybe, who at 10 or 11 years old, my cousin was a CPA partner at Ernst & Young, in Buffalo, New York. I’m originally from Albany. My dad’s a CPA, but worked in the government sector. And at 10 or 11, I knew I wanted to be a CPA. I know that that sounds really sexy to all your listeners. But – and by the way, I’ve been recruiting my kids forever and –

[00:02:29] AD: No luck?

[00:02:29] JB: No luck. But seriously, continued that. So, I thought the Big 4 was the pinnacle. Right? I really felt like it was the end all, be all.

[00:02:39] AD: Why did you feel that?

[00:02:40] JB: They have such marquee – First of all, I love golf, and they’re on every golf tournament, right? They’re sponsoring every golfer. But also, they have marquee clients, they recruit really heavily on campus, and they’re the Big 4. All are hundreds of thousands of employees, and there’s a big drop between them in five and six. I got there, loved what I did, loved the people, don’t have anything bad to say, it just was not what I thought it was, because it was just so big. I really felt like partner – my outside expectation was that partner was the pinnacle of a CPA career. If you could do it at the Big Four, it was unbelievable.

What I found was that the partners at the Big Four generally were employees. I mean, yes, they got a K1, they were not legal employees. But they didn’t have a lot of decision making autonomy and that actually surprised me.

[00:02:40] AD: So, it sounds like, one, you have an entrepreneurial spirit, which I already know that talking to you about. But we’ll dive into that. But it sounds like you had some entrepreneurial expectations kind of looking when you were thinking about that as a career, and you got there and kind of found yourself saying, this isn’t necessarily where I feel like I’m going to have that decision making and that ability to lean into. Is that fair?

[00:03:45] JB: Totally fair. I definitely felt like they were running a practice within a practice, right? If that makes sense. And really, it didn’t end up being what I thought it was, as entrepreneurial as I thought it might be.

[00:03:55] AD: Okay, so you get there, you realize that. Then what? What do you do?

[00:03:58] JB: So, my wife is actually a CPA by trade as well. And the two of us in 2004, crazy, by the way, in retrospect, at 25, decide to start our own accounting firm. It seems crazy looking back now, 17, 18 years later. But we decided to start an accounting firm from scratch in Charlotte out of our house. We did that and did two really, really tiny acquisitions within the first 60 days of starting, and did another one 12 months later. And that first sort of 12 months got us to fully replace our prior incomes, and then do a little bit better, actually. That was really the focus at the beginning.

[00:04:36] AD: How cool. So, I want to first jump into, so you made the decision to leap into that, which is, I love when you talk about entrepreneurs starting something, the word leap, I think is very – it is the right word behind it. How would you take it? What went through your mind? What were you thinking? What were you trying to accomplish? And what surprised you in the first year?

[00:04:52] JB: I think, it’s hard to imagine how crazy it sounds at 25 to do that. But we didn’t have kids at the time. What went through our minds was, “Look, if we’re going to do it, this is the chance.” We knew that we were both willing to work crazy hard. The Big 4 instills a work ethic that’s second to none in people. I already had that, anyway, growing up as a kid. I had a paper route for eight years waking up at 4:45 AM, 365 days a year. So, I understood work ethic. I understood having to deal with it.

But what surprised me I think, was when you’re at the Big 4, you’re dealing with some of the largest companies in the world, and I did not – I dealt with privately held companies, but they were still huge, right? I mean, some of the companies I dealt with were a billion dollars, and had basically all audited financials. I was on the tax side. The reality was, when we got into the small business space, I’d never heard of QuickBooks.

[00:05:43] AD: So, you started a small business, accounting, CPA advisory practice before you’d heard of QuickBooks?

[00:05:48] JB: Yes.

[00:05:49] AD: You did that backwards.

[00:05:50] JB: Which is totally crazy. Fortunately, QuickBooks, especially, back then super user friendly for an accountant. Maybe not user friendly for a business owner, but super user friendly for an accountant. I understood debits and credits. I wasn’t so far in my career, candidly. If I had been a partner at the Big 4 to then go back and do this, it seems almost impossible. But I had started it so young in my career, that I still knew a lot of the debits and credits and stuff that I had to learn to pass the CPA exam and get my masters.

So, that was number one surprising, and then the other was that small business owners really don’t understand financial statements. I was dealing with CFOs and controllers who were above my head, if you will, at the age of 25, when I was at PwC, to then go to deal with a small business owner who made you two million in revenue, and really just manages their financials by how much money they have in the bank.

[00:06:38] AD: Yeah, and bringing that value there and helping people understand that. So, you focus – you and your wife jumped out, started this business. You learned a lot and you sad said you did two small acquisitions. Take us through what happened in kind of the next handful of years as you grew out your practice?

[00:06:53] JB: Yep. So, 2004, August of ‘04 is when we started and, by December of ’06, so just 26 months, 27 months later, we had just shy of 17 people, I think it was 16, and we were doing a little more than 1.5 million in revenue in 27 months. To get there, for those who think the Big 4 work a lot, we worked – it wasn’t even close. We worked way more than that.

[00:07:19] AD: I want to go on a quick tangent for a second. As an entrepreneur, spending the last four and a half years working for myself, the single number one thing I thought when I left is that I would work less and have more work life balance, and a greater control. Nope, totally wrong. Everything I thought was – my expectations were wildly wrong. Sorry. I thought it’s one of those things. So, you always think that until you actually go and do it, and realize what it really takes to be successful at it. Sorry.

[00:07:42] JB: It does. And I think it’s about the passion, right? Going back to the entrepreneurs, and we were certainly super passionate about it. We weren’t going to let it fail. We were going to do whatever it took to grow it and make it sustainable, rather than –

[00:07:53] AD: Why were you so passionate? What gets you excited about it?

[00:07:55] JB: I really found – so going back to my PwC days, I loved the smallest clients I dealt with. I actually got to talk to the owners, and those businesses weren’t the most profitable compared to some of the billion-dollar entities I worked on, and they weren’t the most sophisticated, but they cared in a way. Our discussions, they cared. If we helped them save 10,000 or 20,000, it meant an extra Disney trip or whatever for the family, right? You could feel and see the impact. So, that was what was really exciting about working with small businesses was the owner, instead of the CFO, the owner was really excited about whatever it was we were talking about, and it wasn’t just about debits and credits, it was about business, and that has always excited me.

[00:08:35] AD: That’s really cool. So, the passion to help business owners, really understand what they’re doing, and excel and kind of achieve what their goals are.

[00:08:43] JB: Yeah. So, that allowed – it doesn’t feel like work when that’s what you’re doing, and at least to me. So, even though we worked a crazy amount of hours, and for your listeners who are thinking about starting a firm at 25 years old from scratch, it is a lot of work. If you want to build it fast and if you want to build something that’s sustainable, we were working 100-hour weeks most of the year, not busy season hours, right? It was mostly year-round, and it was the two of us, and that allowed us to get to a size really quick.

[00:09:09] AD: Wow. Well, okay, so you exploded in growth and got to, you said 17 people and north of seven figures in revenue. Where does the business go from there?

[00:09:18] JB: Yup. So, to get there in ’04 to ’06, we had done five acquisitions and grown a lot organically. From ’06 to ’09, we then decided there was some clients that we no longer, or service lines that we no longer wanted to do. We ended up selling pieces of the business. So, for instance, we did three different sales during that time of pockets of clients that didn’t fit our model anymore. That was one. And then we did two, payroll. We didn’t want to do payroll anymore, because that’s a lot of what small businesses wanted back then. Not the case anymore as much, but back then, almost 20 years ago, it was important. We sold those to ADP and paychecks and pay choice type entities and that – even though we were growing organically, we still had revenue growth, even lopping off hundreds of thousands each of those years in selling piece of the business.

[00:10:03] AD: Wow. I guess a couple of things I want to ask you about there. So first off, you said, ’06 to ‘09, which I think there was something that happened in the economy somewhere in that timeframe that may have made some challenges. I want to understand, I want to hear your adventure through that. But more importantly, I want to first ask you about: you chopped clients off, you pruned, you made space, and I think this is something that is often time extremely challenging for any business owner, specifically as a professional service provider, especially when it’s a different element of how you’re doing that work. Sometimes, it just feels like, “Well, I need that revenue”, every dime counts, every dollar counts. I get that mentality some ways. But also, at the same time, what I’m hearing you say is you did better off by actually pruning and we’re able to grow more from it, right?

[00:10:44] JB: Yeah, I think you have to do what you’re passionate about, and we weren’t passionate about those specific types of clients or that specific service as it relates to payroll. In order to grow, there’s only so much capacity. You only have so much time and so much ability, and we wanted to grow in other areas. It’s different. I always laugh because professional services, many of them advise other entrepreneurs or business owners, but they don’t always take their own advice or their own medicine. We always felt like if we were going to give that advice, we’d better live it ourselves.

[00:11:14] AD: It can be hard too. It can be hard to – it’s always easier said than done, right? It’s always easier on the whiteboard, it’s always easier to advice than it is to actually do. So, when you’re doing that, knowing this is a number of years ago now. But kind of taking yourself back to that time. What were some of your feelings around that? Was is just like blatantly obvious, this is what we have to do, I have no problem with this. Were there hesitations? What were some of the – what do you learn from the experience?

[00:11:37] JB: I think young and naive was probably helpful in those first bunch of years. I think, because we had done some acquisitions, it’s different than the person who starts from scratch and has these clients for 20 years, who no longer makes sense for them. While we loved the clients. It wasn’t the same 20-year relationship, right? It was different. So, it was easier emotionally to part with some of the clients. We knew, and we were clear. It was better for them. So, that was – it came from a place of better for us and better for the client. It wasn’t like we thought we were – they were going to get a worse deal where they were going. We thought they were definitely getting a better service, better quality, and probably at least the same price, if not a better price.

[00:12:18] AD: So, it sounds like in many ways you embrace the thinking of I’m going to focus on what I’m good at. I have limited – it’s all about resource allocation, right? You have limited resources, whether that’s time and money and how you’re going to spend your energy within the business, and you wanted to focus your efforts on where you did the best and what you also, you said very clearly there, you knew that because it wasn’t the strike zone for you, that you were better off to help those clients find a better provider for that.

[00:12:45] JB: Yeah, for sure.

[00:12:46] ANNOUNCER: This is Branch Out, a connection builders podcast.

[00:12:55] AD: I like that. Okay, so let’s go back. This is all happening through ’06 to ’09, which the whole world goes sideways as well in that timeframe. What was it like growing your business through that?

[00:13:05] JB: So, in Charlotte, we were late to the table on the recession. But then, overnight in September of ’08, it fell apart over a weekend literally, as Wachovia collapsed. I’m thankful that Wells Fargo purchased instead of Citi, and I think it was Citi at the time or JP. The city was terrified because there was 25,000 to 35,000 jobs with Wachovia at the time, and we were a much smaller city at that time. The city, the metro area was like maybe 1.5 million, now we’re like 3.3 and we’re like a real town these days, we always joke.

So, that was really scary, because that was the lifeblood of the business community was this alternative service provided and all of those employees needed new construction, they need whatever. Well, we were heavy in the construction industry at that time. And certainly, I learned a lesson which is as the economy begins to shift, you have to make sure you’re doing the right things around billing collections, and cutting people off quicker. We definitely got stuck with a life lesson between September of ’08 and February of ‘08 at about 1.5, 1.6 million, somewhere in there. We got stuck with about 200,000 of bad debt, and that was a very painful lesson at that size.

[00:14:16] AD: Yeah. I imagine. I imagine. But it was a lesson, as you said. It was a lesson through all that. So now, you navigate through that, you had some exposure, the economy goes down, you learn these lessons, pick up some bad debt. Where do you go from there?

[00:14:27] JB: So, after ‘09, we realized that what we had done in the first five years, we were really – if you look at ’04 and our strategy through about ’07, ‘08, we really thought we’d be about 1.5 million to 2 million and have what I’ll call a lifestyle CPA firm for the next 30 years or whatever till we were done doing this work. Coming out of ‘09, we realized that we were unique. There were no other small firms doing this. There weren’t other firms doing the pruning. There weren’t other firms doing the acquisitions, and then we turned on the secret sauce and realized that it was unique, and we then became gangbusters trying to do those things on steroids around acquisitions.

So, we were starting to look at 10 or 15 a year to do one, maybe two. We were really getting focused on how fast we could look at somebody and decide they were not a fit for us. That took us through 2014. If you take the 2009 to 2014, we accelerated from about 1.5 million to about seven and a half million.

[00:15:29] AD: Wow. Okay. How many employees?

[00:15:31] JB: We were about 60 people, 55, 60 people.

[00:15:34] AD: Wow, that is explosive growth. How many acquisitions total from start to finish?

[00:15:38] JB: So, from 2004 to 2019, we did 15. We did 15 in 15 years. Some really small, like I said, the first three we did barely added up to 200,000, 250,000 total between the first three to our largest during that 15-year period was just shy of 4 million.

[00:15:55] AD: Wow. Okay, so now you grew your firm, and now where did things go from there? I want to come back to the M&A stretch. I want to dig back into that for a minute. But take us through kind of the rest of the journey, bring it to where you are today.

[00:16:05] JB: Yeah, so between ‘12 and ’14 realized, 2012 to ’14, realized that we were becoming a real firm and not sort of mom and pop and had partners then, and realized that we all needed to do our unique ability, and that’s when we begin shifting work, becoming a little bit more niche focused, a little bit more service line focused. And that accelerated organic growth faster.

Fast forward through to 2019, we started to build out our five-year plan for what 2025 would look like for – the firm’s name was LBA Haynes Strand. We decided, like, “Okay, look, if we’re going” – at that time, we’re about 70 people, we thought we’d double again, and we’d be 140, 150 people by 2025. We looked at the challenges and the opportunities that lay in front of accounting and advisory firms across the country, and decided to explore merging with Aprio at the time.

We had a relationship, Richard Kopelman is a longtime friend of mine. I’ve known him for seven or eight years now and we shared ideas every six months for years. He’d come here, or I’d go to Atlanta, and finally decided to actually explore what it looked like if we combined forces and accelerate our own growth, both for our clients, because our clients were getting bigger and needed more services that we couldn’t provide, but also for our people, because we felt like it would provide a better opportunity for them in the long term.

[00:17:24] AD: Wow, as the business owner, it sounds like you were thinking about that from two different directions: client service and opportunities for your people, which I think, it’s very much growth-oriented mindset. I think that it’s something to acknowledge.

[00:17:35] JB: Well, thank you. I definitely think, again, if we were telling our clients to think that way, we ought to be thinking that way, too, is really what it came down to it.

[00:17:42] AD: Which is always harder said than done. So, let’s go back then, let’s talk about M&A. Let’s talk about what you’ve learned. So, you’ve done, you’ve been on both sides of this, right? You did 15 transactions as a buyer, building your business, and then ultimately sat on the other side of the table as a seller, if you will, to merge your firm, right?

[00:18:00] JB: And since 2019, have done a whole lot with Aprio. I spent a lot of my time today on the growth of the firm, including our inorganic growth.

[00:18:07] AD: Let’s talk about the lessons. Let’s talk about what you’ve learned from it and what some takeaways are.

[00:18:10] JB: So, early on, for our smaller listeners, one thing that I learned was a CPA does not equal a CPA. What I mean by that is early on, ‘04, ‘05, ‘06, I just assumed everybody was like PwC, not in the work they did, but in the quality of the ethics. When we did a few deals, no issues the first four. When we got to the fifth deal, we’ve had some learning lessons.

We learned that – we did a lot of diligence around integration, tech, people, financials. We didn’t do a lot of integration around tax strategy, like are they actually doing the right things? Are they following what normal CPAs and IRS code are supposed to? We were a little surprised that first busy season after we acquired that practice, as we had to give a lot of bad news to people about some rules that just weren’t being followed. So, we changed our process after that. We did more due diligence related to the client product, because that business had been around for 20 years. Of course, they must be successful. They built a business. They’re a CPA. They have multiple CPAs. They must know what they’re doing. That was definitely the first lesson learned.

[00:19:13] AD: So, it sounds like, I guess, maybe let me ask it this way. Going into that, were you clear on what made you unique or where you specifically – how you drove client value? Or was it just more, “Hey, we do it well. We know we do.” But how much clarity did you have from yourself about that? And how did that maybe influence your ability to sniff that out in diligence?

[00:19:33] JB: So, I think it definitely, our unique identifier back in those days was definitely client service driven because many small firms are very reactive, and that was not ingrained in us coming from the Big 4. We were very much focused proactively and that drove client development. It drove new clients. It drove cross-serving opportunities. Because we paid attention and we’re really focused on doing those things, we had to start making calls to clients who were taking positions that are definitely black and white, and they were on the wrong side with their prior CPA.

[00:20:10] AD: Okay. So, some lessons there.

[00:20:12] JB: Yes, yes.

[00:20:12] AD: What else? What are some other lessons? So, diligence, being very thoughtful, and obviously everyone knows diligence is important. But what I hear you say, is really being clear about where you drive value and where value is driven across, and make sure that you’re understanding that that is the same is true on both sides of the transaction.

[00:20:28] JB: Yeah, another lesson I learned, and I learned this very early on, actually, early 2006, I called my cousin who had been an entrepreneur for, at that point, like 16 years, and in a totally different space, but in Pennsylvania. I talked to him for about an hour. It was like a mentor, sort of relationship. One thing I learned was to always treat partners that are legal partners, actual legal partners, and the other side of a transaction with the ultimate respect and fairness. You don’t want to deal with anything that comes back on the other side. You always want to feel like you gave them the benefit of the doubt, and that paid off.

The reason that paid off is because I never felt like I was trying to screw anybody. I always felt good about myself. But also, repeatedly, after we did deals, the exiting CPA partner, a year or two later, would refer us to somebody else. They were like, “Oh, they were really good to deal with. They’ve always treated clients. I’ve haven’t heard anything bad.” So, that paid itself forward in a way that was sort of unexpected. That was not – but you can run across people in life, who always have to get the upper hand in a deal, and that was not the way we did business. We always felt like, you know, arguing over $10,000, if that means a lot to Alex. Alex, you can have the 10 grand.

I mean, in the grand scheme of my life, I’m going to be here a long time, I’m going to have to deal with your clients for a long time. I need you to be happy, and that paid off.

[00:21:46] AD: I want to pin on this or talk about this a little bit more. I want to speak from so my own experience from it around is, listeners know, my background was investment banking, and did a bunch of work in the deal space. One of the things that I think, at times, I say, we being myself and the team that I’d worked on within different deal transactions, we would, at times, as the advisor, get too focused on winning, and I’m getting the best deal.

I understand that if you do something, if you’re going to make a transaction, you have to get a fair deal that you can sleep at night. That you feel good about and you have to feel good about what you’re getting. That to me is the win. Where I think it’s very easy to trip over that line is winning means that you have everything the way you want it to be or the way you expect it to be from the very beginning.

When you hold onto that and try to just really hammer that in, and again, I’ve seen where we, as advisors, at times dig our heels in on some of that. I think as advisors we always forgot was that we didn’t have to live with the other side of that transaction when it was said and done. But I see where those challenges come from. What I hear you say, which I think is just so important, is at the end of the day, if you can’t come to a deal where you genuinely feel good, I feel fair, I feel like this make sense, and it works for me, and the person on the other side can genuinely say that to you as well, then you shouldn’t come to terms. You shouldn’t come to a deal. Because if you don’t get there, something is going to boil up later in one way or another, whether it be someone left, someone’s unhappy, someone doesn’t refer you.

There’s so many negatives that whether they come out in kind of a true negative material issue or not, is, it depends on the situation. But there’s always going to be something negative if people are kind of getting to the end of it saying, “I don’t know, but I guess.” How have you seen that play out? Because we’ve done a number of transactions now. Where do you see thinking at times that causes challenges? What else have learned from all of that?

[00:23:37] JB: I mean, so I tell – we look at, there might be 10 things in a deal we really want in our ideal deal. If we get six or seven, we think we’re doing just fine, right? But there are people who want all 10. So, on the other side of the transaction, I always ask right up front, “What are the things that are going to be huge for you on this deal? Is it people? Is it clients? If you’re merging in with us, is it you want to stay five years? Is it you want to get out immediately?” We’re flexible. We actually don’t care which ones drive your decision, but we want to make sure we meet those. If you want to stay five years, and we don’t want you to stay five years, let’s talk through that. We don’t want to put a round peg in a square hole.

Having those conversations upfront, really quickly, in the first couple of hours made us pass on many deals really quickly because they weren’t going to fit us or they were like, “Oh, I want all the money, I want it all up front, and I want to stay 20 years and I don’t want to make any less.” I’m being a little bit extreme. But you know what I mean, right?

[00:24:35] AD: Yeah.

[00:24:35] JB: Okay. Well, show me on a piece of paper how that math works. And then they would be like, “Oh, yeah, I guess it doesn’t.”

[00:24:40] AD: You’re driving at really ferreting out expectations and ensuring that everyone has appropriate expectations going in. Because hammering out the actual deal terms, the purchase agreement or however it may be structured, takes time. There are discussions and there’s always pain points to work through in that. But as long as everyone has appropriate expectations walking into it, those things are usually pretty achievable. And it sounds like you were trying to ferret that out early on, make sure expectations were in alignment with reality, I guess, and what a transaction looks like.

[00:25:15] ANNOUNCER: This is Branch Out, bringing you candid conversations with leading middle market professionals.

[00:25:24] AD: So, then, I want to turn a question to you on that. Whether things you’ve maybe asked yourself, or if you were advising someone, I’m a CPA that’s considering doing a transaction with you. We sit down. What are the things, the questions I should be asking myself to think about what is really important? How do I come up with the things that I should care about and be thinking about?

[00:25:45] JB: So, as they acquire, the things, I start with one major thing, which is, is the person on the other side of the transaction staying or going? Meaning, are they going to be here for 5, 10, 20 years? Or is this really their retirement plan, and they’re exiting in the next 12 months? That is really important, because it drives how I care about the transaction. If they’re leaving in 12 months, then my focus is client integration, people integration, and what are we going to do? Can we transition these clients? Do they fit our model? Do we feel like that they’re going to be successful clients, long-term in our model?

If the person is staying for more than two to five years, then it’s probably not a “purchase,” it’s more of a merger, and they’re probably going to get some equity in our firm. And then, I care a lot less about the clients, and I care a heck of a lot more about the person that is going to be a new partner, and I’m going to be stuck with. So then, what I’m focused on is, do they adapt to change? Because we like to change. We like to do best practice no matter what it is, and we like to learn from deals, and we don’t always think we know it. We are happy to take something that we merged in and say, “Oh, they do it better. Let’s do it that way.” Are they an actual leader or are they a doer? To me, there’s a difference. Are they a CPA who just sits behind the desk and does the work or are they leading their people? And how do I manage around that?

And then, the third sort of big driver of, if they’re saying is, do I think they can answer to me? Because if not, if there’s somebody who’s been their own CPA for 25 years, and they love the way they do it, and this is the way we’ve always done it and whatever. Well, how hard are they really going to be able to adapt and change to a bigger organization?

[00:27:29] AD: The two things you said that really jump out, one is intent. What is their intent? So again, if I’m in the situation, I’m the “seller” in this dynamic, I want to understand what my real intent is. Is it because I’m ready to retire? Is it because, in your case, you saw a greater growth opportunity by being part of a larger organization for both your clients and your people and yourself? Or, and this is probably the easy deal breaker, or is it economically focused? There’s always an economic benefit. We wouldn’t do it if there wasn’t, but it’s the real intent just to get money? That’s what it also looks different, right? Because if you’re retiring, obviously, that’s important and you want to get the value of create it.

But the reason, the intent is because you want to retire or if you want to stay, and then the maybe the subset of this, and I assume this kind of applies to both mindsets, but in particular, those that want to stay, it’s the true willingness to let go of something, which I know can be unbelievably hard, especially if it’s your baby. But realizing that if you’re making a decision to move on to a bigger opportunity, you have to recognize that things are going to have to change along with that.

[00:28:37] JB: Yup. Especially in the smaller world, if they didn’t have a partner, do they play well in the sandbox and collaborate? Because that’s important.

[00:28:45] AD: So, what do you say, let’s shift directions here a little bit now. So, I’ve got someone who is interested. I’m interested in exploring it. Why should I care? Why should I be thinking about? Whether I am exploring it from the perspective of maybe I’m going to buy some other smaller firms to help my growth, or I’m exploring it, for maybe I should go partner with a larger platform to help accelerate my growth or as an exit strategy? Tell me, I guess, maybe the exit strategy is probably the more obvious reason than that. Let’s talk about the non-exit strategy kind of components. Why should I be thinking about M&A?

[00:29:17] JB: I think you ought to be thinking about entertaining many of these conversations, both as a buyer and a seller, and this doesn’t just apply to professional services, it’s to all businesses. If you get these calls, where somebody wants to sell to you or somebody wants to buy you, it never hurts to have a two-hour meeting, right? You learn stuff every single time and you never know where that’s going to turn.

I’ll use a real-life example. So, Richard Kopelman and I met seven or eight years ago. He’s the current CEO of Aprio and my partner, sits on the board of directors with me. He reached out through a broker, who a friend of mine now, seven or eight years later, who reached out and said, “Hey, look, there’s a firm looking to grow into the Charlotte market. They want to have a conversation with you. They know who you are. They’ve been following your acquisitions. Love to have a conversation.” I could have said, and there are people who would say, “Oh, that’s a waste of my time. I’m not interested in meeting.” I said, “Sure, I’d love to meet him. I don’t really know the firm, but I’d love to spend some time. Let’s have a couple-hour dinner.”

We had great conversation, we became friends, and we shared a lot of ideas for years to come, which eventually led to we were both better together than separate, and we ended up doing that merger in 2019. But that was never the intent. It was the intent of the phone call. But that was not my intent going in, and I was clear right up front, “I’m happy to have a meeting, we might be able to have some shared common goals.” I think that that openness drives entrepreneurial growth, it drives collaboration. You don’t know what you’ve missed if you’re not open to the opportunities.

[00:30:48] AD: Openness as a mindset and openness as kind of an approach I think is radically important. Going down a different tangent for a second, a lot of the work I do is business development networking focus. We help individuals learn that skill set and what’s become really clear over the years of doing it, oftentimes, one of the greatest barriers is the openness, because I don’t have the time for it. It’s not important. If I don’t know that there’s an opportunity there, why would I spend time on? If I don’t see the direct benefit to me, why would I spend time? I have too much else going on, right?

I was speaking about that from a networking business development standpoint, but I could say it exactly as you had said, in the same – as a buyer outreach, a potential buyer outreach, inquiry, a possible opportunity. If you’re not open to sitting down and having a dialogue and learning a little bit more, you have no clue what you’re missing behind all of that.

I understand, you’ve got to manage your time, and there’s always more things you have to prioritize. You maybe not necessarily can’t take every single one, every single time someone reaches out, but make time for that kind of stuff. Make time to have discussions and learn and just sit in those kinds of dialogues that are going to do nothing but open up your mind to what possibilities might exist out there. But also, what opportunities that you yourself may not have been aware of unless you have that dialogue to begin with.

[00:32:08] JB: Yep, couldn’t say any different. Totally agree.

[00:32:11] AD: Why do you think, then, maybe kind of digging into that a little bit more, when you see folks that aren’t willing to have those conversations from a transaction. Again, we’re speaking about in your world, CPA firms and M&A in that space. As you said, this applies to all business owners. Anyone who’s in that kind of that entrepreneurial seat, I think that this applies to you. Why do you see people challenged with that at times? What do you think gets in the way of it?

[00:32:32] JB: I think a little bit of its ego, for sure. They think I’m doing great. I don’t need that. Whatever. And then the other is, another thing that gets in their way is that they self-identify as that. They self-identify as the owner of X, whatever X is. Whether that’s a CPA firm, a law firm, a consulting, firm, landscaping, whatever. So, they can’t picture their life any different than that in the current reality for the next X number of years.

And then third would be that they just really aren’t – they always blame time. “I don’t have time.” It goes to a mindset. I’ve always been a thirst for learning type of person. I’m always open to learning something new, figuring that I certainly learned from a lot of people over the years, so I’m happy to pay it forward and teach others. But also, I don’t know it all. I’m not even close. So, feel like every conversation, I can learn something from.

[00:33:21] AD: I try to embrace the personal mantra, if you will, of ‘I’ve learned a lot, but I know nothing’. It does feel like the more I learn, the less I know, which I think is a positive thing at the end of the day, because you can see your own thinking opening up. Then, I really try to never say “I don’t have time,” and I find myself slipping in saying it. But it’s never about not a time, it’s about what’s a priority. It’s not a priority for me, that’s fair. That’s totally fair. It’s not a priority, so I’m not going to make time for it. But “I don’t have time” is just an easy excuse to say that I’m not willing to think about what else I’m doing and why I’m not making time for it. I think that’s a really – that does get in the way of creating the time.

So, John, this has been great. I appreciate some of the insights. I think the last question I want to ask you as we go out here is, if you look back, and you’ve had a heck of a career as an entrepreneur and regional managing partner today, what is some advice that you would give to someone if you can kind of go back 10, 15 years? And whether that be the entrepreneur sitting in the same seat as you are, or just a professional that looking forward and saying, what is my future career look like?

[00:34:25] JB: Yeah, so I would say the things that have made me most successful have nothing to do with technical skills. I have a Master’s in tax. I was an unbelievably good student, but that has nothing to do with where I am today. It really was about being open, listening and making a lot of friends. I mean, I felt like I could help people, right? So even on #taxtwitter, which is the hashtag for those of us in this space. Occasionally somebody will ask a question that I can be helpful at, and I’ve had about six one on ones in the last year, where I’ve taken a Zoom call for 45 minutes or an hour for free. I’m happy to help from some younger entrepreneurial minded accountant who wants some help on an acquisition or a business strategy discussion, right? Because somebody did that for me.

So, being open to both receiving and giving allows you to be helpful in long term. That does not pay off on day one, but it pays off over a lifetime, both in physical rewards and feeling good, but also in actual monetary eventually. I mean, things come around. So, start that young. Don’t wait until you’re 60 to give back. Start young and build relationships and do it from the goodness of your heart, rather than expecting an outcome.

[00:35:36] AD: And have the right expectations to know that it’s not going to happen overnight. It’s going to take time. There’s no shortcut to it. John, I really appreciate you coming on. I appreciate you sharing your thoughts on this. For listeners that have questions and want to reach out to you, what’s the best way to get ahold of you?

[00:35:50] JB: So, I’m on Twitter, John Bly, CPA. I’m also on LinkedIn, but email me. It’s [email protected]

[00:36:00] AD: Awesome. We’ll make sure that’s linked in the show notes below here. So, awesome. Again, thanks, John. Appreciate you being on here.

[00:36:05] JB: Thanks, Alex. I enjoyed it.


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