I knew one day I would sell Summit CPA (now Summit Virtual CFO by Anders), the accounting firm I founded in 2002 with my partner, Adam Hale. But I wanted to sell it in the same way I built it: unconventionally.

Some of it has to do with pride in what we built. No question. But I also was motivated by something bigger: we built Summit to change the way people think about accounting. In doing that, we created a machine capable of remarkable growth. The only way we were going to be able to offer that value to a buyer was if we kept the machine together operating as designed.

Summit differs from a traditional accounting firm in four key ways. From my perspective, any potential partner would have to want these things for the deal to be a win-win:

1. Inbound marketing: When you create something new, clients only come if you teach them about it. Thanks to our thought leadership in the virtual CFO space, our clients come to us, at a rate of 4-6 new clients per month and a $90,000 per year average package. Our virtual CFOs don’t spend time looking for business; they get straight to work, focusing on what they do best — strategy.
2. Subscription-based billing: Instead of the hourly model that keeps the client guessing about their upcoming bill and forces us to act as the bank, we implemented a weekly flat fee that allows us to focus on high level strategy and eliminate accounts receivable. We zap our client’s account every Monday. I guess you could say it’s my favorite day of the week!
3. Fully distributed workforce: Long before the pandemic made “work from home” a household expression, we pioneered remote working to attract clients and top talent, nationwide.
4. Variable comp pay structure: Our employees don’t earn based on seniority. We offer a competitive national average base salary, on top of which they can earn more (or choose to work less) based on their book of business. Salaries are transparent and equitable across the board.

Adam and I didn’t plan to sell until we got to the $20 million mark, so that we’d be big enough to merge without getting swallowed up. When we sat down with Anders, we were about three years away, based on our current rate of growth. Still, we took the meeting — we’ve always enjoyed taking these meetings with potential buyers, just to keep an open mind.

Anders has always been an entrepreneurial firm that’s grown significantly over its 60-year history thanks to strategic mergers. When they identified Summit as a potential candidate, it was based on strict criteria: they wanted to accelerate the growth of their Outsourced Accounting Services department. Our virtual CFO Services looked like the perfect fit.

Their attitude kept the conversation going: They wanted us to continue to do what we do best, support us in our growth, and use Summit’s expertise to accelerate their learning curve.

Here’s what I needed them to bring to the table.

5 “Must Haves”

I look at a merger just like buying a house: There are nice-to-haves and non-negotiables. If you want a beach-front condo you won’t accept a mountain cabin, and if you need 6 bedrooms, a 3-bedroom won’t cut it.  For our merger, we had five must-haves:

1. Taking care of the team: Changing the way people think about accounting means no hourly requirements and no busy season. We needed that plus consistent salaries, promotions, titles, and job requirements.
2. Operating as an independent unit: We did not want to be absorbed into a larger company. To accelerate our growth, we knew we needed to keep the machine together, functioning as designed.
3. Maintaining a national brand: We wanted to keep our nationwide name recognition as a fully distributed company that allows us to attract top talent and clients.
4. Incentivizing the buyout: We wanted to structure the deal so that part of the pay-out would be tied to our reaching the 50-million goal. I knew that would light a fire under the board of directors and ensure we’d never be tempted to coast.
5. A seat at the table: Even though a merger meant less decision-making power, Adam and I needed to be able to cast a vote as equity partners and make our voices heard on any major decisions.

When we made this list, we thought we were asking for the impossible. I was truly shocked when we got a ‘yes’ for all five with Anders. Actually, it was a shock for both sides! Anders CPAs + Advisors gained a growing company that could help them lead in this particular industry while we had all of our needs met. Neither side could believe they found the perfect fit. But we had.

Obstacles & Opportunities

Anders appreciates innovation. That’s one of the reasons we’re such a great fit. From our fully distributed workforce to our leading-edge tech stack, Anders came to Summit wanting to know how they could integrate our philosophy, strategies, and tools.

Now, of course, when you move into a larger firm, you have to deal with a lot of administrative things that are critically important both to the employee and client experience. Obstacles are to be expected, but both teams are committed to turning any obstacles into a net positive, starting from the integration steering committee that built a plan for each department, executed it, and now monitors progress.

One of the biggest challenges was figuring out how to handle Summit’s name — to maintain the brand recognition while signaling our relationship to Anders. We decided to take a gradual approach, moving from “Summit CPA Group” to “Summit CPA Group, a Division of Anders CPAs + Advisors” to “Summit Virtual CFO by Anders” until it becomes “Anders Virtual CFO.”

Here are five areas where we’ve turned obstacles into opportunities:

1. Human Resources and administration: Summit isn’t big on titles, but we needed to come up with a way to integrate our team into Anders so that job descriptions lined up in a meaningful way.
2. Compensation and partner track philosophy: As we advocated for the adoption of Summit’s approach, we had to confront issues of equity, whether it was fair to have different models for compensation within a single firm. We also needed to hear from our employees about their needs and values.
3. Marketing philosophy: While sales has often been part of an accountant’s job description, Summit eliminated that need by creating a thought-leadership marketing engine to drive the business to the accountants.
4. Speed of change: At Summit, there were times when we would adopt new software overnight; now decisions impact more people. There are more stakeholders and more sides to every story, so we have to move more slowly, even though everyone values staying nimble. At the same time, we know the stakes are higher, so when we get it right, the rewards are even greater.
5. People-first culture: Summit and Anders share this core value, but each workplace culture handled that a little differently. A lot of energy and resources are devoted to making our remote environment as connected as possible – for example with twice-a-year retreats. We needed to make sure that culture didn’t change when we became a hybrid workplace after the merger.

Obstacles & Opportunities: Employee Perspectives

There are so many ways to measure the success of a merger. As finance professionals, we know the metrics inside and out. But at our most recent retreat, when I looked out over the crowd, I saw a clear sign that we are on the right track: instead of Anders employees on one side and Summit on the other, I saw team members from each legacy group interacting, sharing a drink and a conversation. Sometimes, it’s hard to believe how recent this has all been.

The retreat showed me that the culture fit is on point, but what about the day-to-day work? Here’s what our teams see as the various obstacles and opportunities:

1. More career opportunities. For Summit employees in particular, the merger opens the door to so many career options if they want to grow or change paths.
2. More experts to give guidance. With so many seasoned professionals under one roof, it’s easier to find internal guidance on any topic, whether it’s doing a deep dive or wading into new waters.
3. New perspectives on how to work. The Anders team appreciates Summit’s use of offshore resources for low-level accounting work, allowing more of a focus on strategy.
4. Increased market influence. Because Anders and Summit each have expertise in certain niches, there are more opportunities for sharing learning and benefiting from the influence.
5. Revising communications expectations. Each team entered the merger using different tools – for meetings, internal communications, etc. — and with different expectations about how those tools are used, especially given that Anders is hybrid and Summit is remote. The merged teams have needed to spend time discussing best practices, which has given them the opportunity to ensure effective communication.
6. Choosing the best tools. In some cases, one team has a perfect tool, and the other team is excited to jump on board. When both sides love their tools, they have to spend time figuring out which way to go — which means there has to be a willingness to compromise and try new things.
7. Understanding the leadership structure. Both teams have to take time to understand how decisions get made, what’s the workflow — and who are the people they’re collaborating with. Transparency has been so important, so that fewer miscommunications occur and when they do, we can address them right away. The retreats have also gone a long way in making sure people have that human connection and give each other the benefit of the doubt.
8. A balance between freedom and structure. Summit’s team members have always been entrepreneurial. That’s what makes them effective with clients. We want to strike a balance between encouraging employee freedom and maintaining structure and flexibility as we grow and scale. Communication has been key: When there’s a change in policy, understanding the reasoning helps make sure there are no hurt feelings.

Advice for Prospective Mergers

There’s no one-size fits all when it comes to mergers or, at least, not for successful ones.

Start with what you want. Before you go house hunting, you want to be clear: do you want a two-story or a ranch, a condo on the beach or a cabin in a mountain range? That’s my number one piece of advice for anyone interested in a merger: be clear. That’s the same advice I’d give people who think they are uninterested in a merger, like I was. If you start by writing down every one of your non-negotiables — even if you think it’s impossible to find someone willing to accept them — you’ll be in a great position to respond to any offers. (In the event that you're marketable, you're going to talk to many different folks who are going to have many different ideas.)

The goal with these early meetings is to get to ‘no’ as quickly as possible, if that’s where you’re headed. That ‘no’ is what will get you to the right partner.

Due diligence is not just about finances. Yes, of course, there’s a financial component to due diligence. (I am an accountant after all.) But everyone knows they have to study the spreadsheets. I’m here to remind you to look into things like the leadership structure of the acquiring firm – that one detail will end up influencing everything going forward.

Then, of course, there’s the firm culture, which is absolutely the number one must-have for a successful merger. To make sure that’s a fit, you’ll need to get your team involved: We had a full, in-person meeting with our leadership teams, early on. It made it way easier to say, “Yep, this is a match,” when it wasn’t just coming from Adam and me.

Keep an open mind by recognizing each other’s strengths. When two great companies come together, it’s natural that each side has a long list of best practices that got them where they are today. Summit and Anders merged while each company was experiencing a lot of growth. We committed to recognizing that while we’ve each been successful doing things in a certain way, we need to find the right answer for the future state of the firm. That means we’ve spent time developing a process to negotiate, compromise and respect each other’s points of view.

To go back to the house analogy, you might be looking for a three-bedroom, but you find a two- bedroom with the yard of your dreams. You need to be solid on core values, but flexibility is absolutely key. Change and evolution are part of the process, during and after the deal, so be ready to embrace that.

Always be transparent. When you’re working on a merger, every obstacle is also an opportunity. An opportunity to build a stronger team and to offer a better service. Commit to full transparency, every step of the way. If something is taking longer than expected, tell your team or your clients, “Here’s why.” The more you include everyone in your process, the easier it is to get a strong buy-in.

There’s a lot more to say about mergers, so if this got you interested, we have several additional resources, including a webinar we recorded about the merger.  And for more details on the merger with accounts from leadership and team members at Summit and Anders, see the book I wrote about our experiences.