Your Practice: The lighter side of life

But the takeover of the three-partner practice Murphy, Deeks Nolan by Windsor Stebbing Marsh, a firm of five partners and growing, tells a different story.The joining together of two firms can be an equally traumatic experience for partners, clients and staff. The firm taking over has to be sure that it will retain at least 60% of the acquired firm?s client base; and that new staff, if taken on, will slot comfortably into the new firm. And, of course that partners on both sides agree how arrangements will be managed. This can all be extremely complicated and prolonged if the two parties are not well matched.

However, to behold the free-and-easy relationship between Richard Murphy, former partner at MDN and Paul Windsor, partner at the acquiring firm, it is clear that takeovers do not always have to be plagued by bloodshed and tears.’Richard’s in the office every three or so weeks to chat about clients,’ explains Windsor. They even admit to the occasional out-of-hours pub outing together.

‘We knew right from the first meeting that that was it,’ enthuses Murphy, who now works as a consultant for Windsor Stebbing Marsh. ‘A lot of deals fail due to nit-picking. We worked this on the basis of trust and honesty.’

Indeed, their openness is suspiciously unnatural in the world of business deals, but their chosen tactic clearly worked to the advantage of both firms. Both men agree that the key to the deal’s success lay in the two firms knowing what they wanted and how to get it by being up-front with each other.

Following three successful acquisitions over the past few years, Windsors wanted to expand into the southwest London corridor. The accountancy firm also wanted a local firm to ease problems of relocation for staff and a business that charged similar fees.

A further instigator for expansion was the announcement last year of the government’s decision to raise the statutory audit threshold to £1m, up from £350,000. Windsor says he knew it would affect the firm and therefore it had to expand into other sectors. With Murphys’ strengths in the corporate field and associated tax sectors, Windsors saw this would fill the gap they lacked through the loss of some audit work.

All three partners at Murphys had the same goal of selling up and moving on to other things. Murphy says: ‘I had wanted to move away from conventional accounting for a while. I’m working more as a business consultant these days.’

The deal was struck quickly following the initial meeting – as both buyer and seller were at a similar stage in the process. They were eventually united through a ‘marriage bureau’ and the initial meeting led swiftly to the deal being signed and sealed at the beginning of this year’s tax year.

‘From the moment we shook hands, it went very quickly,’ Murphy says of the deal. The swiftness was also attributed to the expediency of e-mail.

‘E-mail worked well for us. It was unambiguous,’ says Windsor.

One of Murphy?s key concerns about the sale was that the acquiring firm would retain the staff and was a similar kind of animal. In fact, he says, probably the most stressful part of the deal was telling the staff.’We had a group of staff that had been very loyal to us over the years and we wanted to repay that, so as part of the deal we wanted the staff to move over to Windsors,’ he says.

Following the staff meeting the next problem lay in the systems, which in fact turned out to be similar enough to reduce potential technical difficulties to a minimum.

For Windsor a good rapport was vital to the success of the deal. ‘It was essential to have similar personalities, since none of the partners were coming across. It is a two to three year [transitional] process. We had to make sure we got on well with the clients as well as with one another,’ he says.To ensure MDN clients were happy with the prospect of being dealt with by another firm, the two ‘rival’ partners went out on client visits together, arranged meetings at the new offices and maintained close telephone contact at all times. The result was a 95% client retention rate. ‘80% – 85% would have been a successful deal,’ says Windsor. ‘Of the 600 clients we had, the majority lost in the deal was due to geography,’ adds Murphy.

Of the 10 staff and three partners at the Wandsworth-based Murphy Deeks Nolan, there were two redundancies. Five staff members went over to Windsors. Two left within the first few months principally due to the relocation. They are now happy to confirm that all staff have found work in other businesses.

With the changing face of the accountancy world, small and medium-sized firms are facing change with greater urgency. In order to stay alive and independent, Windsors sees acquisitions and mergers, as well as adapting the skills and services offered as the only way of avoiding the jaws of the consolidators.The firm does not intend to stop there, however. It is already eyeing up possibilities for further expansion on its £2.5m annual fee income. ‘I think we are now in the top 100,’ says Windsor.

The biggest management issues Windsors now has to overcome is the best way of recruiting and retaining staff and ensuring clients get value for money. But, the newly enlarged firm is optimistic of the future for small niche accountancy firms.

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