Hungerford Nichols' expansion reflects growing national trend
Retiring baby boomers are fueling M&A activity.
Hungerford Nichols CPAs + Advisors has merged two small Greenville accounting firms to create a new larger office in Greenville — a sign of the times that a Hungerford Nichols principal says may ultimately involve many types of small businesses in America.
Hungerford Nichols, one of the largest locally owned independent CPA firms in West Michigan, acquired Dean Jensen CPA PC and Christine W. Kohn PLLC. The two principals and their staffs will begin working out of the new Hungerford Nichols office at 114 N. Lafayette St. in downtown Greenville in December.
The new additions bring the total number of Hungerford Nichols staff to 75, of whom 12 will be located part- or full-time in the Greenville office.
Hungerford Nichols, which had its roots in the McEwan & Kauffman firm started in 1941, has its headquarters at 2910 Lucerne Drive SE, off 28th Street in Cascade Township.
“We are excited to have Dean, Christine and their teams join us,” said Rick Chrisman, managing shareholder of the firm. “They are a great fit with our culture, demonstrating a high level of commitment to exemplary service for our clients. We all strongly agree the merger strengthens our ability to serve our clients in Greenville as well as attract new ones throughout West Michigan.”
Both Jensen and Kohn opened their practices in 1990. Jensen focused primarily on accounting and tax services for small business as well as individual tax return preparation, while Kohn concentrated on trust, estate and individual tax return preparation. The two firms bring more than 75 years of accounting and tax experience to Hungerford Nichols’ Greenville office.
“Having worked with Hungerford Nichols on technical projects in the past, we are very pleased to be able to offer their talented staff and industry expertise to our clients on a full-time basis. With expanded services and additional helpful and friendly staff, we feel the merger will be nothing but positive for our clients,” said Jensen.
Kohn said her group is “eagerly looking forward to our merger with Hungerford Nichols. It has become evident, through our discussions, that Hungerford Nichols shares the same commitment to personalized, professional service for our clients, as well as to continued involvement in our community.”
Hungerford Nichols is a full-service CPA firm providing accounting, business advisory, tax return preparation, tax planning, auditing, financial planning and IT advisory services with an emphasis on closely held and family-owned businesses. The firm also services governmental entities, not-for-profit organizations and employee benefit plans.
Chrisman told the Business Journal that Hungerford Nichols definitely foresees more mergers with small accounting firms on the horizon. The reason, he said, is the fact that in many professional services today — not just accounting but many others ranging from physicians to dentists to optometrists and veterinarians — “the baby boomers are getting up there where they’re in their mid-50s on up, and it’s time for them to start figuring out how they are going to retire.”
Many of those small businesses have built up a lot of value with loyal customers and clients. Those firm owners “just have to figure out how to convert that into funding for their retirement,” added Chrisman.
Some firms, such as Hungerford Nichols, have been planning for succession of the business to new owners.
“At our firm, we’ve done a good job of planning for the succession of the show, with managers trained and in line to start taking over,” said Chrisman. “But there’s a lot of firms out there, especially smaller firms than ours, that really don’t have a succession plan. So now what’s happening is, the main CPA or the main professional there is getting into the 60s and trying to figure out who will take over, how to retire.”
“So our feeling is there are going to be a lot of these opportunities (for mergers and acquisitions) coming up,” he added.
Chrisman said there are quite a few small accounting firms in West Michigan, and “the bulk of CPAs out there are probably operating out of small firms, and the average age keeps getting older.”
Many of those firms employ 10 or fewer people — “the size we’d be looking at,” said Chrisman. But many firms are even smaller: just one CPA and perhaps an office assistant or two.
Those small firms have gotten busier over the years and, at the same time, the owner has to deal with other things, such as IT and HR issues.
“You get to a certain point in your career where you want to focus on what you are good at and not spend a lot of time on the other busy stuff,” said Chrisman.
He said a merger with a larger firm like Hungerford Nichols can offer a small firm owner the opportunity to continue working, but with a backup staff that allows the veteran professional to concentrate on what she or he likes to do.
Hungerford Nichols has had a small office in Greenville since about 2005, when it acquired the business of Nancy Fortin. Before that, Fortin had been working with Hungerford Nichols occasionally, providing services to her clients in areas with which she needed help. Eventually, she decided to move out of state and offered her book of business to Hungerford Nichols.
Some of the discussions that eventually led to the latest mergers had been “going on over a period of years,” said Chrisman.
Chrisman said that for the larger firm involved in a merger or acquisition, “What you’re buying is two things: One is the good will of the client base, but it’s also the people that are working there, too.”
The addition of trained professionals with lots of experience and an existing client base is an immediate plus for the larger firm.
Hungerford Nichols does a lot of work for family-owned businesses and closely held companies. “We’ve been growing very steadily and picking up a lot of new, good work,” according to Chrisman.
However, baby boomers’ retirement is affecting CPA firms in another way. Chrisman said he has read that 75 percent of the leaders in the CPA profession “will be retiring over the next 10 years. That’s a huge number of people that are going to be retiring and leaving a lot of holes in the firms.”
“There is kind of a shortage out there of good young people that are interested in accounting,” he said.
“You can’t just run an ad in the paper and see who applies,” he said. The recruitment process now is “to be proactive and start trying to line up people ahead of time, so when you do have an opening, you’ve got a list all ready.”
Recruiting is “our challenge,” he said, so Hungerford Nichols maintains close ties with the accounting schools at universities in the region and offers internships, which is a good way to get to know potential candidates.
The firm also keeps its staff on the alert for other CPAs in the region who aren’t happy where they are.
“A lot of good, quality people start out at the big firms,” he said, “but then they kind of get burned out over time,” and want a better work/life balance.
While some of the big firms have their CPAs traveling often, Chrisman said Hungerford Nichols’ clients are primarily in West Michigan. There might be an occasional night on the road, he said, but not that often, while at a lot of larger firms, the CPAs could be traveling for weeks on end all over the country.