Earmark Podcast | Earn Free Accounting CPE

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Blake Oliver: [00:00:17] Hello and welcome back to earmark. I'm your host, Blake Oliver. And today we are tackling a topic that is on many firm owners minds successfully selling a client accounting services practice. I am thrilled to be joined by Lynette and Craig Connell, who recently navigated the complex process of selling their boutique firm to a larger regional player. They'll be sharing their journey, including the challenges they faced and the strategies that led to an impressive 150% revenue growth. Post-acquisition. Whether you're actively considering a sale or simply planning for the future, this episode is going to offer valuable insights to you. So let's dive in and learn from their experience first. Lynette, welcome to the show. Thanks, Blake and Craig. Great to have you as well.

Craig Connell: [00:02:14] Thank you. Wonderful to be here.

Blake Oliver: [00:02:15] So, Lynette, I'd love to start with where you were when all of this began. You had a firm called click PA. How did you come to start your own firm? How did you two how did you two get that going?

Lynnette Oss Connell: [00:02:34] Sure. So I had been formerly an auditor, so had Craig. Um, each of us had left auditing to do fractional CFO and comptroller work. So I'd been doing fractional comptroller work for a period of time. Um, Craig. And my skill sets really complemented one another. Uh, Craig focused on strategy, um, high level financing, and I'm much more of a technical accountant. So we decided to join forces with Qlik PNW and complement one another and offer something that most of our clients were asking for. Is that when we were each doing advising, our clients often asked for like the full range of bookkeeping, and that's not something that Craig or I necessarily offered ourselves, but we decided it was obviously needed in the market. So that's where the inception of the idea really came from.

Blake Oliver: [00:03:25] So you were doing the controller type work and Craig, I, I take it you were doing the CFO kind of work.

Craig Connell: [00:03:33] Yeah, that's correct. I would come in and step in on the strategy side and more forward looking.

Blake Oliver: [00:03:38] So tell me more about the services you were offering. What kind of clients did you serve? Like where did where did you take your firm? You know, give me the give me the, like, high level view.

Craig Connell: [00:03:50] Yeah. Go ahead. Lynette.

Lynnette Oss Connell: [00:03:52] Oh, sure. Um. I thought you were asking that question. Um. Either one. So. Our clients were typically professional service firms and quite a bit in the tech world. And when we started out, we were kind of taking whatever our contacts sent us, which in the Seattle area, which is where we're located is a lot of professional services. And tech is just where we knew people. Um, also, though, from my auditing background, that was a big focus of some of the auditing clients that I'd had. So I was really familiar with that. Um, additionally, a lot of our clients ended up with subscription model revenue. And so we started at least I started having a bit of a niche practice helping with revenue recognition and also pre and post, um, helping my clients pre and post acquisition really set us up to think about our own future. I helped a lot of clients pre due diligence, post due diligence, Deciding when is it appropriate to for a small client who is looking to be acquired to make sure that their revenue is 100% GAAP, and when is it appropriate to just disclose the GAAP, um, departures? So walking my clients a lot through that, but also providing all of the bookkeeping, client accounting services and advisory leading up to those moments? Um, a lot of our clients, though, never ended up, um, looking toward an exit. They weren't looking to get acquired, but they also had those needs just on an ongoing basis for whether it's their banking needs or just for their investors. Um, I don't know how many. Did you have anything to add? To add to that.

Blake Oliver: [00:05:31] I was going to ask, how many clients did you have?

Lynnette Oss Connell: [00:05:34] Craig, can you give an accurate number because you tracked that more than I did.

Craig Connell: [00:05:39] So we had, um, towards the end, I think we had about 16 or 18 clients. Um, we would do anywhere from just, um, more traditional bookkeeping, if you will, on some clients. But other clients, we would, um, Usually partner with a bookkeeper and kind of do not transactional work, but also all the strategic work. Um, there were some clients that were more geared towards that skill set. As far as, hey, we need to get a little bit more insights over the activity that we're doing and some more, a little more geared towards mine. Like, not only do I need those insights, but I also need to know, looking out six, 12, 18 months, where am I going? What do I need to be aware of? I'm looking to sell my business. How do I get the most value out of it? Um, and then the end all be all for every client is help me with cash flow. Right? And so I've done quite a bit of work around cash flow forecasting and, um, got my own kind of system with that, that I would bundle and sell into the services.

Blake Oliver: [00:06:33] Got it. So these were much larger clients than a lot of people think of when they think of client accounting services. You know, these are not just bookkeeping clients. You're doing the month end close. You're doing rev rec. You're doing cash flow forecasting. And did I hear go ahead.

Lynnette Oss Connell: [00:06:48] Yeah I was I was going to say I think that just hearing you say it out loud, our approach often is we get brought in for the fractional CFO or comptroller work that they either knew they needed to clean up, or they were worried they were going to get audited or whatever the reason may be. They were brought in for the higher level service. And then once we provided those services, we would engage with them to kind of take over either the full book of accounting or work with their existing staff. It was actually really common for me, especially to work with a company's existing staff to and manage them as a third party to come in and during their do the month end close. But I'm closing their work right and going back and giving them feedback and training of how they can do a higher quality job. And most of the time we've got brought in for that. We wouldn't end up doing the the transaction level work ourselves.

Craig Connell: [00:07:42] Oftentimes, we would pick up a client that had a bookkeeper in place that was doing kind of that traditional bookkeeper model, and they just needed something a little more specialized and concierge. And that's really what we offered, was more of that high touch, high value, kind of more a lens on on just the whole strategy. But as well as, hey, from you need someone to be able to translate what the banker is saying, translate what the tax CPA is saying, translate what your investor is saying. Because oftentimes these owner operating businesses, which a lot of them were, they had a great model from a business side, but they didn't understand the finance side of it, and they didn't have a partner in that.

Blake Oliver: [00:08:21] Yeah, that sounds like a great model or a great type of client to have, because if they have somebody in-house, you're not getting bugged to like send an invoice all the time or, or make a payment to a vendor they're doing that day to day. Now, the challenge is you have to manage people who are not under your direct control. So I imagine, Lynette, that sometimes closing the books could be a bit of a challenge, right? Ensuring the quality and all that.

Lynnette Oss Connell: [00:08:48] Absolutely. One thing that really helped us with success in that arena was having very well defined boundaries between what our staff did and what their staff did. So Craig and I had employees who worked for us, and they would do very specific slices of the accounting for these larger clients. So if the client staff is sending their client invoices for the services that they're providing, our staff will go in on a weekly basis or monthly basis by weekly basis, just depending on the volume of transactions the client's generating. And just take a look at that group of transactions that were generated by staff. So a large part of our success as a firm was in customizing QuickBooks online to give me the reports I needed to review my staff work and for my staff to review their staff work like the client staff work, so adjusting the audit reports or other reports to give us the relevant pieces of information to quickly identify where people were falling behind, where there was challenges, I mean, whatever the pain point was. So we got really good at diagnosing where where we needed more oversight because we had so much touch and interaction with client stuff.

Blake Oliver: [00:10:03] So it sounds like efficient. It sounds like you kind of had this service package pretty dialed in. So that can't be the reason that you wanted to sell the firm. It wasn't a fire sale, right? You're not, like, burned out, uh, or just like, looking for more structure, I suppose so. Yeah. Like when? When did you when did you two decide you wanted to merge with a larger firm?

Lynnette Oss Connell: [00:10:27] So I would say that we've always considered it to be a possible option. You know, when you, when you say, what do we want to do five years from now? What do we want to do ten years from now? It was always on on the list. Um, Craig and I knew from the very beginning that we had different tolerances for how much, how much work we're comfortable doing. Um, I had always been in this space. Not necessarily as a lifestyle business, but as a needs based business. In order, I needed to make enough money to pay for my kids medical bills and for other life circumstances that had come my way. And so for me, I wanted to spend only enough time working on it to do excellent work and make enough money to to meet my needs. Craig, on the other hand, and I think his story is more common, potentially he wanted to grow a business. And so those outcomes for us weren't always aligned, goals wise. And so I'll let Craig talk about what options we from the very beginning, kind of saw as possible directions that we'd be going with it.

Craig Connell: [00:11:38] Yeah. So like she said, um, an acquisition was kind of always in the back of her mind. But towards the end of, um, click back in 2022, um was coming out of Covid. Our life had gotten really enmeshed, um, being married in that we needed to figure out how to separate ourselves. And if I really wanted to go and grow it, um, and want to spend more time with the kids and to really help, um, get them through school and get them the base that they need and not feel like she's having to split time between family and work. We knew that we needed to dispose of the business one way or another. Um, and that's kind of we didn't necessarily think that was going to go that way. I had also contemplated buying a bunch of tax practices and kind of stringing them together, as we're seeing in the world right now, with a lot of consolidation and kind of under 20 people practices. I toyed with that idea, and I even toyed with going back to be a CFO for, you know, an investor backed startup or something to that effect. Um, ultimately, we landed on being acquired. Um, and to roll into that, because I really do love the work I do of, um, you know, not just being a fractional CFO, which I'm actually stepping away from at the moment and really building a business and leading people, training people, fulfilling business owners and selling the work. Right. And being being more like organizational transformation type work.

Blake Oliver: [00:13:07] Yeah. I feel like this is something that people really don't understand when they start an accounting firm is the difference between being that expert service provider and being the business owner, and getting yourself out of the client service. I mean, a lot of times it's the, the owner that's the the biggest blocker to that. Like so so you, you figured out pretty early that you wanted to get out of, you know, being that client facing CFO and and build a business.

Craig Connell: [00:13:38] I don't know if I'd say pretty early. I mean, it took me about 5 or 6 years. I'm kind of a slow learner that way. But, you know, I would.

Blake Oliver: [00:13:44] Say that's that's not bad. You know, like some of us, it can take 20 years before we figure that out.

Craig Connell: [00:13:49] Well, in my defense, it was probably closer to 18 years or so with the work I've been doing. Um. Stepping away from client work probably about six months ago. Um, even when I've come into the larger firm, I still took on a lot of fractional CFO work for a lot of clients, and I'll occasionally step step in. And usually it's on due diligence work at this point because I know it's I know it's time bound, right. Like, hey, you're you're looking to be acquired. I know you guys have a target closing date. 1231. Sure. I can throw 20 hours on this project. Right. Um, just having better boundaries with the amount of energy I put into client work rather than it being open. Uh, kind of open framed.

Lynnette Oss Connell: [00:14:32] I also want to give a reflection about the way that that as a spouse. Um, how we. Craig and I observed one another working really accelerated, I think, an exit in a really positive way, because we know each other so well that Craig was able to look at me and say, I see how you work. I see that this particular type of work isn't healthy for you. It's not fulfilling for you and vice versa. So I was able to look at Craig and say, you know, if you're spending time on this particular kind of work that I can tell in your body language, I can tell in how you interact with the family or your need for getting a lot of space, taking a lot of walks. This isn't healthy for this particular area, isn't healthy for you either. And so we were able to help each other pinpoint where were the most fulfilled. And one thing that I will say about Craig is we were able to see together that he needed a larger team. He's a natural manager and so managing me wasn't healthy. But either that meant that he had to hire. We had to hire experienced, talented staff to work with him, or we needed to go somewhere that had more staff that he could tag team with and interact with.

Lynnette Oss Connell: [00:15:47] Because and I think a lot of, um, people in Craig's position probably feel this way too. Craig would get really excited about a project or a big project client wise. And then there are other projects that he's like, I want to delegate this one, but when you're a small boutique firm, you can't exercise the delegation or you can't delegate out work that's unfulfilling for you. So if we look at things like, um, six working geniuses or, or other metrics where you say what somebody is good at when you're a small boutique firm, you have to provide all those levels of every project. And so we had to decide, are we going to grow? Click PNW to the size where we can specialize in our fulfilling tasks? Or do we go somewhere where it's bigger? Where do we let Craig go somewhere where he can exercise that? And being in a couple, being married and enmeshed, as negative as that is, was also a silver lining into helping both of us be more fulfilled.

Blake Oliver: [00:16:48] Yeah. So you looked into or you thought about doing your own roll up, like growing by acquisition with other small firms. Why did you ultimately decide not to pursue that path, Craig?

Craig Connell: [00:17:01] Um. So the amount of work it would take to buy a book of business and the amount of capital, I just didn't feel the value was there when there's so much work out there. Like, if you really are a natural salesperson, which is pretty rare in the accounting profession, I like to count myself as one of those people. I can go and sell the work no matter what. Um, finding the people to do the work is something else, uh, that can take a little more work. Um, on top of it. I just don't like doing taxes. And I didn't like being, um. I didn't like being the person that was signing the tax return. And, um, and so I tried kind of poaching a couple people that I knew, some, some friends. I'm like, hey, why don't you team up with me and do this thing? And I'm like, yeah, that you couldn't match the benefits I'm getting. And I started realizing what I was digging into it. 2022 was really when firms really started cranking up the comp models, especially for experienced people, and really expanding those benefits through Covid, and it just became cost prohibitive.

Blake Oliver: [00:18:10] Yeah, getting getting somebody like that is almost impossible these days in a small firm, because you cannot offer the benefits that a larger firm can. And yeah, it's it's almost impossible. Try finding a manager or a director. Oh, I.

Craig Connell: [00:18:25] Know, I know. I you know, with my growth, I've definitely, uh, needed to find some of those people.

Speaker4: [00:18:32] We ended up, we ended.

Lynnette Oss Connell: [00:18:33] Up tag teaming with some other small boutique people to, you know, to do tax returns for our clients. And as much as that worked, that's not a growth model, right? Because we're just we're partnering with them and that's a great relationship. But that's not growth.

Blake Oliver: [00:18:50] It's also not ideal for the client because then they have multiple providers. Right. And we all know one stop shops provide a better experience. Yep. Yeah. Okay. So let's talk about, uh, the firm that you merged with Sweeny Conrad. Mhm. Uh, how did how did you find the buyer? That's one of the hardest parts of this journey. I know a number of small, firm owners who have been meeting with people for months, years, and they have not found the right buyer yet. So share your secrets with us.

Craig Connell: [00:19:23] Yeah. Well, that night, um, we actually started a career at the same accounting firm, um, which is Sweeny Conrad. And through our career and everything else. Um, they are actually a source of clients for us that they weren't serving because they didn't have a cast department. Um, further, we just made sure to keep good relations with everybody and to not burn bridges. And so just developing and cultivating those relationships through 15 years of just intentionality, um, we created a lot of good relationships in the industry in the Seattle area. It's, you know, they say how many degrees of separation there are in banking and in accounting in Seattle, it's like one, maybe one and a half, right? It's like, oh, do you know? So and so. Um, so in the midst of talking to another accounting firm, it just didn't feel right for me to go to that firm. And that was if I took it, it would have been a huge compromise. Um, I reached out to my folks at, uh, that I know at Sweeney and just said, hey, let's grab some coffee. And mostly it's I wanted to hear from him, uh, what they had going on there, but also if it was even a possibility or what they thought is like, hey, do you think this was even something that I could go out and find? Or is there any other smaller accounting firm you think I could I can go into in that discussion, it came out that the director of the my department that I'm in now was looking to retire. And so I boldly just said, let me throw my, my, my, my name in the hat, you know, let me throw it. Let me see if this would work out with everybody. And I already know, knew probably three quarters of the partners still that are at the firm. Um, and so it's just just through intentionality and cultivating those relationships through the last few years, um, decade even. Yeah. It allowed for the opportunity to exist.

Blake Oliver: [00:21:12] You didn't burn bridges. You maintained relationships even though there wasn't, like, a particular business reason to do so. Yeah. The partner who bought my firm coincidentally taught me one of the most important things I've ever learned, which is, he would say, um, it's all about relationships. Yeah, right. All of my success so far in life has been due to the relationships I've maintained. Right. It's it's I mean, it's important to be good at what you do, and it's important to have a good business. Right. But if you don't have the relationships, you you don't have this opportunity that that you fell into in a way. Um, I'll also say.

Lynnette Oss Connell: [00:21:57] That this partner that, that Craig is referring to is the partner that went. So Craig and I each left this firm at different times for different reasons and went to do our own things. And this was the partner who had hired both of us and to whom we had each tendered our resignation. Wow. And so it is possible to have these transitions and circle back around. It doesn't have to be. So it's not the end of things, right? Everything's always evolving and and maintaining those relationships positively. You never know where you where you will need somebody or where you could partner with somebody.

Blake Oliver: [00:22:38] That's why I'm sad when I read posts on Reddit where people are talking about like the the negative experience they had leaving the firm, right? How they they tendered their resignation and the the the result was just like, go away. We never want to see you again. Right, right. That's just not the right way to approach it, even with our own staff. Right? I mean, when you have staff that go on to do bigger and better things, I always like to think and hope that they'll want to come back and work with me someday. If it's if there's a fit.

Speaker4: [00:23:06] Yeah. Multiple people. Like.

Craig Connell: [00:23:10] Multiple people in my firm have boomeranged to that firm, and that's one of the reasons why I chose it too, is I knew it had a great culture. And there's partners that have boomeranged to, you know, left in their career and came back and became partner. And, um, I count myself lucky as being one of those people.

Blake Oliver: [00:23:27] So you found the opportunity. Partner wants to retire, so there's a slot for you that's opened up. But it can't be as simple as that. Never is. Walk me through how you manage to make this happen. Did you have to get buy in from, like, dozens of partners? Was it? How long did this process take?

Craig Connell: [00:23:50] Yeah, it took about, um, just shy of three months to kind of get it from, uh. Hey, first conversation with the managing partner to, um, you know, signed, sealed, delivered, and, uh, walking in the door, uh, which I think is probably a little fast. That's pretty.

Blake Oliver: [00:24:05] Good. Yeah.

Craig Connell: [00:24:06] I think the saving grace was that we were a known commodity for for them, uh, and that we had positive relationships. And I think more realistic time frame is probably, you know, six months ish. Yeah. Accounting firms especially, you know, once they get, you know, more than ten, 12 principles partners in the door, and they make decisions on the slower end of things. And that's just akin to our whole industry. We just make decisions slowly and we change a little slower. Um, the the conversations we had were less about compensation and pricing and all that, and it was more about, hey, what is this going to look like for me? Because if I step into this role, I don't want to do anything else. Like I need to really vet that, hey, you guys are really serious about my vision and what I want and the autonomy that you want to give me in order for me to feel like I can be successful. Because ultimately, if I'm successful, everyone's successful. But also let's have a conversation about, um, you know, what do you expect of me and what things? You know, what things are you concerned about and how can I address those now? And so really, it was, you know, setting the table and making sure that we knew what was for dinner, right.

Craig Connell: [00:25:19] Uh, and so on both sides of the fence. Just really having a bit of a conversation of I can let this go and let that go. But I know that, you know, five, ten years, you know, this agreement isn't going to really mean anything anyway. Um, it's kind of like, you know, you graduate college with a great GPA, you get that first job, you don't talk about that GPA ever again. Um, and so the the agreement is really meant, like, okay, if this really does go left, what does an exit look like? Right. Um, if this goes really great, what does this look like for this piece of the compensation if I roll into an equity situation. Right. And so it's kind of thinking of all the situations that might occur because of this combination, um, or might not occur because of the combination even. Right. And so, um, that was a lot of the conversation. And the slowest part, I think, of the whole thing was getting the whole legal process review and getting, you know, I's dotted, T's crossed, put it in legalese and then translating it again, took some energy.

Speaker4: [00:26:22] Yeah.

Blake Oliver: [00:26:23] I want to come back to that exit clause because I had one and it saved me. And I think it's really important. Everyone should have that that release valve in case things don't work out. Um, but first, I'm curious to know more about the autonomy that you mentioned. What were you looking for in terms of autonomy that you were able to get at at your firm?

Craig Connell: [00:26:46] Yeah, I knew I was going to need resources to grow. Um, sometimes it's monetary, other times it's more for for what we do in Cass. Uh, we should be looking at how do we enable technology to, uh, to really grow and to leverage it to create some efficiencies and get some margin? Um, the accounting firms in our world, in the US world, are on the bleeding edge of technology. We just aren't. Uh, so I told him, um, my managing partner, Sam, that I'm going to I'm going to be pushing the envelope a lot here in in adding new technology, adding platforms that aren't consistent with, um, the firm's kind of typical model. And, um, he said, you know, you got to do what you got to do in order to grow this the right way. And we know that what we've been doing isn't working right now. And so that was kind of the the big thing was, okay, they knew that this this piece here needed some energy and effort into it as far as the technology and the energy to move it forward, um, with kind of some, some vigor. And, and he knew I could I could bring that.

Blake Oliver: [00:27:57] So. So you got your own PNL.

Craig Connell: [00:28:01] I do, yeah.

Blake Oliver: [00:28:02] And you got your own technology budget.

Craig Connell: [00:28:06] I do, yeah.

Blake Oliver: [00:28:07] Oh, that's the dream right there. That was my biggest frustration. Working in a large firm was it was in a different city, and I had to get their prior approval to put in place any apps that I wanted to use in our outsourced accounting practice. Yeah, and for a long time I was forced to use the tax workflow software. Yeah. Which just, like, just hurt my brain. Yeah. To the point where my team. I just told my team, don't open it, don't use it. Just update it once a month.

Lynnette Oss Connell: [00:28:37] You just. That's exactly what Craig.

Speaker4: [00:28:39] Yeah.

Lynnette Oss Connell: [00:28:40] Encountered.

Blake Oliver: [00:28:40] That's so important. It's so important to be able to choose your own tech because the tech is the experience, right? For the for the client and for your people. Yeah.

Speaker4: [00:28:48] The other part was jump into really quick.

Lynnette Oss Connell: [00:28:51] And just things that we didn't expect is that that ended up being such a huge issue, as you said, Blake, that coming the boutique firms like we were and like you were, were so nimble, we could just implement and make a decision and moving into a larger firm. That's not it's not the way to make decisions. It's not they don't move fast. And I think that's true among all the larger firms. And so if you're looking to be acquired, that's going to be a pain point for you. If you're used to being accustomed to being so nimble.

Speaker4: [00:29:25] Yeah.

Blake Oliver: [00:29:26] Was there something you were going to add to that, Craig? Otherwise, I want to move on to the escape clause.

Craig Connell: [00:29:30] Yeah. The, um, the first firm I was talking to about about being acquired, they were a larger national firm, and that was kind of one of the things that when I was talking to them, like, hey, if I wanted to implement a new process or a new technology, what does that look like? And they spelled out this process that was full of bureaucracy, red tape. And just by the time that it would be ready to be implemented, something new or bigger, better, faster would be in existence, and it would just be moot at that point. Yeah.

Speaker4: [00:29:59] Exactly.

Craig Connell: [00:30:00] And so the firm that that we implemented with Sweeny Conrad, we are a regional one office independent firm. Right. And so everything is in one office. So I can walk down the hall, talk to the IT folks and say, hey, what do I need to do to stand this up? And they can help me get it up going. And sometimes it's not as fast as I want. And I think that's a good thing. And one that would probably agree that sometimes I move a little too quick. And so it helps me kind of slow down and that, but at a speed that everybody can accept.

Blake Oliver: [00:30:29] Good compromise.

Speaker4: [00:30:31] Yeah, I suppose so.

Blake Oliver: [00:30:32] You mentioned the you had an out and mine was pretty simple. So when I sold my firm we had a we had a in the in the terms basically I could choose to leave within a year and get the same buyout that my partners got. I was the I was the one partner who went into the new firm. My other partners had a buyout, and I could get the same terms as them if I left within a year. If I stayed after a year, then I would convert to equity so I could kind of feel things out. Ultimately, I did decide to leave, but we had structured the deal in such a way that it really didn't matter, right either way. You know, my the partner who bought my firm was happy. I was happy it all worked out. I'm curious what your arrangement was.

Craig Connell: [00:31:22] Yet, financially speaking, there wasn't a lot to really kind of argue over. It's, um. It just wasn't. I was more concerned about, hey, if this doesn't work out for me, what are you going to do with my clients? Like, I want to make sure that they're taken care of. I'm bringing employees in. What are you going to do with my employees that are bringing in? How are you taking care of them? And so I took it from more of that angle of, um, let's make sure and let's have some assurances around if I go, these people are still being taken care of. And, um, and that's really the angle. I looked at it with everything and so just got some assurances around that.

Speaker4: [00:32:00] Were there.

Blake Oliver: [00:32:01] Any other were there any unexpected challenges that you faced in making the deal happen.

Craig Connell: [00:32:07] And making the deal happen? Um, I think just the amount of time it took for the legal review, the legal it's you know, it's I had to I felt like I had to babysit the arrangement a little bit, like I was kind of poking the bear a lot, like, hey, you know, um, however, the managing partner still had a decent sized tax book, too. And so, like, I'm talking to him in September and early October. Like anything, he's like, man, this is like, this is busy. And then busy. Season for managing partners is also like from November to January, right? That's like when they do all their things. And so, um, and he's a newer manager partner too. He just been taking over for a year. So it was really just being diligent and gentle reminders and trying not to be too annoying, but have enough pace, being like, hey, I'm still interested. And this is something that I created the expectation for. I want to get this done by the end of the year. And we got it done by the end of November. So I was I was ultimately satisfied with that.

Blake Oliver: [00:33:08] So three months to make the deal happen. And then you have to transition the staff, the clients. Lynette. This is where. Yeah, you you had a lot of work to do. I imagine, uh, over a dozen clients. How many team members went to Sweeney?

Lynnette Oss Connell: [00:33:27] So it was four total, and then I phased out. You phased out? Had more. We had more employees than that who were very part time, um, a bookkeeper type individuals who would not have made a good fit on the transition. So that was a hard conversation to in order to break it to them, that either you need to up your hours to a minimum number per week. Um, because we had some very fractional people who just handled, you know, some simple or just specific tasks, right. And so that was a a really sensitive conversation for those individuals, because even though they worked maybe five hours a week, that was income they depended on and they couldn't increase their hours. So we ended up bringing over two employees who were near full time, in addition to Craig and myself, with the intention all along that I would transition out. So I had six months to help Craig and our staff get our clients over, well, transitioned into to get myself out of the game.

Blake Oliver: [00:34:31] Um, six, six months, you said.

Lynnette Oss Connell: [00:34:33] Yep. Six months total. Um, so Craig started in December, I think December 1st, maybe of 2022. And I started in and our two employees started January of 2023, which in a cast practice is you are throwing everybody into busy season 1099.

Speaker4: [00:34:56] Yes.

Lynnette Oss Connell: [00:34:57] And month and year end close. And so it was a shock to all parties, I think. Um, and that's where the human element became very important, and their relationships with new relationships became very important between our staff and the staff who were inviting us in. Surprised to invite us in. Um, so the transition was thrown together very, very quickly. There was a lot of overtime for everybody because it means 1099 anyways. But our team was we were operating concurrently with one another pair in parallel using different systems because as you said before, they're using a lot of tax software. So they're using tax software for 1099. And we were using embedded qbo options or other options that our clients were using in order to generate those forms. Um, and so Craig had the unenviable task of managing multiple ways of doing things. Um, our clients themselves during that time, I think, were holding on based on the relationship. I mean, it's rocky to pull somebody over regardless of the time of year. And in fact, I would say a big lesson for anyone looking to go through this is that I wouldn't necessarily not recommend January, but understand what you're getting yourself into if you choose January.

Blake Oliver: [00:36:22] I have heard that from more than one person. Yes. Don't do it during busy season.

Speaker4: [00:36:28] And I think in.

Lynnette Oss Connell: [00:36:28] This situation, because of the partner's retirement, because of the timing, we were all in a situation where it had to be what it was, what it was. Right. And we were going to make the best of it. Um, our clients, though, going back to the relationship aspect, we had cultivated such deep relationships with these clients because we had fewer, higher depth clients that they trusted us through the process, that even if this January was challenging, that we were going to get through it together. And so they held on in faith.

Blake Oliver: [00:37:03] The how did they take the news, Lynette, that you were transitioning out. That must have been tough for some of them.

Lynnette Oss Connell: [00:37:08] Yeah, I had multiple clients ask me not to leave. And on one hand, that's validating. On the other hand, it is hard to stick with the plan for your own mental health and for your family. I mean, that's tough.

Craig Connell: [00:37:24] Yeah, we basically made them choose between her and me and said it was me. So it was it was kind of a hard conversation for some of it. And I even we even have a client that was given to us from Sweeney from years ago that we brought back into Sweeney, which was a completely awkward conversation. Um, and he actually just called Lynette, like a month ago to talk about something. And it's interesting, the relationships that you build and just remembering that, you know, um, we created pretty deep, intentional relationships with these clients, and that's why most of them are still with me today.

Speaker4: [00:37:57] Mhm. Well, and.

Lynnette Oss Connell: [00:37:58] To just a lot of those clients are individuals for whom that in the end I ended ended up providing much more advisory. That was not accounting. It was, you know, organizational strategy and and really just consulting.

Blake Oliver: [00:38:15] Therapy sometimes I imagine.

Speaker4: [00:38:17] Exactly. Yeah.

Lynnette Oss Connell: [00:38:19] So in that sense, I think that my value to my clients was not necessarily in the accounting sphere anyways. So transitioning the accounting work over to Craig's team in the Sweeney Conrad team, I think once they understood that they were still going to get the same high level of service from a deliverable standpoint, everybody transitioned just fine. I think that most of the challenge was administrative, and that's administering new contracts and explaining to them that billing was going to look different because we had to conform to the way that the firm does their billing cadence and the way that the time gets coded, the way our employees coded, their time actually was different. And He also just the administration of your client has to be involved. When you move a qbo account from click PA Qbo to Sweeney, Conrad's Qbo, your client has to sit there and resubscribe and reenter their credit card information, or get onto the new firm's billing. That process alone is so aggravating for the clients. Yes. Um.

Blake Oliver: [00:39:25] If anyone from Intuit Accountants is listening, take note, please.

Speaker4: [00:39:28] Well.

Lynnette Oss Connell: [00:39:30] I yeah, if I could re-engineer the process of it, I don't, I don't I'm not sure how we could make it any easier because there's good legal reasons for why the client has to be so involved. But I can only imagine, Blake, like, if when you transitioned your firm with a higher number of clients. How much? Unless all of your clients had their own subscriptions. I think that's the trick.

Blake Oliver: [00:39:54] I'm pretty sure we just gave up and ended up having two partner accounts forever. You know, like.

Speaker4: [00:40:01] Okay.

Blake Oliver: [00:40:03] But we had hundreds of clients. And for me, like, having a meeting with all of them was going to be, uh, impossible. So let the let the other firm let the buying firm deal with that.

Speaker4: [00:40:17] Yeah.

Lynnette Oss Connell: [00:40:17] The way we ended up doing it is that I had to sit on a zoom with every client, owner or whoever was the decision maker who had the credit card and who had admin access to their qbo, as well as I'm using Qbo as an example, but it's also if they had a standalone payroll software, it was this too. It was their State of Washington accounts because.

Blake Oliver: [00:40:39] Your clients, they had set up their own accounts or you had set it up for them under their login. Right.

Speaker4: [00:40:44] No, no, no.

Lynnette Oss Connell: [00:40:45] So it was it was the partner account.

Speaker4: [00:40:47] Okay.

Lynnette Oss Connell: [00:40:47] But we needed to transition.

Speaker4: [00:40:50] It over because. And the reason we were leaving.

Lynnette Oss Connell: [00:40:53] Well, yes. As well as the fact that the way that Sweeney, Conrad and I think some of these bigger firms do their Qbo or Xero or or whatever logins is that they're kind of unified. And so we can't keep using the the old one. Right. Because Craig's new staff. So if we shuffle staff say, which we haven't even talked about touched on that yet, but if we shuffle staff on and off engagements and they were on a click PA login, now we're having to administer a lot like adding it's it's a headache.

Speaker4: [00:41:27] Yes.

Blake Oliver: [00:41:29] It gets.

Speaker4: [00:41:30] Also.

Lynnette Oss Connell: [00:41:31] Though I would say the way around it, whether or not you like it is if you have each of your clients set up their own qbo with their own billing and not take advantage of any of the Intuit partner discounts, then your client's standalone qbo can just be reassigned to a different partner, right? But if you're taking advantage of those discounts as they market very heavily and you you're part of that ecosystem, transitioning your clients is is very hard.

Speaker4: [00:41:58] Yeah.

Blake Oliver: [00:41:59] I think the other way I've heard to get around, having to transition all the tech and the partner accounts is simply to even, even if you don't do it from like a legal perspective is to just do it more like a you become a subsidiary where it's, you know, click, click BMW powered by um, what was Sweden? Sweden. Conrad. Yeah, I've seen that too. And then you don't have to change everything. Even your website can kind of stay the same.

Lynnette Oss Connell: [00:42:25] And here's, here's the drawback of that method is that Craig and I though, had a whole history of clients over the years that we've been in business, because we started click in 2016, and when we first started out, we were taking a lot of the smaller clients, and it's only over time that we evolved into having the fewer number under 20 in-depth clients. And so we have all this history of these smaller businesses. And those companies were not moving over. And so and so there's just from a confidentiality standpoint. Right. Like we.

Speaker4: [00:42:55] We.

Lynnette Oss Connell: [00:42:56] Couldn't give access to that partner account because we have all the history.

Speaker4: [00:42:59] Got it?

Craig Connell: [00:43:00] Furthermore, click survived the acquisition and Lynette was still tied to it as she was wrapping up a couple of engagements that didn't make sense for us to move over to. So I was like, well, we could interrupt their whole thing for 3 or 4 months of service, which they were being acquired. Like, we knew that it didn't make sense for us to move it over.

Speaker4: [00:43:19] Yeah. You know.

Blake Oliver: [00:43:20] It's funny, this whole thing kind of reminds me of the the challenge that nobody, I think has ever solved, which is like you're transitioning from like Xero to QuickBooks or QuickBooks to zero or QuickBooks to NetSuite, and you've got that cut off date. Yeah. And you aim for that cut off date, and you say we're never going to close the books again in the prior accounting system, and you end up doing it in both for six months?

Speaker4: [00:43:42] Yeah.

Lynnette Oss Connell: [00:43:42] Well, so to clarify to what Craig said is that when we had those conversations with our clients that we were going to be making this transition, we did have a small handful who said, we support you And we're not going. And there are some different reasons for that. One is that if they weren't going to be with us, they had another friend who was an accountant and they felt the allegiance there. And so we helped I outside of Sweeney, Conrad Still and Click, spent several months working with their new accounting firm, which is actually a competitor to Sweeney Conrad. But because we had those relationships, I agreed to stay on and help with the transition. Um, and then I had another client who said, this is great timing because we've been considering and I had been counseling them to get a full time controller. Right. And so in their situation, rather than moving to Sweeney, Conrad, I worked with them for several months to onboard a controller and get her trained so that all doesn't fit in the box.

Speaker4: [00:44:43] Yeah.

Lynnette Oss Connell: [00:44:44] Of moving just moving a firm.

Speaker4: [00:44:46] Over in.

Craig Connell: [00:44:47] The instance of the one client that went to the competitor. I actually really like that because I got some unique insight into their practices and how their onboarding went. And I was like, I see some opportunity for improvement on our side here. Anyway, it's just I got a little, little peek. You can secret.

Blake Oliver: [00:45:02] Shop. Yeah. Secret shop.

Speaker4: [00:45:04] The other firm. Yeah.

Blake Oliver: [00:45:05] That's great. Um, I always wondered if sometimes my prospects were my competitors. You know, it's the smart thing to do, right? Go get quotes. But I digress. So let's talk about how things went at the new firm, the clients you did transition over. Craig, what what was your retention rate like? Often you can lose a good number in that first year. Even if they come over, they might say, you know, I don't like it. I know that happened with my book of business. I had to take a little haircut on my buyout because not not everyone stayed. How did that go?

Craig Connell: [00:45:45] Think of the 12 or 14 clients we brought over. I think only one left, and that's the one that went to the competitor due to a personal relationship. In the first year. In year two. So in starting in 2024, I actually the way that our work has been working and everything else, our business model and the size of Sweeney has has grown to the point of I'm pricing them out. Their business isn't as growing and as fast as Sweeney. So Sweeney has actually outgrown them. And so, you know, reluctantly, they've said, hey, totally understand. I'm going to go with a different service provider. And it's been hard. I think I've lost 3 or 4 of those clients. Um, one transitioned out. Um, was a fractional CFO gig of mine. And I told him, hey, you're going through this huge F reorg, and your business has grown substantially. Like, it was a bit of a turnaround when I got in there and it went really, really successfully. And I'm like, you now need a full time CFO like you. You're your top line. Revenue is tripled. Like, go get a CFO. You're good now.

Speaker4: [00:46:49] Like, yeah, going.

Craig Connell: [00:46:51] To the road. Right. So for the most part, the retention piece of it and the way my compensation worked with that piece of it, it went, I think, better than planned. Um, with only losing one. And they were a smaller client of ours, too. Um.

Blake Oliver: [00:47:07] Yeah. That's great. I mean, one out of what, more than a dozen?

Craig Connell: [00:47:11] Yeah. And like I said, you know, we established there are larger. Our clients typically were a little bit on the larger side for us. The, um, you know, I remember looking back six months and I'm like, I am shocked that we haven't lost a client, you know, outside of the one that had the personal relationship. Um, but it was really a testament to my employees and to Lynette and, and our intentional relationship building with all those clients and really just the high level of communication we had in the transition, which it was it was extreme. It was probably over communication, but with change, you have to kind of.

Speaker4: [00:47:47] Oh, yeah.

Craig Connell: [00:47:47] Overcommunicate with.

Speaker4: [00:47:48] Them.

Blake Oliver: [00:47:49] Yeah, way better to overcommunicate than under in that situation. Yeah. And, you know, it's also just a sign of what a great profession we have right now. We're in such high demand that if you just care a little bit, you can do really, really well.

Craig Connell: [00:48:05] It's amazing what happens if you just pick up the phone.

Blake Oliver: [00:48:09] It's seriously like, we need to crop that out. Plaster that everywhere. Just pick up the phone, talk to people, and it's amazing what you can do. I know that since you have joined Sweeny Conrad, uh, you've had some pretty great growth. Yeah. So where are these clients coming from? Are they clients of the firm? Are they new people? How has how has that happened?

Speaker4: [00:48:38] I'd say it's.

Craig Connell: [00:48:38] About 50 over 50, uh, internal kind of cross-selling with our tax department. Um, it's about half my leads. The other half is just, the relationships that I had established and nurtured through the last, you know, 15, 20 years along with Lynette. Lynette gets still leads sometimes, and she passes along to me, um, just those relationships that we've built, you know, the networking and the intentional, you know, business development, sales, whatever you want to call it. It's really just, you know, saying hello, exchanging Christmas cards, you know, grabbing coffee, buying lunch, you know, whatever it might need to be its needs. It's like a, um, it just takes a long time for those relationships to really cultivate, to the point in which those business opportunities present themselves to you. Um, and that's that's about where it's gone. But, yeah, it's about 150% growth in about 18 months for us. Um, it's a little longer than that now, but when I measured it back in the spring, that's what it was.

Blake Oliver: [00:49:38] Lynette, thinking back on your experience and what we've talked about today, what advice would you give firm owners who are thinking about selling their cars practice?

Lynnette Oss Connell: [00:49:50] So I thought about this question this morning before we get on, and two things really hopped out at me. One, we just said, which is that communication is key. People can fill the void if they don't have information. That could be your employees, the acquiring firm, your clients. And when in doubt, just pick up the phone or send the email. If you're on texting basis with somebody, text them, um, whatever it is. Um, but oftentimes it wasn't until you, me, or Craig initiated a conversation with an employee or a client that we got the feedback. People are not likely to initiate giving you feedback when they think you want to hear. This is a great decision. They think we want to hear. We're so happy for you, when in reality, what we want to hear is I'm worried about my building. I'm worried about my payroll. And so to give them the opportunity to say that is powerful because even in expressing their displeasure, you're strengthening the trust.

Speaker4: [00:50:57] Mhm.

Lynnette Oss Connell: [00:50:58] So that's one of the things. Um, the other thing is think really reflectively on what is it that you want. It might be simple. It may just be that you want the highest payout. But like Craig was saying when he was negotiating the deal, it was less about the money, although that that's that's important and that's a huge motivator in the at the end of the day, this decision was irreversible. We were we were putting the business into another business. And if it didn't work out, we had no recourse on that. Like it was gone. We couldn't just go start a new boutique practice. Now, maybe we could. Maybe we couldn't, but it would kind of be dead to us at that point. We'd have to go in a different direction. And so in that sense, it took a lot of premeditated, reflective, what do we want out of it? And be honest with yourself. What is it that is important to you? And don't if you get a feel like Craig said, we pursued another accounting firm and the vibe wasn't right. It didn't it. It wasn't tracking. Yeah. And there's nothing wrong with that. Like, don't take a deal out of fear. Stick around and really be true to what's going to be best for you. Or if you have a family, your family.

Blake Oliver: [00:52:24] Trust, your gut is. Yeah, I wish I'd trusted my gut more when I was younger. That really, even if you can't describe it. If you if you get a bad vibe from, like, somebody you're going to work with, often that tends to be what happens. You have a bad experience. I don't know why that is, but well.

Speaker4: [00:52:44] Also.

Lynnette Oss Connell: [00:52:44] Energy follows energy and so. And that doesn't have to be that bad energy or good energy. Yeah. But if if that's not a good fit for you, just like when you interview a new client, that may not be a bad client, you know, per se, but it may not be a good client for you. It might be a better fit for somebody else in your town or your city. Take advantage of letting that go. Don't follow the energy that's not matching with your vibe. You're not going to be a good fit. Just like Craig wouldn't be a good CFO at every company. I wouldn't be a good controller at every company.

Blake Oliver: [00:53:21] Craig, anything you want to add? Any any sage advice for our listeners who are thinking about selling a CAS practice?

Craig Connell: [00:53:28] Um, listen to your.

Speaker4: [00:53:31] Spouse. Yes.

Craig Connell: [00:53:35] Um, you know, just listen to the people around you, you know, don't you don't have to do it all yourself. And you shouldn't do it all by yourself. Like you should have partners in this, this conversation. And, you know, find a mentor. If you're not in business with a partner as it is, if you're a single shingle type person, you've got leaders and people around you that that you've worked with. Um, you know, have them sign an NDA if it makes you feel better. But this is a you know, it's a big decision. Um, you know, it was probably the biggest decision that we've made outside of starting the business, right? Um, and it just takes a lot of energy, intentionality and, uh, um, quite a bit of humility, too. You've got to really put your ego on a shelf for something like this.

Blake Oliver: [00:54:25] Well, I think that's a great way to wrap it before we go. Lynette, I'd love to hear what your plans are for the future. What are you up to these days? And where can people follow you online?

Lynnette Oss Connell: [00:54:36] Sure thing. Thanks, Blake. Um, I took the year, year and a half after we sold click to effectively take a sabbatical and hide under a rock. Um, in my journey, I actually dealt with a lot of cyclical burnout. Um, I think just being a bit ambitious and also having an active family. So I'm moving into a space of writing, speaking, training on burnout prevention. Um, it's still in the works. So you can follow me on LinkedIn right now. Um, but they're following have faith because I'm I'm still building it. That's where I'm going, though. That's where my heart is. Um, I want to see us grow our professional lives sustainably in ways that are really fulfilling and not kill ourselves in the process through unsustainable practice.

Blake Oliver: [00:55:27] Well, as somebody who covers the accounting talent shortage, basically every week on my other podcast, I wish you the best in that mission because we need it. Burnout is just it's it's a plague on accounting. And it's so strange to see accountants who have figured out how to create this flexible lifestyle. Yes. And have work life balance and actually make really good money, working relatively few hours wherever they want, anytime they want. And then you have this whole group of accountants who are like, miserable working in cubicles. And it doesn't have to be that way. No. So.

Lynnette Oss Connell: [00:56:09] Well, and to your point, to those of us who can find the flexibility, be entrepreneurs, create our own Paradise on earth, as it were, like we can make it work for us and be efficient. That can lead to burnout too. Right. And I think our profession isn't alone in it. And there there are some really actionable things that we can take as individuals, as and as organizations. And that's the space I'm going to kind of move into.

Blake Oliver: [00:56:35] And there's a great middle ground, which is these mid-size firms like Sweeney that you have joined. Craig, I'm eager to hear what your plans are for the cast team there and where people can connect with you.

Craig Connell: [00:56:48] Yeah, you can follow me on LinkedIn or check out Sweeney. Conrad's website. Sweeney, conrad.com. That's Sweeney. Conrad. Um, I'm just going to keep growing. You know, my my two year plan when I came into this is, um, almost fully executed. I probably have six more months about it. So I'm going to be a little over six, a little over two years. Um, but it was a bit of a stretch, and I knew that, um, really, I'm looking to, to build kind of a top notch national CA practice, and we're well on our way on doing that. And I'm just trying to create a more of a national presence, um, through, um, speaking on panels and things of that nature and really just providing value to the profession that, you know, we need to rethink the way we do our work. Um, and to start thinking more entrepreneurial and stop thinking like, uh, just transactional folks. Like, we need to be advisors. Um, the AI revolution is coming for accounting. It's not quite there yet, but I think it's, you know, 18 months to two years away from a lot of the transactional work not being needed. And so we are the human element, and we need to reengage with that piece as accountants.

Blake Oliver: [00:58:03] Are you hiring?

Craig Connell: [00:58:05] Yes. I'm always hiring. I'm always looking for good people. Um, and, uh, and just bringing in clients, um, looking to onboard about 2 to 3 clients a month going forward. So that's my my people know that. So if they're listening, it's the first time you're hearing it. Then they weren't listening the first time.

Blake Oliver: [00:58:23] And if you're listening and you're looking for a role outside of, say, audit, you want to, you know, make the leap into, but you want to stay in public accounting. Check out Sweeny Sweeney. Conrad. Right. Um. It's it's Klein. Accounting services is so rewarding. I'm so glad that I got to have a career in it. And I hope more people do. And and by building that national practice. Craig, you are creating a place where people can go and stay in public accounting and and feel like they are really contributing something. So thank you for that. Yeah, absolutely. And thank you to everyone who has joined us live. You can attend live earmark webinars. Go to earmark. Com slash webinar or is it webinars. Try both of them. Hopefully one of them works and you can register for upcoming events. Join our mailing list on that website. Earmark Cpcomm. And if you haven't tried it, try the earmark app. You can get CPE for this webinar, this interview, and all of my other earmark podcast interviews, including dozens and dozens of shows that I do not host as well. And you can get your IRS continuing education. You can get your Nasba CPA for your CPA or CMA renewal. And I'm looking forward to this interview being a course on the app. So thank you both for being CPE instructors.

Lynnette Oss Connell: [00:59:42] Thanks everyone.

Craig Connell: [00:59:44] Thank you.

Blake Oliver: [00:59:44] We'll see you around.