Who's Really the BOSS?

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Rachel Dillon: Welcome to Who's Really the Boss podcast. I'm Rachel Dillon, and along with my husband, Marcus Dillon, we share the joys and challenges of leading a $3 million accounting firm together. From team structure to growth strategies, we share our leadership successes and failures so you can avoid the mistakes we have made and grow a valuable accounting firm. Welcome back to another [00:00:30] episode of Who's Really the Boss podcast. We have Marcus, as usual, and a special guest, Amy McCarty, with us today.

Amy McCarty: Thank you for having me. I'm glad to be here.

Rachel Dillon: Yeah, I think this, Amy, is your third or fourth recording with us, so you're definitely our, um, most visited guest for sure.

Amy McCarty: I'm honored.

Rachel Dillon: And we get to spend online, but we get to spend all day with you now as our Director [00:01:00] of Operations and Dillon Business Advisors, and then also co-founder of collective. So very excited, um, and love enjoying spending time with you on a regular basis.

Marcus Dillon: Yes.

Marcus Dillon: All right, Amy, I know that we talk about you a lot and director of ops and the many capes that you wear, um, both at DBA and collective. So why don't you give a little bit, uh, additional background on anything [00:01:30] that you want? Um, just to kind of remind people of how awesome you are.

Amy McCarty: All right. Uh, how far back should I. I'm just kidding. So it is. I was thinking really quick. I was thinking earlier how great it is to be on the inside of the team at DBA and now also at collective. So again, just stating that I love it. It's great to see what we're able to accomplish and how far we've come. So I joined [00:02:00] DBA about a year and a half ago. Is how long it was or how short it was. Is it a year and a half if I can do math? I don't know. Um, coming up on two years. And so prior to that, I've spent a significant amount of time in the accounting industry. Pretty much all of my time in the accounting industry. And that has ranged from technology to training to consulting. And [00:02:30] so now I'm inside of DBA helping on the ground, especially with acquisition that just happened that we're going to talk about. And then also still getting to help others, other accounting firms both leaders and teams inside. And it's I love it. I love what I do.

Marcus Dillon: And fun fact like you even used to contract and do some tax work for DBA way back in the day, which you didn't share that part, that you [00:03:00] actually can prepare a tax return with an ultra tax and all that fun stuff.

Amy McCarty: And pretending like I can't. I'm pretending like I can't.

Marcus Dillon: I'm still waiting for you to say, hey, I'll take these, uh, these two that just came in or I'll assign myself. I just keep waiting for that day. But your time is so much better spent other places than, um, preparing tax return.

Rachel Dillon: Amy, that's always been my trick. If I don't learn how to do it, I can't take it on or take it over. [00:03:30] So I think that's wise to just keep pretending and not raising your hand. Um, even if it is something you can do, probably not where your time is best spent, for sure.

Amy McCarty: It has been pulling at me to jump in and do tax returns this tax season, and I have had to stop myself multiple times. And all I think about is I think about for other [00:04:00] firm owners who is at the best use of their time, if they can get team in place to do it right. And so it has been a it's been a constant struggle. I have not done it though. So I guess I'm successful.

Rachel Dillon: Yeah. I love that. I was just having a conversation with a friend about, um, it was really about belief and faith. And she's like these this. We were talking about specific opportunity, but she's like, this is [00:04:30] where we get to put it in practice. Do we really believe what we say? We believe. And, you know, if we live differently than what we say we believe, you know. So if we're sharing with other firms and other owners ourselves, our team members that, you know, stick to your specific responsibilities and, um, giftings and where your time is best spent and don't always jump in and have to be the one to rescue or solve the problem, then we have to live it [00:05:00] out. So that's good.

Marcus Dillon: All right. And with that, I guess, Amy, uh, is there any piece of advice that in your previous episodes, um, or previous wisdom that you haven't yet shared with us or the listeners?

Amy McCarty: Okay. Best piece of advice that I have received. I asked my husband this morning, Nathan, what his was. He gave me some questionable ones that I won't share, but I have to say it. So [00:05:30] if he listens, um, the one that I don't know if it's advice, but I think it's more a saying that I heard a long time ago that has always stayed with me, and that is the way that someone treats you is not a reflection of you. It is a reflection of them. And so it's something that they're dealing with. And for me, that's a nice reminder that it's not about me When I'm interacting with somebody else. It's not about me. It's about helping them. And so what do they need [00:06:00] in order to feel the light that should be shining on them? And the love that they should be feeling is maybe a more spiritual way to say it, but that's the one I always hold true to. So if somebody is upset, it's not me. It's just how can I help them process what they need to process so that we can move on?

Marcus Dillon: That's good.

Rachel Dillon: That's really good. And that's why we, in working with you, Amy and others have stated [00:06:30] exactly that. There's just like a calm and a presence and a clarity when you speak with. And this has actually been said about all of our advisors. Um, but when you're working with someone else who can step back out of the emotions of the situation and just help guide and present facts and not get so heated and emotional in the moment because they're not as close [00:07:00] to and have the mindset of this is about them and I want to help. And it's not about me or my feelings.

Marcus Dillon: Yeah. And that is great advice. Um, with an asterisk, because sometimes it really is the other person.

Rachel Dillon: Tell us how you really feel, Marcus. Tell us how you really feel.

Marcus Dillon: But. But maybe not the first time, but the 10th time. It's probably then.

Amy McCarty: Patterns. Yeah, just recognize patterns. There also has to be boundaries. Yes, [00:07:30] yes.

Marcus Dillon: Yeah. And then, you know, after after the first few handful of times, then you have the choice of who you interact with. And I'm sure we'll talk a little bit about that today from a client and team member perspective. But uh, but yeah, great advice.

Rachel Dillon: All right. So we promised on a previous episode that we would do An acquisition update. So just as a reminder, or maybe first time listeners are hearing about this acquisition, Dylan [00:08:00] Business Advisors, our accounting firm in Texas, remote. We have team members everywhere, clients everywhere. Uh, but the physical address is in Texas. Acquired a firm that is mostly a physical location in Saint Louis, Missouri. And so we're remote. And in Texas, this firm is out of state [00:08:30] and physical, in-person, physical office. And we did all of this on January 31st. So both firms, uh, do prepare and file tax returns. So that makes it especially interesting. So our episode today is really to talk through. What did that look like? What does that look like now? Um. And we invited you, Amy, because you have worked really hard, but [00:09:00] have really helped to lead the acquisition and lead the integration of that firm into DBA. So thanks for being here. Thanks for being willing to share. Uh, Marcus, thanks for being willing to share, because I think it will be very helpful for people to understand what this actually looks like, and then hopefully that we can provide even some, you know, helpful tips or as always, like what to avoid the the warnings and the cautions. So, um, let's [00:09:30] kind of start with where are we at today with the acquisition? And if we need to back up to explain that we can do that, who wants to start first with where we're at today?

Marcus Dillon: Well, I'll, I'll just state, you know, like we're recording this on Friday, April 11th, right. Uh, and, uh, so if we closed on January 31st, um, we're about 70 days in, right? Um, and so that 70 days fell [00:10:00] within really the, the busiest time of year for, for both, both businesses. Like, even though DBA is set up a little bit different and kind of has consistent work, still that window of time is still the busiest for DBA. So um, but yeah, like as far as transitions and everything like that, I'll also give a little bit of background because while we closed January 31st, we were in conversations probably started November, I would say, and all the all the due diligence [00:10:30] and everything leading up to that close January 31st. If if y'all didn't know that we were looking for an acquisition during 2024, um, so it wasn't like this just popped up and we were like, oh yeah, like that's great. Um, so we were actually as a team had excess capacity, which most CPA firms like would love to have. And so with excess capacity, you have to rebalance things, which means you either have to go get additional work to fill that capacity, or you have to make some [00:11:00] hard decisions on team members. Right. And so we would rather have continued growth.

Marcus Dillon: We believe that there's good in growth, in all the fun that comes along with and the lessons and obviously what we're learning and teaching within collective. Um, it just made sense to continue to grow. So we sought out a couple of different acquisitions. One we passed on that was just down the street. Uh, if you would, in another neighboring town, it just didn't make sense. And so then this one presented itself and [00:11:30] it aligned a little bit better than the other. So some of our criteria in acquisition is we wanted, um, we didn't want to dilute culture or processes or workflow within DBA, so it had to be of a certain size to where wear. Those weren't even negotiable. You know, as attaching to DBA. So in our mind, that was a 25% or less base of revenue clients, team members, [00:12:00] all that fun stuff. Because if we could lead with majority of, you know, the business after acquisition is DBA, then assimilation would be clear on what we are moving forward with, right? And while we would still learn if things are great on that other side, like they're doing a process or a technology or something that we could learn from, then great. But um, but yeah, we didn't want to dilute culture.

Marcus Dillon: So that was why we chose and this was a $600,000 [00:12:30] base acquisition. Uh, it was negotiated based on retention. And so there's a down payment retention over three years based on what, uh, retains. Uh, that's what we were able to kind of solidify. And then there is a floor and a ceiling to protect both parties, in case we really mess things up and run everybody off. Um, you know, the buyer or the seller is protected. And then with [00:13:00] that, we wanted to give the seller opportunity to refer or if we were able to grow new business. Um, so there's a 20% delta on either side to be able to have a floor and a ceiling to protect both sides. So that's a little bit of the base of kind of leading into where we're at today, about 70 days in. Um, we did capture, I guess, two of the three main team members. And then we have the seller [00:13:30] for a period of time contracting with DBA, and that was set for an initial like 30 to 45 days. And we're approaching, you know, the end of that contract. So that laid the groundwork. I don't know any other, uh, things. Before you all really jump in and start sharing nitty gritty stuff.

Rachel Dillon: Yeah. And, Amy, I'll, um, just share. You know, my first question was, why do we need to do this [00:14:00] in the middle of tax season? Um, because they have a tax season. We have a tax season. We typically do not disrupt our team anymore because we learned from previous years when we did. We don't we try not to have any major disruptions during, uh, Q1 of the year because tax season brings enough disruption in and of itself. And so, um, do either of you guys want to share one of [00:14:30] the main reasons that we decided to move forward with this, um, on a January 31st instead of, say, a may or June time frame.

Amy McCarty: So the acquisition came with team and also the opportunity to assist the clients right out of the gate. Instead of waiting till a slower time to then try to do it. In hindsight, would we have done it differently? [00:15:00] I'm not sure. On timing wise, I think the the biggest thing was because there was already some team members in place that would be able to do the work because mind you, a month prior, two months prior to acquisition, we communicated to the DBA team that we were looking to do an acquisition and and then discussed possibilities of what that would look like, and that our goal was not to disrupt [00:15:30] them. And so staying true to that, right. If, if it had been a firm acquisition with no team members to do the work and the existing DBA team was doing all of it, then that would not have made sense for us.

Marcus Dillon: Yeah. And we told the team, hey, we're going to protect you during this assimilation process. And it was key to obviously have a couple of team members that came over and still during this process, um, you know, evaluate [00:16:00] are those team members great for DBA long term? So those those are happening just like any new hire, right, 30, 60, 90 day assessments. Uh, we also hired an additional client controller, one to, um, you know, supplement where another client controller had left in Q4, but then also really help us with, um, you know, tackling some of this tax work, um, that was coming in during this time of year. So, um, kind [00:16:30] of my from a business lens. Right. Um, this made really good sense from a business lens. And we de-risked ourselves and, uh, have run and acquired and sold off parts of DBA over the years. And so really, it had to make sense from a business perspective to move forward with it. And um, given all the negotiation planning, what the seller wanted, uh, we knew like it was it was good business. And so with that, [00:17:00] we chose to close when we did, because we were able to capture a majority of the revenue that would come in during tax season. And so to date, you know, 70 days in, we have captured revenue or sales equal to the down payment that we essentially paid. You know, so I think that's the that's great for any business acquisition within 60 to 75 days. If you've already recouped some of the, you know, money that you've outlaid for [00:17:30] the acquisition, then great.

Marcus Dillon: We also know that there's going to be some additional, um, you know, just synergies with reduction of cost moving forward and adding additional profit because we had that capacity, right? Um, we were already carrying some additional expense going into 2025. So this revenue top line, um, is definitely hitting, uh, bottom line as well. So but yeah, even though we've captured some of those sales, then obviously we have expense going [00:18:00] along with, with now, uh, you know, paying some rent in Saint Louis, having some team members that came along with some technology that we had to absorb as part of the transition. But we'll, you know, kind of navigate here quickly. And, uh, yeah, it was that was part of it. And so if you're thinking about acquisition, timing is really important because for us, this deal would not have made sense to close May 1st. We would have had to carry all those team members, you [00:18:30] know, all the additional carrying costs really half or more of a year before we really start to see return on investment And this business is also set up where about 50% of the business is annual recurring revenue relationships, and then the other 50% is monthly recurring. So of that annual recurring, I would say 90% of it is captured during tax season. And with that, we're able to capture probably 45 to 50% [00:19:00] of total revenue within three months. And coming out of the gate immediately.

Rachel Dillon: Yeah, I would say final piece of why January 31st was important. It was also important to the seller. So he was looking at starting his next, um, opportunity and kind of moving on from he had made the hard decision that he was going to kind of leave the accounting industry and was [00:19:30] looking for a great place to care for his team and clients that he had built. But also that new opportunity was starting. So he, you know, instead of being kind of half in, half out for him, the timing worked out well also because as we just mentioned, a lot of that revenue is captured at this time. So he could have easily tried to do both at the same time. But it was very important to him that [00:20:00] the client experience and his team were taking care of, and I don't I think that he understood he couldn't be in both places, um, to the full extent that he wanted to be. So that also prompted timing to go along with those others that you guys mentioned. And so let's talk about that's kind of where we are with revenue. Anything else to add with revenue since we were just kind of on that piece of it?

Marcus Dillon: Yeah, I was I was going to cover revenue [00:20:30] last and share that. I mean, I think that's great. Um, you know, we work a lot with business owners and people that are acquiring businesses. And so the fact that we were able to capture so much revenue, given timing alone now, that came with work, like there's no downplaying the revenue and the sales that came along with. Um, but coming out of the gate and revenue solves a lot of problems, right? It gives you runway to, you know, fix challenges, think through things. And so for [00:21:00] Q1, DBA, especially with this acquisition out of the gate, we're trying to sprint like, you know, and I don't know, that's been really communicated to all levels of the team because we've tried to protect the team as much as possible, but we're trying to sprint out of the gate and trying to get far enough down the road to where as we catch a cramp or as we, you know, um, need to dial it back a little bit then we're already further down the road than we really could [00:21:30] have been if we started off a little bit lax. And so like, that's what we've done out of the gate. We also know that with divas like caucus, we had a couple of clients that were selling and kind of, um, you know, turning off services later in the year or bringing services back in house. We've got one client doing that. So it's some of those were just like, okay, out of the gate. We need to we need to hit it and go. And so if you think about like a race, that's what we're essentially doing. And if we get tired and need to walk part of the race, then we totally [00:22:00] can. But straight out of the gate it's good to have that revenue. So um, but yeah, revenue standpoint, I've said it before, I've said a lot of times like sales and revenue solves a lot of challenges.

Amy McCarty: And so the revenue gave us bandwidth to fix some foundational things also, or to start to set it up, um, trying to use analogies like you use Marcus, but so really to hire.

Marcus Dillon: It gives us budget. [00:22:30] Yeah.

Amy McCarty: Gives us budget to hire angel. Director of technology. Right. Who can really help us to solidify what is our foundational base of how we are operating from a security and technology standpoint, which just again, it's long term and what we're after there. So yeah.

Marcus Dillon: So side note is in January Angel started January whenever fifth, you know, seventh whenever that day was [00:23:00] within the first 30 days Angel rebuilt our whole server environment. Um, we call it the bubble, you know, and so how we're supporting teams in a virtual world and able to scale that and not have to worry about really lackluster support or people that don't know the accounting industry, um, having that in-house was very important to us. So we chose to bring that in-house. And that comes at a cost. Right. And so we knew that having more budget would also [00:23:30] help to, um, afford, you know, Such a great team member. But then to all the learning that we're doing and able to share with collective members and the accounting community is going to be key. And so, you know, having Angel on the team is huge. And the fact that we had to, you know, go get more budget to do that, um, was a small cost at the end of the day for that long term win.

Rachel Dillon: Anything to add there, Amy, on some of the specifics. Not [00:24:00] too high level, but some of the specifics of things that changed with DBAs technology in order to make this acquisition even a possibility in January, and to make it a little bit easier.

Amy McCarty: I think I mean, I'll share that, you know, having Angel on the team, I could not imagine doing this acquisition with any other like, technology partner. So he has made it possible to take software that was being used by the other firm [00:24:30] and giving us access to it without us continuing to use it right has been the goal here is we have to draw a line in the sand. We we need their data, but we want to be using it all in a single place and starting everybody using DBA technology. So that has been a big one. You know, we're both both firms used ultra tax. That makes it easy. We're straddling two client communication [00:25:00] systems right now which makes it a little bit challenging. But we'll be quickly pivoting to just one. And then just data the ability to pull historical archived information into our DBA structure.

Marcus Dillon: Yeah. And I mean you already mentioned ultra tax. That was key right. So the other firm they were hosting a lot of items in file cabinet. We don't like file cabinet. Um, you know we are [00:25:30] in 2025. Um, so we use SharePoint, OneDrive, and um, so a lot of that extraction of data that what was necessary to like, prepare 2024 tax returns was the first step. Now it's going back and getting some of that additional perm file stuff or you know, just prior years that that makes sense. You mentioned the two communication platforms they use. We use canopy for secure communication. We used Alessio in the past, which was good, uh, [00:26:00] for the team because we knew how to navigate it. But um, much like we transitioned away from Licio at DBA, we're doing that same thing, right? We're going all in, uh, with one platform and, um, yeah. So the other small things like they use ACS, uh, accounting CS, which is a Thomson product, which, um, yeah, still around people. Um, and we have to get that into, uh, a more modern software, um, which [00:26:30] I think between tally for which if you've never looked at tally for tally for can do the exact same thing ACS can, but it's not server based.

Marcus Dillon: Right. Like produce book to tax financials. Your M1 AJ's all that fun stuff like just go with tally for it was it was better than Envio. Um, it's independent and you could do financials. You could dress them up enough to where the financials that come out tally for you could issue. But you know ultimately we want to be in Qbo too. So it's bridging [00:27:00] that gap from like ACS to Qbo what that looks like. Um, tally for is there from accounting GL software to tax to kind of be your workpapers if you need any, any of those, um, they use sure prep, we use sure prep on the work paper side. So there are some familiarity there. So tech stack was also a big reason that we chose to move forward, um, not only with this firm but in the timeline that we did because we felt really comfortable with the with the, uh, tech. [00:27:30]

Rachel Dillon: So just a reminder. What did we transition immediately and then what is still to come. And when we say immediately, like within a week, right? I mean, we when Marcus when you say like sprint we went up and met the firm, met the team and saw the physical office a couple days prior to January 31st. And from that moment really forward, um, haven't really slowed down [00:28:00] much. Um, just to make sure clients are well taken care of.

Marcus Dillon: Yeah. A few things that happened. Um, we put in a contractor agreement where DBA was contracting with that firm, and then the owner, obviously on the other side of acquisition, was contracting with DBA that way, like file sharing, and things could happen. But immediately we brought over clients into one ultra tax platform. Right. Um, so all those clients moving forward, anything that was printed was in one file [00:28:30] under one firm ID. Just because, you know, now we're liable for it. And then with that was also the bubble. You know, we moved from. They were in infinitely virtual, which is a platform that hosts, um, softwares like that to our bubble, which is Azure based. And, you know, that was all happening that last week of January, that first week of February, I think it spilled over into the second week of February as well, just because we wanted to make sure everything was really, really good. Um, [00:29:00] so we even had a little bit of a delayed start, um, serving some of those Saint Louis clients because we really had to get technology super solid and to get to get team members in bubble. Um, you know, that firm, they still had desktop, still have desktop PCs to this day. Um, so Angel had to remote in load all of our good stuff on those desktops, optimize them, you know, um, and then they'll, you know, team members will start using laptops here shortly. [00:29:30]

Amy McCarty: We also moved practice management. So they were using practice keys. We moved everything immediately to canopy. So project tracking, time tracking was migrated to a single location to manage work. So pulling out everything.

Marcus Dillon: Yeah. And then invoicing. Invoicing. Effective January 31st, anything that was invoiced for work was done out of the DBA qbo file. You know, no more. No more sharing of anything like that. And then [00:30:00] if a payment came in, uh, the seller did a really good job on. Ah. So there wasn't much if a check was written after, um, you know, so we didn't have much bleed over into. Hey, we collected your ah. You collected ra like that really didn't come up because we we really try to plan, uh, really well around it. Um, so, but yeah, it was obviously the accounting software, the practice management and the tax databases, not the software necessarily.

Rachel Dillon: So the tools that really [00:30:30] impacted the team and the ability to collaborate, we were able to move over very quickly. The tools that are client facing that the clients use to communicate with the team. We waited so that there wasn't as much disruption for them during a time, because a lot of those clients will only use it during this time, so we can roll out the next way of communication when it's not such a critical, [00:31:00] deadline driven time where we can actually support the clients if they need it. Um, as far as setting up accounts or whatever questions and support they may need.

Marcus Dillon: Yeah. And so we'll start that transition here shortly. You know, after April 15th, it'll be inviting them into canopy, uh, which they, they because as Amy said, we moved the practice management within canopy. They were already getting emails about the status of their projects, like if their project moved from being checked in [00:31:30] to prep to review and then accepted. They're getting emails from canopy, so we're starting to plant that seed like, hey, Canopy's legit right? And oh, we're just going to use canopy for everything. So it's one of those where we try to ease in those clients and not cause disruption, not cause, you know, churn out of the gate, if you will.

Amy McCarty: Yeah. Need to ease in internal clients to like team right. The team members that needed to get comfortable with. How are we doing it internally? It's one thing to be like, I don't know what's [00:32:00] happening internally and ask somebody else on the team. It's another thing to not know what's happening and then have clients who don't know what's happening. And then you are frustrated and wondering what you're doing.

Marcus Dillon: The other two small pieces of software that took a little bit of transition were the Bill.com, you know, bringing those over into our Bill.com environment, and then they use Uh receipt software called Dext, which we use on select few clients. Um, so yeah, it was those were two other small pieces that [00:32:30] we were already familiar with. We just needed to get them all in one place. And then the last one was like their qbo like qbo QB accounting, uh, where you have all their files. Uh, we worked with Intuit to actually bridge those clients over into our Qbo qbo, including any promotional pricing that went with the firm. So, um, there's a tool out there. We worked with our Intuit contact, make sure that happened correctly, and that was a lot smoother [00:33:00] than I thought it was going to be.

Amy McCarty: So it's way better than one client at a time.

Marcus Dillon: Yeah. Or having multiple multiple qbo files hanging out there. I mean, I know some firms that have done acquisitions that have multiple qbo files.

Rachel Dillon: All right, let's get an update. Where are we at on team?

Amy McCarty: We still have our team members. They're both still around.

Marcus Dillon: Yeah. And they're, you know, for for somebody [00:33:30] that has learned of a big change like this and, you know, start going to work like you have to go both of them credit. Um, so one came over as a tax administrator. She actually sits in the office there in Saint Louis daily. Uh, kind of accepts does intake and, you know, builds binders for tax prep and then, um, you know, has delivery for pickups and drop offs as, as needed. So, um, the other team member that came over, uh, she [00:34:00] was with the firm so long that she's kind of evolved over every role, as you could imagine, with being at a firm for about ten years. And so she came over as a CSM, um, client service manager. So she does accounting. She also she's also really good at tax prep. So she touched a lot of the ten 40s, which was very helpful this season. Um, so, yeah, both team members, um, came over. Uh, we'll continue to assess like 30, 60, 90, obviously [00:34:30] doing assessments and where there are gaps and long term opportunities, um, for, for both positions. Uh, I would say that some of the pain points with having two client communication softwares with Licio and Envio, there were some challenges with having two tax administrators. Right? Because you've got this client base that's communicating with this tax administrator. And Dedra, who's our main tax administrator, [00:35:00] who we rely on quite a lot, um, didn't have insight into that completely. So that's something that we'll reflect on. And, you know, obviously, uh, drive some of the decisions that need to be made.

Rachel Dillon: I'll clarify for you, just since it's April 11th, you said Lucio and Envio, but really we are on canopy. We we did use on veo.

Marcus Dillon: Previously.

Rachel Dillon: So I just it's April 11th while we're recording so there's that okay. I want to ask you guys about this because DBA operates [00:35:30] in a team of three structure. With the acquisition we have, um, Heather who came over as a client service manager, and we have Audrey, who came over as a tax administrator. And tax administrators aren't typically part of the team of three. So kind of what was the thought there on what would how would we integrate, uh, the Saint Louis team members into teams of three, maybe how we would do it immediately, and then maybe [00:36:00] what we've learned or what we plan for the future.

Amy McCarty: So immediately we knew that we needed to service Saint Louis clients. Right. And and team coming over. So Heather coming over had already done a lot of the work. The previous team member who did not stick around before acquisition, who left before acquisition, did a lot of the business tax work. And so we [00:36:30] hired, as Marcus mentioned, we hired Tiffany as a controller because we had a need even before acquisition. We had a need, right. And so immediate plan was we have a new team member coming on that can service these business clients business tax. And then we have Heather, who has been doing a lot of the work and can also do the individual tax work. I would say that given that we [00:37:00] have 70 ish days in right, like our immediate plan, we've adhered to immediate plan. And now goal going forward is for Heather to better understand how we service clients as a team of three, how DBA does, and also for Tiffany to understand what does that look like. And so that means that they will be merged in with other teams of three to really experience it. [00:37:30] You know, neither of them really understand how DBA services clients as a team of three. They've heard us say the words they've watched and shadowed our team members who are doing it, but it's not what they have been doing for the last 70 days with our Saint Louis clients. So lots of opportunity there.

Rachel Dillon: So on paper, the team of three is Heather at Client Service Manager, Tiffany [00:38:00] at Client controller, and Marcus as Client CFO. But really, everyone's main focus has just been tax preparation and take care of the clients who have immediate needs Seeds for.

Amy McCarty: The.

Rachel Dillon: April 15th deadline. Um, I bring that up, and I wanted to share that, especially because we have had something similar in the past where we had a team of three that had [00:38:30] two newer team members, and also we gave them the new clients as they as we signed on, signed up new clients, and that did not work. I will say that was a fail. That did not work well. It was hard for team members to support each other in the way the team of three is designed, and also hard for them to serve clients because they didn't have that same level of support or familiarity. [00:39:00] And then for another team of three, to come in to mentor them was also challenging because they didn't know the client either. So they knew the role and the responsibilities. But as they were trying to guide and help, then they were having to try to learn the specifics of and the nuances of the client itself. And so what has worked better, and what we are planning to do, is to help match up people of different [00:39:30] experiences and skill sets so that they really can support each other. So thinking about if a firm was thinking about hiring basically a brand new team of three to then take on any new work or new clients that came in, we would probably, um, say not to do that. We would advise against doing that and help pair up people. Um, if it is a new team, then it needs to be on clients that are [00:40:00] very well adapted to the process and services and very simplistic in nature, so that they're able to easily learn that and don't require a lot of support from the rest of the team to do it.

Marcus Dillon: Yeah, yeah. For sure. And, um, with those clients, even if you had great existing clients and you're shifting them over to a completely new team, that that could cause disruption in the client relationship. So even that alone may not be the best. [00:40:30] The best is just gradual, um, you know, improvement, adding in team members to shadow to learn from and, uh, you know, kind of building out additional teams and pods that way.

Rachel Dillon: Yeah. All right. Let's talk about clients. What has been the overall client feedback or client interactions from the acquisition?

Marcus Dillon: Yeah. So clients were used to being served in a very, um, legacy [00:41:00] kind of setup way and where, you know, it was always an option to drop off, maybe to meet with somebody when you dropped off. Um, preparation was done and then delivery was either through a meeting drop off. Definitely a phone call conversation. Right. And so that was how they were used to being served. Uh, so we've tried to bridge the gap this this year and kind of help meet people where they're at. And I think [00:41:30] it's gone. It's gone. Well, um, right now I think we've only we've only heard of like 3 to 5 individual clients, like moving on. So churn is relatively low or not even, um, because we've already replaced that revenue with other new clients, um, in that office. So I think that's something like retention numbers, which in acquisitions of accounting firms are typically around 85%. Uh, as far as client retention [00:42:00] hours already is a little bit higher in year one, maybe higher than years 2 or 3 as we continue to evolve that office there. But out of the gate, we couldn't have asked for better as far as client service, we are treating those clients and serving them just as much like DBA as we can, which means whenever a tax return is delivered, it has voice over commentary for the most part, unless it's just a really older client that doesn't have the technology. [00:42:30] Yeah, the technology to be able to set that up. Um, but for the most part, and those clients, we consider it a win. Every time a client sends back an 88, 79, pays the invoice without asking for a phone call or a lot of follow up questions, right. So I think that's that's working well with technology, that's working well with DBA processes. And we'll continue to lean into that.

Amy McCarty: I think my favorite part with the clients is it [00:43:00] kind of Marcus to what you're saying. Like it's a win every time they're appreciative of how we do things and acknowledging it, but just being realizing Surprising that something different isn't bad, right? So there have been some frustrated clients that once they've had a conversation with anyone on the team, they are immediately at ease and they realize that we are also humans and that we want to help them and we're able to help them, right? That's [00:43:30] I love hearing those stories.

Marcus Dillon: So yeah, they they don't know how good of a team they got is essentially what happened. Um, so but that's that's where we're at with clients. So continue to retain um, all the monthly currently is retained. The annual relationships are being retained. And we're on the other side of tax season. We'll look at cross-sell upsell opportunities for those clients.

Rachel Dillon: All right Amy I'm going to ask you first, what would you say has been the biggest [00:44:00] challenge. Or if there are more than more than one, you're more than welcome to share biggest challenges so far.

Amy McCarty: The biggest challenge is was was having a team member exit the firm prior our acquisition, who had been there for a long period of time, right. Understood all the clients, understood the work that needed to be done. [00:44:30] That has probably been the biggest challenge and just not losing anything, you know, as the transition happened and making sure that those clients are serviced and determining what it is that we need. Um, I'm going to add two in there though, because you said that I could. So the second one and this kind of goes to like what would what would we do differently for the next time is getting consent form signed [00:45:00] from the clients, because we have Toa team members who could have Helped us sprint even faster with this work. And but because we did not have consent forms signed, we were unable to tap into them to help us. And so, knowing what I know now, that would have been part of. Thank you for submitting your documents. Here are some additional forms that we need you to sign in order for us to begin work [00:45:30] on your return. Right. Like that is how we will handle that next time.

Rachel Dillon: That's good. All right. Marcus. Additional challenges, maybe specific to you or other challenges.

Marcus Dillon: Yeah. One of the challenges is just, um, to Amy's point, building upon that, like, we we did backfill that team member that left, put in a new controller, but, um, just they weren't a part of the team prior to acquisition, so they didn't know, you know, our software as as much as our other team members [00:46:00] or how to serve clients. So, you know, just being thrown in to a lot of different situations with new software, new clients, new team. Um, it's been been a lot for that person. And then, um, the other thing that, you know, I wish we would have known, maybe ask better questions on the next one. Um, is one communication style internally and with clients. Uh, we just have, like, to known that better. Um, and then two, um, [00:46:30] you know, really defined services, right? Because, um, that was a heavy lift for Amy. Uh, the first few weeks is really seeing all of their clients and seeing such a variety and piecemeal of what each client receives. So we could set them up into our practice management software the correct way. Um, thankfully, this firm did not do any payroll, uh, which is great. It's also a great opportunity for us, [00:47:00] uh, with our payroll solutions. But then, um, you know, you've got state and local tax. You've got, um, some different property tax renditions. You've got some that you do 1099 for, you've got some. And it's just there was no clear set, um, service or model in place, even though, um, even though there may have been a word. Right. Um, that word didn't mean anything. At the end of the day.

Rachel Dillon: I actually just talked with another team [00:47:30] member, and we were talking about how when the firm is, let's say, less than 500 clients, the team is made up of 3 to 4 people. Things look differently. You're able to keep up and operate without having things as documented, without having things as, um, transparent across the whole team as far as how messages come in, how meetings [00:48:00] are handled, where notes are saved, how projects are set up like not just the client name. And the project is due at the end of the month, but every single task that needs to happen for that client is actually tracked. Or the one off things like pets or something else throughout the year is also written down. And not just the one person who's in charge of doing it has it in their mind. And so that was something that like it worked before because everyone was in office, there [00:48:30] was a fewer number of clients. And, um, you guys were able to talk and interact and keep up with that style of keeping data and communication. But whenever you have a larger team that's fully remote with more clients, that's not possible to continue running a firm in that manner. So while it may last for a short time, that's not going to be, um, beneficial to anyone going forward. So I think that that's real [00:49:00] important.

Amy McCarty: That cramp when you're running is not going to go away in that situation. Like you're just done. You're done.

Rachel Dillon: It's not. And you don't see, um, you don't see how detrimental it can be until something changes, like a team member leaves or an acquisition, or somebody gets sick and is out for an extended period of time. And so you just kind of limp along with it because it's okay [00:49:30] until you have that major, um, until you have that major occurrence that might happen. And so let's talk about biggest win. Amy, let's start with you first. What's the biggest win so far?

Amy McCarty: I, I was thinking about it I think there's a couple right. Like the first one that I and I already mentioned it earlier is Angel director of technology. He's the win I'm taking out of this. But um, there have been [00:50:00] a it's a lot of learning and it is exciting. Um, the opportunity that exists with team members, um, Saint Louis team members and DBA team members, you know, our DBA team members were excited about this acquisition. Slightly nervous. Like, what does that mean? But also excited because with anything new comes opportunity. And so there's also a ton of opportunity with the client base to [00:50:30] service them. Like we would service our existing client base. And so that's very exciting.

Marcus Dillon: Yeah. And those are both great wins. Um, obviously one of the team members has assimilated really, really well. And I think we'll have a great long term career at DBA. The other is just like the clients. Some of the clients are just really great clients. They brought in, um, key revenue that was needed for some of those budget items like Angel. [00:51:00] Um, so that's great. And just building upon this, obviously proving that the mousetrap that we built at DBA, um, can handle stuff like this and that we have the right team members in place. And that includes, as Amy mentioned, adding, um, a Toa team member, Julie, this season that was really instrumental in helping us move along some of those returns for the DBA side so that other team members could focus on some of those, you know, Saint Louis [00:51:30] clients that weren't that just came in at different times, you know, because our structure wasn't in place the full year.

Rachel Dillon: And so, um, Amy, you mentioned earlier that we were really excited about the opportunity to help and serve and work with more people. So we have talked about probably almost every episode that we need to make hard decisions. And I would say a hard decision for us was deciding [00:52:00] to do an acquisition in January or on January 31st, and we really had to hold that up to our values to see how that aligned. So I think we've mentioned a few of them, but let's just reiterate what are some of the ways that this acquisition actually does align with our values? Um, Amy, you go first.

Amy McCarty: So our values making the acronym impact right and integrity meaningful [00:52:30] work. People first. Appreciation collaboration transparency all of those fall into that. So this helps us to create. It's all about the team. Let me back up. It's all about the team. And this is what I love about both Marcus and Rachel, both of you, and how you're thinking on all business decisions that you're making. How does it impact the people and opportunity for the people, right. So this was an opportunity [00:53:00] to create meaningful work and keep team. First, on how can we get budget? How can we help create more opportunity, more work for our existing team? Instead of saying, hey, we have excess capacity, let's just let good team members go. So those are a couple ways. Those are the two I think of.

Rachel Dillon: How about you, Marcus?

Marcus Dillon: Uh, yeah. I mean, I think, uh, integrity. It comes with everything that we do. And I think that's [00:53:30] a core value for every accounting firm because it comes on a templated website. Right. So, um, but it truly does like every decision we've made around team members, clients, uh, with this acquisition has come from a place of integrity and not, like, greed or anything like that. And we just try to hold that, hold those values up to the lens of every decision we're making. Um, to kind of see it through, you know, those perspectives? Not necessarily. [00:54:00] What is this just really a good business decision or not?

Rachel Dillon: Yeah, I think it gave us the opportunity to practice, um, that transparency with our team by letting them know up front that we were considering an acquisition. And so as soon as we started having conversations, we were able to share that at a team retreat. We did not do that email teams message, um, even in a weekly remote meeting. We did that at a time that we were all in person [00:54:30] so we could talk through what that meant, answer questions, and really get personal feedback on, um, how people were thinking about that. But we could have just as easily not said anything until until the deal was done, or just about done, um, to the team. And so I think that that was really awesome, that it gave us that opportunity to practice. And what we found was that they were as excited as we were, um, for the additional opportunity and appreciated [00:55:00] that we trusted them enough to share it upfront. So I think that was really awesome. Okay. Last thing. Anything that you wish you had known before we signed or that you would have done differently? Um, if there's anything else to add there.

Amy McCarty: I shared mine already. I mean, Margaret said on the one like, better, better understanding of the services, like right out of the gate, you know, I mean, we tackled that, but it was next [00:55:30] time right out of the gate. But those consent forms are top on my list. It was rough this tax season to see availability but unable to fill said availability.

Rachel Dillon: So that's good. How about you Marcus? Anything that you haven't mentioned or you'd like to reiterate?

Marcus Dillon: Well yeah. And I'm sure we'll continue talking about the acquisition, um, in future episodes. But, you know, we're we're we're right now just focused on getting through April 15th and doing that well, and then we'll [00:56:00] move into improvement season, right, which we have that free resource there. If people haven't downloaded that yet based on the previous podcast. Um, so I think it just will come down to some communication that we're about to have in some hard decisions that we're about to make. Um, maybe by the time this comes out, those are done, maybe not. And so I think it's just one of those where, um, there was a business thesis going into this. Right? And, um, you know, even though emotions [00:56:30] and human, uh, you know, come, come into play and, and make things cloudy and make judgment, you still have to move forward with being a great steward and continuing to execute on the plan that you have. And so, um, there will be, you know, conversations that are had some of those will be hard conversations, um, and just making sure that we communicate that and in ways that are loving and caring for for others and um, but yeah, like, as far as, uh, [00:57:00] what we wish we would have known, like, maybe communication could have been a little bit better. But so much of what we say now, we wish we would have known it could not have been known prior to close. Like everyone's got a great business up until close. And not just the seller, but like in general. Right. Um, you don't know that the car has an oil leak until you get it home and it's on your concrete. So I think those are the pieces that, um, you know, we just have to reflect on. And now that we know of those [00:57:30] challenges or know of those pain points, you got to go execute to remove them or address them so it doesn't become a future pain point.

Rachel Dillon: Yeah. Um, one tip, because you can never know all of the questions and answers that you would know after the fact. But I would say one tip is don't make any assumptions. We have some common language, especially in the accounting industry, but we interpret those words [00:58:00] very differently. Um, Cass, uh, different monthly recurring revenue or monthly recurring services, all of those things, even positions and titles within firms, all of those things mean something very different from person to person and firm to firm. So I think also there is don't be afraid to ask questions and get more clarity on what does that mean to you. You know, whenever you say this, what does that mean to you? Or what does that look like for [00:58:30] all of the clients, this client? Um, I think that that's helpful to remember as well.

Marcus Dillon: And I would also I would just, you know, finish with, uh, you know, the rally cry this year personally and like, leadership team, uh, was uh, the goal is growth, not comfort. And, uh, you know, I think we're coming out of a season where you can definitely see light at the end of the tunnel. The the dawn, you know, kind of rising. So, um, I was I was [00:59:00] in a group study yesterday, and there's also a quote from Peter Marshall, who is the pastor and chaplain of the United States Senate. And he says, when we long for life without trials and work without difficulties, remind us that oaks grow strong and contrary winds and diamonds are made under pressure. So we're not we're not meant to live, you know, easy life. I think once you get to the next threshold, you know, road mark, there's going to be new challenges. [00:59:30] And so, uh, maybe, you know, more money, more problems, to quote, uh, Biggie Smalls. But, you know, it's one of those where you're not you're not meant just to lay around. Um, so we're we're facing the new challenges head on, and, uh, it'll be fun to document what we're learning and share with others.

Rachel Dillon: I appreciate both of you. We went into this with the leadership team, knowing and fully expecting that this would be a lot of work and we, [01:00:00] um, as a leadership team, were ready and willing to do that. So thank you guys for, um, definitely doing the heavy lifting for taking the risk and the chance, uh, and making it a great acquisition. Um, thank you, Amy, for joining us on the podcast. We appreciate you being here.

Amy McCarty: Thank you for having me.

Rachel Dillon: All right. And I will see you guys on the next.

Marcus Dillon: All right. Thanks.

Rachel Dillon: Thanks for listening to this episode. If [01:00:30] you enjoyed the conversation and want to learn more, be sure to visit collective CPA. You can schedule a meeting directly with me, Rachel by clicking on the Contact Us page. Be sure to subscribe, like, and share so you don't miss any future episodes. We look forward to connecting with you soon!