Hartford Business Journal

24 Hartford Business Journal | March 22, 2021 | HartfordBusiness.com they said. CLA also brings the ability to invest in new technologies and practice areas. For example, it expects to shepherd blumshapiro into the wealth advisory business. CLA also boasts more state government auditing assignments than any other accounting firm, and is expected to be a boon to blumshapiro's ability to compete for municipal audits in Massachusetts. "Smaller firms may tell companies that they will pay more in fees now because they're with a top 10 firm, but that's not true," said Joseph Kask, former CEO of blumshapiro and now New England managing principal at CLA. "The fee structure is the same. We will service clients from the same offices. We aren't flying people in to do your audits." Kask said he's excited the deal will give blumshapiro's team the opportunity to enter the wealth advisory market, where it's been looking for a way in for some time. "There are going to be so many opportunities," he said. "It's an outstanding opportunity for us to go into another area and we can stick with our clients all the way through a company's life cycle." Competitors expect CLA to eventually chase bigger clients used to paying higher fees to larger accounting firms. "CLA didn't get to $1.3 billion [in annual revenue] by working on $30 million to $50 million manufacturers, that's just my gut feeling," said Sabol. However, James Watson, CLA's chief practice officer for the Northeast, said CLA focuses on industry sectors, rather than whether a particular client is big or small. "There's really no set wheelhouse as far as the type of client," Watson said. "We have a small million-dollar nonprofit we're serving alongside Make-A-Wish, which is one of the largest nonprofits in the world." One thing you won't see CLA doing? Chasing auditing assignments from publicly-traded companies — Watson said it's a conscious choice the firm has made. Boston market While blumshapiro was in the Connecticut market for 35 years, some of its more recent moves were aimed at growing its Boston area presence, mainly through acquisitions. CLA already had a presence in that market and likely saw blumshapiro's growth there as a key trait, said Andrews. "CLA can leverage that and move more into the Boston area, which is considered a higher-growth area than Connecticut," he said. Whittlesey fields several calls a year from larger firms, both from the area and further afield, sniffing out potential interest in an acquisition, and they're often interested in proximity to the Boston area (where Whittlesey doesn't have a presence). "One firm told me that 'we'll get you to Boston and build it out,' " Andrews said. "I said 'well, it doesn't work that way. If you're not in that market you're not just going to be able to walk in there and grow.' " Sabol agrees that Boston is a draw for many outside firms, and notes blumshapiro likely saw value in building additional clout there. For its part, CLA says it was interested in securing "a more local presence throughout New England." "Our service model is built on being close to our clients," Watson said. Future outlook At Whittlesey, Andrews says he discusses the firm's future at just about every annual partner meeting, including the possibility of being acquired one day. "I bring it up as an alternative at least once a year and I never get anybody wanting to do it out of our 23 partners — zero," he said. "We like running our own shop." Andrews thinks the retirement benefits his firm offers to partners, which are designed to move younger talent up the ranks to replace aging counterparts, have been one important factor in remaining an independent firm. Partners worry that being acquired might mean they are forced to take on more clients than they can handle, and they will lose their decision-making autonomy. In an age of steady M&A activity, Andrews said he sees that local autonomy as increasingly unique. "Now can we keep it going forever? Who knows?" he said. "I think we can if we do the right thing." Both Sabol and Andrews expect more consolidation in the region's accounting sector moving forward, though the remaining firms are relatively small and may not draw the eye of national giants like blumshapiro did. "Most partners are getting older and most haven't done what we've done, which is develop talent underneath us, and they need an exit strategy," Andrews said. His partners are determined to remain independent, but there's still pressure to keep growing; acquisitions or mergers could be part of the equation. "We're constantly talking to folks," he said. FOCUS: Accounting James Watson Michael Sabol GO TO >> WWW.HARTFORDBUSINESS.COM/HBJ-EVENTS/FAMILY-BUSINESS-AWARDS CALLING ALL 2021 NOMINATIONS DO YOU KNOW A FAMILY-OWNED BUSINESS, PIVOTING & MAKING INCREDIBLE STRIDES? Family businesses are an integral part of the social and business fabric of our state. These awards recognize outstanding achievements in family-owned businesses and tell the story of a select group of the region's most successful firms. Honorees will be recognized in a special issue of the Hartford Business Journal. NOMINATE TODAY DEADLINE 4/16 EDUCATION LEADERSHIP SPONSOR: PRESENTING SPONSOR:

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