MHM’s new chairman plans to acquire more companies
Andrew Gragnani, the new president of Mayer Hoffman McCann, intends to increase the firm’s national presence, in particular by acquiring other accounting firms.
MHM, a Cleveland Top 10 company that operates in an alternative practice structure with publicly traded financial services firm CBIZ, announced Gragnani’s appointment earlier this month, succeeding Andy Burczyk, who is retiring. (see the story). Gragnani has been a shareholder of MHM for 13 years, serving on the firm’s executive committee and as head of the regional attestation practice for 12 years. One of his first tasks will be to deal with the recent acquisition by CBIZ and MHM of Marks Paneth LLP, one of the top 50 companies in New York, in January. The company also made two other acquisitions last year. Last September, CBIZ MHM acquired Shea Labagh Dobbersteina San Francisco company, and last April it acquired Berntson Porter & Company LLCa company in Bellevue, Washington.
Gragnani expects more mergers and acquisitions in the future, as well as organic growth in other areas, while expanding MHM’s efforts in diversity and inclusion, and environmental, social reporting. and governance.
“We continued to focus on our people, our culture, our D&I, ESG and innovation efforts,” Gragnani said recently. accounting today. “Our management team is engaged and heavily involved in all of this strategic work. Obviously, CBIZ is the key. There are many opportunities for our employees internally as well as in our offices. We are looking to expand our national office to support this growth. Given some of the transactions that have taken place over the past two years, particularly in the alternative practice structure space that we find ourselves in with CBIZ, it has created a lot of opportunities for us to really acquire businesses that make sense in a geographic and niche industry. adjust. You will see us continue to do so with CBIZ. It’s a pretty exciting time to take over, given the opportunity to lead the business into the next generation, if you will, in what I think will be a period of growth for the business because we’re really focusing on all of those things, but really an acquisition target based just on what’s happening in the market. »
The deals with Shea Labagh Dobberstein and Berntson Porter helped MHM expand its presence in new markets, while Marks Paneth helped the company expand into an existing market. “If you look at those two transactions, they gave us footholds in places where we weren’t there before,” Gragnani said. “As we begin to look at where we are, location and niche, could we secure a greater presence in an area where we currently have a practice that has performed well? This was part of the whole Marks Paneth transaction that we recently had.
Gragnani joined the firm when CBIZ and MHM acquired Mahoney Cohen, a New York-based company, in 2009. “I was involved in the Mahoney Cohen deal,” he said. “After leaving Andersen I went to Mahoney Cohen and we were acquired in 2009. That office went through its next generation. Together with CBIZ, we are quite fortunate to be with a strategic partner like this that gives us a very solid foundation to position ourselves to execute these transactions. The partnership we have with them allows us to be able to take advantage of what we believe to be a strong M&A market.
With the alternative practice structure, MHM acquires the audit and attestation side of a CPA firm, and often also the tax side, while CBIZ acquires the advisory side.
“In the structure, from an attestation perspective, we are very focused on our proprietary methodologies, our technology deployment as well as a large part of our audit quality policy, particularly on acceptance and customer consultation,” said Gragnani. “Having a partnership with CBIZ allows us to focus on quality efforts.”
He worked with Burczyk during the transition, as well as with Jeff Gluck, who was named chairman of MHM’s board of directors. “It’s been an interesting couple of weeks,” Gragnani said. “I’ve worked with Andy for a long time. We were working on a lot of things, so it’s a smooth transition. I had the good fortune to work with Jeff for a very long time. He and I were part of the business that was acquired, so I’ve known Jeff for a very long time. It is his role to lead the New York office and in my role at MHM I had to work hand in hand in the operations of the New York office from a attesting perspective, while he led the office. I am very comfortable with our relationship. Our communication is very collaborative, very transparent, and we are in agreement with CBIZ on the strategic objectives and where we must position our company in the market.
CBIZ and MHM maintain some independence by maintaining two separate boards of directors. They also have an independence officer who has protocols and policies in place when attested and unattested parties work on common clients. “It’s paramount to being part of the structure of the practice and making sure that happens,” Gragnani said. “We are very comfortable and ethical in the way we operate, but execute.”
CBIZ primarily supports the ESG and DE&I board, but MHM is represented on the committees as the voice of the attestation practice.
The audit market could be booming for companies with a recent proposal from the Securities and Exchange Commission this month to require hedge funds and private equity firms to undergo audits of their financial statements at least once a year and upon liquidation (see the story). Under the SEC’s proposal, audited financial statements should be distributed to investors soon after the audit is complete. “These audits would provide significant control over the advisor’s valuation of private fund assets, which are often the basis for calculating advisor fees, and would protect private fund investors from the misappropriation of fund assets,” said the SEC in a statement. fact sheet. The proposal, which also includes greater disclosure of fees, is likely to attract considerable pushback from the private equity and hedge fund industry, but if passed could provide more business to audit firms. CBIZ and MHM already have a number of clients in this sector.
“We’re quite lucky to have had a lot of inroads working with a number of groups, mostly in the North East, but across the country we’ve really seen a lot of growth,” Gragnani said. “I think it would give us more opportunities across the country. I think we have a pretty good track record of working with a few key players in a few key markets, and that’s really fueled a lot of growth for us.
MHM and CBIZ plan to further compete with other firms as the war for talent continues to rage in the accounting profession. “With the ongoing battle for people and talent and the big resignation and all that, we’re trying to embrace the remote environment and provide flexible working arrangements for people,” Gragnani said. “Some of the companies have really put in high stakes, and you have to be responsive to that and know how to manage that effectively from a quality risk management perspective. We look at a number of different things when it comes to those areas, but we focus on our people, what keeps them up at night, what motivates them, what’s important. How can we not only make their work fulfilling, but also make them feel challenged and have the ability to grow within an organization? They should be able to do this in a flexible and remote environment. From a technology perspective, we’re trying to put our methodology where people can access it on their phones. Technology is essential to achieve this. We have a really good team to take advantage of all of these things as well as the emerging technology that everyone is looking at.
In some parts of the country, CBIZ and MHM employees have returned to their offices, although in New York and most of the Northeast, many employees are still working remotely.
“In other parts of the country, in our offices, it’s back to normal, and I’m very optimistic that it’s back to normal and people are coming back,” Gragnani said. “But to the extent that we don’t, we will get there. We have organized several live trainings [sessions] in 2021, and we had a very good attendance, and we plan to continue the live training. We plan to accommodate more people, but we will still provide the remote options that are needed. It’s part of trying to give people those opportunities, giving them flexibility. We succeeded in 2021. We will do it again in 2022 and do it better.