Baker Tilly’s CEO isn’t satisfied his firm was recognized as the fastest-growing large accounting firm last year and is poised to move up the ranks, as he projects revenue reaching $1.5 billion.
He wants to shake up the accounting industry at the same time.
Alan Whitman’s formula may be a bit radical—from scrapping the traditional way partners are paid to experimenting with an end to the time-honored use of billable hours. But fueled by a hefty number of acquisitions, it’s a strategy that has paid off. Revenue has tripled since Whitman took the reins of the US firm in 2015 as he eyes overtaking some larger peers—a tier of firms just below the Big Four that includes the likes of BDO USA LLP, Grant Thornton LLP and CliftonLarsonAllen LLP.
“We want to be right there in the mix,” Whitman told Bloomberg Tax in an interview Monday in New York.
Whitman has been trying “to break the mold in public accounting” in more ways than one. Baker Tillly:
- wants to ensure recent graduates rotate through more roles sooner in their careers and to promote employees throughout the year and not just at fixed points like the end of the fiscal year.
- is running a pilot program that explores the idea of scrapping the traditional “billable hours"—billing for the firm’s services based on the amount of time its employees spend working for a client—and basing its fees on the actual projects it completes instead. “It’s not about the hour, it’s about the production, it’s about the work to get the project done,” Whitman said.
- altered partner compensation to consider only the value and quality of partners’ work, not based on the size of firm funds available for partner compensation.
- gives staff the option to disconnect from the firm 12 days throughout the year—like the Monday after the Super Bowl—in a bid to boost productivity.
Reimagining work is a business imperative amid a shortage in accountants and the great resignation that left even the Big Four accounting firms reeling.
Whitman said the way accounting firms deliver services is “archaic” and that younger generations don’t see the career path “as sexy as it once was. And I don’t think it’s about what we’re doing, it’s about how we’re doing it.”
Keeping enough accountants and other professionals on staff to serve clients and meet demand is one of the biggest challenges for the firm amid a post-pandemic reset in career expectations.
“That’s our supply chain,” Whitman said of the firm’s professionals. “We’ve got supply chain bottlenecks and the supply is people, with less people going into the accounting.”
Baker Tilly’s meteoric growth was driven largely by at least 18 acquisitions completed since Whitman took the helm of the firm. The deals include a 2020 merger with Squar Milner that pushed Baker Tilly into the ranks of the 10 largest firms—from its ninth ranking, according to Accounting Today. And more acquisitions are in the works.
The deals have not only boosted capital available to reinvest in the business, like deploying $100 million on technology, but also expanded the amount of talent and expertise available to clients. More recent additions expanded the firm’s presence in Arizona and added an enterprise resource platform offering to its mix.
Whitman sees room to grow the firm’s presence in Atlanta and South Florida, which serve as gateways to markets in Europe and South America. After investments in the health care sector and forensic accounting, the firm is focused on boosting its reach in certain industries or sectors. Top targets to expand its offerings to include digital transformation and real estate advisory services.
Emerging areas like sustainability reporting and digital assets aren’t on that short list. He called cryptocurrency a “new and untested industry.”
“It’s not a place that we are in.”
President Joe Biden’s tax-and-climate law, which was enacted in August, creates significant opportunities to help clients take advantage of new incentives or to help protect clients from potential negative consequences, Whitman said.
One area the firm is cutting is its real estate footprint. Baker Tilly began to reconsider how it uses office space even before the pandemic and the remote work revolution. The firm now anticipates cutting from 20% to 50% of its office space as leases come up for renewal, Whitman said.
“The focus,” he said, “is on being intentional about how you connect, not where you connect.”
—Naomi Jagoda contributed to this report.