Accounting and business consulting firm Wipfli LLP has been snapping up smaller accounting firms at a breakneck pace over the past few years, and has no plans to slow down anytime soon.
The company has recently been focused on the Chicago market, and could soon even have a larger workforce in Chicago than at its corporate headquarters office in Wauwatosa.
Like many firms in the accounting world, Wipfli is growing strategically in order to expand the business services it can offer clients, and also to get closer to existing and potential customers.
“There is quite a bit of accounting (firm) consolidation going on, particularly during the past few years. It’s maybe picked up in the last three to five years,” said Dennis Tomorsky, CPA, J.D., CGMA, president and chief executive officer of the Wisconsin Institute of CPAs. “In a lot of cases, I think it’s being driven by CPAs who are approaching retirement age and haven’t really figured out an exit strategy.”
Not only does Wipfli look over the books, but it also consults on topics like IT and human resources; guides companies through mergers and acquisitions; handles employee benefits; performs risk advisory; helps companies go public; and offers a myriad of related services. Those value-added services have been driving its growth, said Rick Dreher, managing partner of Wipfli.
Many accounting firms are moving in the direction of using the data they already gather to give businesses additional insight about strategies such as increasing profit margins, reducing costs or lowering prices, Tomorsky said.
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Money doesn’t necessarily change hands in accounting firm transactions, but the companies are being absorbed into the larger firm, with the promise of a benefit upon employees’ retirement. Wipfli made five acquisitions in 2016 alone, bringing in about $40 million in acquisitive revenue, and it has a second 2017 acquisition wrapping up in the next month or so, with total 2017 acquisitive revenue expected to exceed last year, Dreher said.
“We’re looking for partners that choose to practice with us in the way we practice,” he said.
When Dreher became managing partner 11 years ago, Wipfli had 16 offices in Wisconsin and two in the Twin Cities. Now, it has more than 1,800 employees at 43 offices in the U.S. and two in India. It is ranked among the top 20 accounting and business consulting firms in the country.
Last month, Wipfli acquired CPA and advisory firm BIK & Co. LLP, based in Chicago suburb Palatine, the third Chicago market acquisition it has made in the past 13 months.
Wipfli now has eight Chicago area offices: downtown; Northbrook; Buffalo Grove; Burr Ridge; Palatine; Vernon Hills; Tinley Park; and Westchester. The plan is to acquire another downtown Chicago firm and then consolidate some offices in the market to serve clients from one location in each cardinal direction, Dreher said.
“Over time, there will be a combining of offices and we are going to work out of multiple locations—we call it our diamond strategy for Chicago,” he said. “Chicago is a strategic hub for us. Wipfli’s plan of the future is really around a hub-and-spoke model.”
While the spokes will house traditional CPA firm services, such as bookkeeping and tax advisory, the hubs will be where consulting associates are located, Dreher said.
“Wipfli, as a firm, earns a little over one-third of our revenue from this consulting space,” he said. “A hub city for us needs to be an airport city.”
Milwaukee, which has fewer airline routes, doesn’t necessarily have to be a hub city, and Chicago will house a significant portion of the company’s Midwest consultants, Dreher said.
Wipfli already has a decentralized management structure, with two of its eight management team members in Green Bay, two in Eau Claire, one in Milwaukee, one in Chicago, one in Appleton and one in the Twin Cities.
“Where we’re ‘headquartered’ really doesn’t matter,” Dreher said. “Milwaukee’s headquarters for now and we don’t anticipate changing that anytime soon. But someday, could Chicago make sense? Sure, but it’s certainly not required the way we manage our firm.”
The Midwest is a stronghold for Wipfli. The Wauwatosa office has the most employees, at about 170. The Twin Cities has two offices totaling about 170, Green Bay’s office has 135, Wausau has 100 and Eau Claire has 120, Dreher said. Wipfli now has about 200 employees among its eight Chicago offices.
But the company, which has about $300 million in annual revenue, also is expanding its presence across its nine-state footprint, with seven offices in Montana alone. It expects to grow its top line revenue 15 to 25 percent per year for the forseeable future.
Wipfli’s model is built on personalized service, so it is doubling down on in-person availability with brick-and-mortar in its key markets. While it’s more costly to have so many offices, it’s a good long-term client satisfaction strategy, he said. The company serves a total of 45,000 businesses and individuals nationwide.
“If you were going to come to the Midwest new, you wouldn’t replicate what we have today. We just have too many offices on top of each other,” Dreher said. “We just think that is the best way to service our clients and develop a longstanding relationship. We will operate out of more offices than most of our competitors.”