The Titus Group to expand into Atlanta, Houston markets
By Andrew Weiland, of SBT
Capitalizing on the growing need for independent auditors, The Titus Group Inc. plans to expand by opening offices in several new markets over the next decade.
Company founders Scott Seefeld and Ron Bocciardi already are interviewing applicants to work in offices the company plans to open in Atlanta and Houston. Those markets are fertile for corporate headquarters of publicly held companies.
The Titus Group, which provides internal audits, accounting, and technology and tax services, plans to open offices in one to two additional markets each year until 2010. That’s remarkable growth for a 3-year-old company that currently employs about 60 people at its Milwaukee headquarters in the Historic Third Ward and that already has offices in Chicago and Indianapolis.
"We don’t want to open offices just to open offices," said Seefeld, president of The Titus Group. "We have to have the right leaders in place. I don’t want to force it. I’ve seen companies force it, and it doesn’t work out."
"Our growth is only limited by our ability to find the best and brightest people," said Bocciardi, vice president of firm.
The consulting company’s new offices will be established in large, growing markets, Seefeld and Bocciardi said.
They plan to focus their expansion in the South and Midwest until the economy improves, before opening offices on the East and West coasts.
"Sooner or later, we are going to expand to the coasts," Seefeld said. "We’re waiting for the coasts to get the wind at their backs in this economy."
The Titus Group’s growth has been spurred in part by the Public Company Accounting Reform and Investor Protection Act, also known as the Sarbanes-Oxley Act.
President George W. Bush signed the act into law last year in an attempt to discourage accounting scandals such as those involving Enron and WorldCom.
The federal law prevents accounting firms from performing consulting work for publicly traded companies they are auditing. The law has created business opportunities for The Titus Group to perform independent audits for publicly traded companies seeking to comply with the new law.
"We provide the added independence to the whole process of executing Sarbanes-Oxley," Bocciardi said.
Helping corporations comply with the new law accounts for about 20% of the work The Titus Group provides for its clients.
The law also mandates certification of financial reports by top executives and increased penalties for executives who commit corporate fraud. A chief executive officer or chief financial officer who certifies false financial reports could be sentenced to 20 years in prison and receive a fine of up to $5 million.
Seefeld and Bocciardi believe another reason their business has grown is because they have an edge over many of their competitors, which are publicly traded companies with higher overhead costs.
As a privately held firm, The Titus Group can move more nimbly than the publicly traded companies it serves, they say.
Seefeld and Bocciardi believe their services are of similar quality, but cost less than those provided by publicly owned firms.
"We don’t have a desire to go public," Bocciardi said. "We have a desire to stay leaner and offer better value to our clients."
Many of The Titus Group’s customers are concerned about the costs of complying with the new federal regulations, Seefeld said.
"Sarbanes-Oxley has been a huge regulatory issue for a lot of large publicly traded companies," he said. "They’re looking for more affordable ways to comply with the act. If they can do that in a quality way in a much more affordable manner, they are very interested in that."
The Titus Group has more than 100 clients, including some of the largest in the three markets it serves. The firm’s client roster includes BP Amoco Corp., Kraft Foods, The Tribune Co., Conseco, Journal Communications, Miller Brewing Co., Rockwell Automation, Marcus Corp. and Wisconsin Energy Corp.
Seefeld, 36, and Bocciardi, 37, have worked together for more than 10 years. They first worked for BDO Seidman. Prior to starting The Titus Group, Seefeld and Bocciardi were executives at Jefferson Wells International (formerly known as AuditForce and now part of Manpower Inc.), which they helped grow from a company with 12 employees to a corporation with 1,400 employees, $175 million in annual revenue and 24 offices across the United States and Canada.
"We took a lot of things we learned from Jefferson Wells, but also we felt we could do other things better," Seefeld said.
They opened their first office for The Titus Group in Indianapolis in September of 2000 and opened the Milwaukee and Chicago offices a year later.
"With the recession starting and Sept. 11, there were some challenging obstacles thrown at us," Seefeld said. "But 15 months after opening, we were profitable, and we have never looked back since. Our profits are very solid — they’re very strong. I’m really proud of our team and our ability to do it and grow in tough economic times. We have no debt. All three of our offices are profitable."
Each of the accountants at The Titus Group has at least seven years of professional experience.
The quality of the employees and the personal relationships they build with their clients are the greatest strengths of the company, Seefeld and Bocciardi said.
"We are very passionate about client relationships," Bocciardi said. "That’s something that gets me out of bed in the morning and really charges me up."
The Titus Group was named to this year’s Future 50 list of fastest-growing young companies by the Metropolitan Milwaukee Association of Commerce and its Council of Small Business Executives.
Although the company plans to open new offices in several larger markets, Seefeld and Bocciardi said the firm’s headquarters likely will remain here.
"I see us staying in Milwaukee," said Seefeld, who grew up in the area. "I have very strong family roots here. I love Milwaukee. It’s a great city."
Private firms also can benefit from independent auditing
Although the Public Company Accounting Reform and Investor Protection Act (also known as the Sarbanes-Oxley Act) applies only to publicly traded companies, the law has some privately held companies reevaluating how their businesses are audited.
Among other things, the law prohibits accounting firms from performing consulting work for companies they are auditing. That provision in the law has provided business opportunities for The Titus Group Inc. to conduct independent audits for publicly traded companies.
However, smaller privately held companies also may benefit from having an independent audit done, according to Ron Bocciardi, vice president of The Titus Group.
"To perform a basic internal control review would be a very wise thing to do," he said.
The owners of small, family-owned businesses often lack the accounting knowledge to prevent internal fraud, he said. For that reason, some of those small-business owners are deciding to have independent audits done, Bocciardi said.
"They see the need to ensure they have the proper controls in place," he said. "Some non-public companies are taking the initiative of implementing portions of (Sarbanes-Oxley) in order to make sure they have a strong control environment."
Public Company Accounting Reform and Investor Protection Act (Sarbanes-Oxley Act), 2002
— Prohibits public accounting firms from performing consulting work for publicly traded companies they are auditing.
— Sets up an independent oversight board to watch over the accounting industry.
— Mandates certification of financial reports by top executives.
— Stiffens penalties against executives who commit corporate fraud.
— Increases financial disclosures, including disclosure of all off-balance sheet transactions.
Oct. 17, 2003 Small Business Times, Milwaukee