Counting more than beans Accountants: At a time when home computer programs can perform many of the bean-counting tasks of a CPA, accounting firms are selling themselves as business consultants.

August 12, 1996|By Abbe Gluck | Abbe Gluck,SUN STAFF

When the sale of Annapolis-based TeleSpectrum Inc. becomes final this week, owner Karen Schweitzer will be giving a nod to the consultants who helped her $12 million telemarketing firm get there.

They're not who you might think.

They're accountants, and they're not just for taxes anymore.

Rosen, Sapperstein & Friedlander, Chartered is just one example of the many accounting firms that have expanded their services well beyond audits and taxes.

In a time when off-the-shelf computer software has taken over many of the tasks once performed by CPAs, accounting firms that want to grow have to broaden their services, said Howard Rosen, senior partner at the Owings Mills firm, which employs 24 people.

And firms larger than Rosen's are part of the trend.

Consulting now makes up more than 30 percent of business at the "Big Six" accounting firms, and its importance is growing, said Arthur Bowman, editor of Bowman's Accounting Report.

Robert Elliott, a partner at KPMG Peat Marwick LLP, one of the Big Six, agreed. "You can get yourself a $39.95 software package that enables you to do things that you used to have to hire a CPA to do," he said. "Audit and tax services have been relatively flat because the companies that need them already have them, but consulting is very hot."

"Consulting is more lucrative," said Bill Bavis of Clifton, Gunderson & Co. in Baltimore, where 25 percent of the firm's business is consulting. "Clients are more willing to pay for services that fall within the consulting category."

As a result, firms like RS&F are doing everything from valuation services to serving as human resources departments for their clients, which are primarily mid-sized companies looking to grow or sell, Rosen said.

For TeleSpectrum, that meant coming up with ways for the firm to raise more capital and expand, as well as "literally picking them up and pulling them out" of another deal because the terms weren't optimal, said Sheldon J. Berman, a partner at RS&F.

Schweitzer said RS&F has been her primary consultant for eight years, helping her build the business up and making Wednesday's $10.4 million deal possible.

"They really have provided so much professional and personal support from the standpoint of helping us determine where we wanted to go," she said. And it was RS&F that helped Baltimore's NeighborCare Pharmacies flourish, making it an attractive acquisition for Genesis Health Ventures Inc., said former owner Michael Bronfein. Genesis bought the company in April for $57.25 million.

And while accountants said large companies often look to major consulting firms like Mackenzie or Booz Allen & Hamilton, they called themselves the right choice for mid-sized companies.

"It's not unusual for our clients not to have a chief financial officer or a human resources department," said Bavis. Rosen agreed, saying some mid-sized companies "have many opportunities unfold before them, like selling or going public" but are too small to approach industry consultants. More than 40 percent of RS&F's business is consulting.

According to a 1994 survey of small businesses by the American Institute of Certified Public Accountants, 50 percent of owners said they always or often consult their accountants before making a business decision, while only 22 percent said they turned to bankers and 5 percent said they turned to management consultants.

Accountants said that, unlike most consultants, their long-term relationships with clients offer advantages.

"We already know everything, so the owner really feels comfortable talking with us," said Ed Tucker, of Ellin & Tucker, Chartered in Baltimore. "The client doesn't always want to drop his kimono in front of anyone."

It also means they are constantly involved in a business.

"The CPA is involved in your company on a continuing basis," said Elliott of KPMG. "You call a consulting company and they have to spend a lot of time learning your business, your clients -- that's dead time."

And they can see their suggestions through to implementation, Rosen said.

But while agreeing accountants often serve smaller companies well, consulting firms can offer specialized expertise, said Booz Allen's Michael P. Noonberg.

"Sometimes an accounting company is not as up to speed on technology as even the boutique consulting companies," said Noonberg, vice president of Booz Allen's Worldwide Technology Business in Linthicum.

Companies concerned with cash flow will do well with accountants, but for "issues relative to infrastructure, like what kind of desktop publishing you need," even small companies should seek consultants, said Noonberg.

Accountants say their expanded role also offers more professional gratification.

"Consulting is more satisfying," added Tucker. "Auditing is fulfilling an unpleasant requirement -- people pay us with a frown -- but if we help our clients make more money, we not only get a check, we get a thank you."

Rosen agreed. In January, when occupational health provider Baltimore Industrial Medical Group sold out to OccuSystems Inc., it was RS&F that made the decision that it was time to sell, said former owner Russell May.

And for Rosen, who said he "was there the day BIMG opened" and guided it through negotiations with banks and regulatory agencies for the 18 ensuing years, seeing clients reach their goals is proof that RS&F "aren't bean counters."

Pub Date: 8/12/96

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