Writer: Ryan Gandolfo
3 min read February 2023 — With uncertainty a running theme in 2023 as the economy continues to adapt to changes from an aging workforce, among other areas, Boston leaders in the professional services industry are looking for ways to remain relevant and meet a high level of demand from clients. With Invest:, Stone & Co. Managing Partner Robert Miller and Eckert Seamans Cherin & Mellott, LLC Member-In-Charge at the Boston Office Peter Carr share their insights on the Boston market and its shifting landscape.
How do you see the landscape for M&A evolving in the near term?
Robert Miller: I expect that we will continue to see more mergers and acquisitions. The dynamics are such that smaller firms are becoming more challenged with the burden of complying with increasingly complex standards. As a result, many are exiting the audit and assurance services space that would mandate a peer review inspection. In our profession, CPA firms can generally provide non-attest services, such as tax and advisory services, quite profitably and avoid the requirement to undergo peer review inspections. But once you start to do audits and assurance work, those inspections are mandated by the AICPA. For many smaller firms, it’s a real struggle to keep up with the changing and increasingly complex standards. Some of these firms are looking closely at certain attestation engagements with lower margins, the cost/benefit, and the overall exposure that comes with the extra outside scrutiny, and many are making the decision to no longer perform audits, and we have seen that happening fairly consistently, and it continues to happen.
The other dynamic is that not all smaller firms have a succession plan. We have seen some smaller firms with an average age of the firm’s professionals in the 60-70 range and there aren’t any mid-career people who are ready to take the mantle. As a result, they have to find a way to be acquired or have some exit strategy. That is a dynamic that keeps showing up fairly regularly as well.
What areas of practice have been most in demand?
Peter Carr: We’ve done a ton of real estate work recently; a combination of financing and development. That practice area has been super-busy this last year in all different types of deal structures, which could be a restructuring of a commercial loan or acquisition and financing of a new project. The real estate market has been exceptionally hot and busy, which I think bodes well for the region because when real estate is really moving and shaking, that means everybody’s kind of moving along in the same direction.
What is your perspective on the greater Boston market and what would you say makes the area a great place to live and do business?
Miller: I’ve been in the area since the early ‘80s and have come to love the city and the surrounding towns. I’ve also worked in many other cities during my travel years as an auditor. It’s a unique community in that there’s a certain amount of camaraderie in the business community, like a family or a club. Once you connect with people in Boston, there is a welcoming vibe and energy. The way people interact with each other almost always has a very supportive feel. People are interested in taking care of one another, so it’s a nice place to do business and interact with the business community.
There’s also a certain amount of diversity in the Boston market that makes it quite unique. Yes, while there’s still more progress to be made, in almost any meeting you’re in, whether conducting business or throughout your professional network, you’ll generally see this diversity on display. I continually see all kinds of unique perspectives that can only come from a very diverse group and a good mix of people, whether it’s gender, age, background or something else. For example, when I’m in a Zoom meeting with, say six, 10 or more people and I think about who’s generally in that meeting, it is typically a dynamic mix of folks, including professionals who are early career, mid-career, women, minorities and/or some deeply experienced people who are more advanced in their careers bringing decades of experience to the conversation. We might also see others who have a variety of different backgrounds. More often than not, it’s a nice mix and with all kinds of different personalities and perspectives. I love that about doing business here.
Carr: It’s all about the people in Boston. We have serious professionals and businesses, but you still feel like you are in a city where you can approach people. It’s not just the excellence that we have here for business, it’s the nature of the community.
We have excellent schools here, and I’ve worked very closely with school leadership in the last couple of years as we evolved with the COVID-19 pandemic. It has been very strategic and forward-thinking. We’re focusing on how we can learn in this environment and how we can educate and continue to provide great educational opportunities to families. We also consider what families need from us.
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