Safety in Numbers
With its recent foray into Ontario, Calgary-based Meyers Norris Penny is challenging the big four accounting firms for a national presence
by Fabrice Taylor
Daryl Ritchie is not an exciting guy. He’s an accountant, he’s from sleepy Brandon, Man., and he still vacations there, if you need evidence. But that’s OK because he doesn’t want to be exciting. He wants to run a fast-growing, successful and dynamic firm. And that’s what he’s quietly doing.
Ritchie is the chief executive officer of Meyers Norris Penny LLP, as of July the biggest national mid-market accountancy in Canada and the seventh biggest firm in the country overall. Not bad for a little joint that a mere 20 years ago had a paltry $6 million in billings. This year the firm will hit a quarter billion, a couple of years before plan, thanks in part to its latest and so far most significant merger, that with Toronto-based Horwath Orenstein LLP.
The plan in question is a critical part of MNP’s rapid growth, which over the past few years has clocked in at more than 20% per year. MNP has been around for about 60 years and for most of that time it was a traditional, small-town firm. That changed about a decade ago when the firm’s partners came up with an aggressive blueprint to conquer the mid-market in Western Canada. What prompted the firm, other than a desire to get bigger, was a changing landscape. First, the big global firms were merging, getting bigger and not focusing on smaller companies.
Second, smaller companies were expanding their geographic footprints.
“Twenty years ago, owner-managed businesses didn’t play on the global stage,” says Ritchie. “Now they do.”
So MNP started making bigger and bigger acquisitions, eventually moving its headquarters from Brandon to Calgary. From its new beachhead, the firm attacked British Columbia and cemented its niche markets, including oil and gas, forestry, credit unions, aboriginal groups, smaller public companies and Hutterite Brethren, among others. The firm also set ambitious growth targets: $125 million in revenue by 2005 and $250 million by 2010. As mentioned, it will easily surpass that target with Horwath Orenstein in the fold. The firm now plans to hit $500 million within five years.
Growing a company, especially quickly, is an extremely dangerous proposition. So what’s the secret to this enviable track record? “Vision,” says Ritchie. “Put a plan in place and stick to it. You can’t be changing your vision every week.”
The other crucial ingredient is culture. Accounting firms are partnerships, in which senior partners own the firm and have a say in important affairs. The partnerships inevitably take on some of the personality traits of their partners, because this business is one of relationships, and client relationships are not with a firm; they’re with a partner. So the firm can’t impose itself on a partner – particularly a successful one.
Bolting on the new, unfamiliar cultures of previously independent firms is obviously risky, so Ritchie says they spend a lot of time carefully scrutinizing that part of an acquisition. “Vision and culture are the glue,” he says.
That’s not to say that MNP is run like a club, though, or like a communal partnership. “If that’s the way you want to run your business, you won’t get very far,” he says. “It’s not a club; it’s a business. Managing by committee makes for great conversations but not great decisions.” Ritchie says he doubts the firm could have integrated 40 acquisitions in 20 years if MNP were run like a club rather than as a structured, hierarchical institution. Still, the firm may be facing its biggest challenge yet.
Although Ritchie says the firmed mulled over the Horwath Orenstein tie-up for two years, it’s the biggest acquisition yet and the furthest away geographically. Ritchie acknowledges that not every MNP acquisition went smoothly either, even if ultimately they may have worked out well. “Our first foray into British Columbia was pretty scary,” Ritchie says, referring to the expansion to the coast (it already had an office in B.C.’s Peace Country). The fear was that the culture might be different than the Prairies. Instead, “we learned that you can find people with similar values wherever you go.” That, he says, emboldens the firm as it heads to the Big Smoke.
Although MNP already had a presence in northern Ontario, the Horwath merger represents its first move into Toronto and, indeed, southern Ontario, since that’s a big part of the plan. The industries in that part of the world are very different. There are few credit unions and fewer Hutterites, for starters. Ritchie doesn’t seem flapped though. For one thing, he says, in a sense the firm had no choice but to keep expanding, and given how dominant it has become in Western Canada, the East beckoned.
“How can you be an entrepreneurial firm and say, ‘That’s it’?”
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