Insights from the TGS Global conference firm development roundtable

Insights from the TGS Global conference firm development roundtable

At the recent TGS global conference, senior leaders from four member firms gathered for a roundtable discussion on the strategic and operational challenges of running a successful accounting practice in today’s market. 

The panelists – representing firms in France, the UK, Sweden, and Peru – shared candid perspectives on everything from acquisition integration to profitability drivers, providing a window into the inner workings of thriving TGS member organizations.

Navigating Acquisition and Integration Challenges: Lessons from TGS Member Firms

Mergers and acquisitions are a common growth strategy for accounting firms looking to build scale and capabilities. However, as the panelists from TGS member firms attested, the integration process is far from straightforward. 

A key lesson is the need to prioritize cultural fit and people retention over pure financial metrics when evaluating potential acquisitions. Firms must invest significant management time and resources into a structured integration program covering everything from IT systems to training and client transition. 

As Christophe from TGS France noted, the integration can take up to 3 years to execute properly. Additionally, firms should be cautious about acquiring “mom-and-pop” practices without strong management infrastructure in place. 

Overall, a methodical, people-centric approach to M&A is essential for ensuring newly acquired firms are successfully woven into the broader organization.

Balancing Organic Growth and Acquisitive Expansion: Strategies from Thriving TGS Firms

While acquisitions can drive rapid top-line growth, the panelists emphasized that organic development of the client base is equally, if not more, important for building a sustainable, profitable firm. 

As Jonathan from the UK noted, clients generated through the firm’s own marketing and sales efforts tend to be more valuable than those obtained through acquisitions. TGS Peru’s Jose Luis underscored the importance of maintaining rigorous financial discipline, with a target gross profit margin of at least 50% and overhead below 30% to ensure healthy profitability. The Swedish firm Jens represented took a cautious approach, preferring to strengthen its existing operations before considering acquisitions. 

Overall, the consensus was that a balanced strategy anchored in organic growth is key, with acquisitions serving a selective, strategic role rather than a means of boosting topline numbers.

Building a Future-Ready Accounting Firm: Critical Capabilities and Organizational Evolution

As accounting firms scale, the panelists stressed the need to evolve the organizational structure and add new functional capabilities. 

TGS France, for example, has grown from 35 to 400 people, requiring the creation of dedicated roles in areas like IT, HR, training, and integration management. Similarly, the Swedish firm Jens represented has appointed a HR lead to support talent recruitment and retention as the firm has expanded.

The ability to invest in these supporting functions is one of the key benefits of reaching a critical mass, enabling firms to truly professionalize their operations. Succession planning also emerged as a critical priority, with firms needing to groom internal next-generation leaders rather than relying on external capital injections. 

The panelists agreed that the infrastructure, talent, and governance required to thrive as a future-ready accounting firm is vastly different from the needs of a smaller, owner-led practice.

Navigating the Private Equity Landscape: Opportunities and Risks for TGS Firms

The growing involvement of private equity in the accounting industry was a topic of concern for the panelists. 

As Jonathan from the UK noted, his fear is that the profession is becoming “a numbers game rather than a professional game,” with private equity firms focused on financial metrics over the long-term health of the business. There is a risk of the “lowest common denominator” prevailing, with firms prioritizing standardized processes over professional judgment. 

However, the panelists acknowledged that private equity capital can also provide valuable resources for growth, provided the cultural fit and strategic alignment is right. Jens, whose firm partnered with a private equity investor, emphasized the importance of finding a sponsor that truly understands the professional services model. 

The message was one of cautious pragmatism – TGS firms should carefully evaluate private equity proposals to ensure they reinforce rather than undermine the firm’s core values and market positioning.

Succeeding at Succession: Best Practices from TGS Firms

Ownership transition and partner buy-ins/buy-outs emerged as a critical priority for the panelists, many of whom were navigating generational shifts in firm leadership. 

A common theme was the need to cultivate internal talent pipelines rather than relying on external capital injections. As Jose Luis of TGS Peru noted, “If you are not building a firm that eventually the young partners when you are 65 can buy you, then you are doing something wrong.” 

The panelists stressed the importance of providing equity ownership opportunities to high-potential younger professionals to incentivize long-term commitment. Christopeh of TGS France also highlighted the benefits of bringing on new partners gradually, with 80 shareholders currently, to facilitate a smooth transition. 

A thoughtful, multi-year approach to succession planning was seen as essential for preserving the firm’s culture and ensuring its long-term viability.

Achieving Profitable Growth: Financial Benchmarks and Metrics from TGS Leaders

While topline growth is a common objective, the panelists emphasized that profitability should be the true north for accounting firms. 

TGS Peru’s Jose Luis outlined a target financial model with at least 50% gross profit margins and overhead below 30% – benchmarks he considers essential for a “profitable firm.” Jonathan from the UK firm noted that he tracks the management time and costs associated with acquisitions very closely, finding that the integration effort can be vastly underestimated. 

Christophe of TGS France also highlighted the need to carefully evaluate potential acquisitions based on more than just revenue, considering the ability to cross-sell additional services. 

Accounting firms must maintain a relentless focus on operational efficiency, cost discipline, and positioning the firm for long-term profitability, rather than short-term growth at any cost.

The insights shared by TGS member firm leaders underscore the importance of belonging to a global network like TGS. By learning from the successes and challenges of peer organizations, individual firms can accelerate their own development and build more resilient, future-ready practices. 

For accounting, tax, and advisory firms looking to join the TGS network, the valuable exchange of ideas and best practices on display here is just one of the many benefits that membership can provide. By tapping into this collective wisdom, firms can position themselves for sustainable, profitable growth in an increasingly competitive landscape.