Marty McCarthy | Crain's Philadelphia

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Marty McCarthy


McCarthy & Company is an accounting and advisory firm serving clients ranging in size from small, family-owned businesses to global, multimillion dollar corporations throughout Pennsylvania, New Jersey and New York. In addition to traditional accounting, tax and business advisory services, the Lafayette Hill, Penn.-based firm also specializes in sales and use tax, nexus studies, long-term financial planning, employee benefit plan audits and tax credit analysis.

The Mistake:

About 15 years ago, we were looking at acquiring another accounting firm. It was a relatively simple process, we thought, because we were just adding another business. We said, “OK, they have clients, we have clients; they bill clients, we bill clients; they do tax work, we do tax work.” It was a smaller firm that we could just add right in, and we would grow.

Some of the things we overlooked in our assessment were: How do they bill their clients? What are their clients’ expectations for deliverables? What are their clients’ expectations, as far as how their relationship is managed? Do they bill the clients every month for time spent? Are they proactive or reactive to their clients? So we never really assessed that aspect of it. We just looked at it and thought, “OK, we’re seven people, we’re going to add two people and grow our business 20 percent. How hard could that be?” It was very hard because they did not bill the way we billed; they did not engage clients the way we did.

It was six months before I realized it wasn’t working for us culturally. We were too different. It was a moment where I realized that, had we just talked to them and asked them these basic questions, we could have saved ourselves six months of anguish.

Culture is one of the most important things you should identify in a merger. 

The Lesson:

Culture is one of the most important things you should identify in a merger. All the numbers could look great, but if you don’t have the same culture, it’s probably not going to work—even down to a little thing like billing. We, for example, enter our time in timesheets every day; they did not. Our management philosophies just didn’t align, so we parted ways.

We’ve since walked away from about 20 potential acquisitions for this reason. The three acquisitions we did make have all gone seamlessly because they did fit with our culture. In those instances, even if they don’t do things the same way, we can work through them together and get on the same page because we are all moving in the same direction. If culturally, everything lines up, you're going to have a much better chance to sustain success, deal with adversity, and improve. And that was probably one of the best lessons I learned.

Follow McCarthy & Company on Twitter at @McCarthyCPA.

​Photo courtesy of McCarthy & Company,