Before BFBA became the region’s largest locally owned accounting firm, there were four guys at a table in a dark corner of the Black Angus Steakhouse in Citrus Heights.
It was the summer of 1982, and the four soon-to-be founders of BFBA were all advancing at big-name accounting firms: Myles Brown and David Boyce worked for KPMG (then Peat, Marwick, Mitchell & Co.), and Craig Boyce (David’s brother) and Rob Fink were at Gallina LLP (now part of CLA).
Brown was grappling with the unappealing prospect of moving his family from Sacramento to a bigger city if he were to make partner. Meanwhile, the Boyce brothers were talking about running their own Sacramento firm. Fink also wanted the chance to run a new firm with people he trusted and enjoyed, say the others who were at the table that night.
The quartet met that first night to get acquainted. As they talked, enthusiasm spiked. By the end of the evening, they were picking a name for their new firm and deciding who might be managing partner (they ultimately decided on Brown). On July 1, 1983, they launched Brown, Fink, Boyce & Co.
For the next 25 years, the partners steadily grew the firm’s tax, audit and business advisory services. Then in 2008, they got a closeup of a problem plaguing companies. That year, a client in Reno, well into his 70s, was struggling with how to sustain his company after he retired. BFBA helped him identify two key people who were poised to leave after his retirement but were actually best positioned to take over. Had they left, the firm would have died, and BFBA would have lost a client, David Boyce says. Instead, BFBA helped structure a deal that let the two employees buy the firm. Today that company is a “hugely loyal” client,” he says.
Related: BFBA partner on family business planning
Transitions wipe out a lot of businesses. For family firms, only about one in three survive through the second generation, and one in eight through at least the third. BFBA recognized a lack of succession planning as a ticking bomb and realized they had the expertise to help defuse it.
Today, BFBA helps companies plan for the complex financial and interpersonal issues involved in leadership and ownership transitions. And in the last decade, the firm has turned its succession planning expertise inward: With BFBA’s three remaining founders getting set to retire (Fink retired in 2006), the company has prepared for its own change at the helm.
Build the Brand
From the start, BFBA grew steadily while managing to stay local. The partners had a strategy to combine the expertise and range of services that a big firm could offer with the flexibility and attentiveness of a smaller local enterprise. By the late 1980s, the company had expanded to about 10 people, and it doubled to about 20 in 2002 after bringing in new partners Ken Astle and Jeff Gustafson, also from KPMG.
“With them, we really started to grow,” says David Boyce. The company quickly burst the seams of its Midtown office and moved to its current spot in the Sierra Oaks neighborhood. More expansion and the acquisition of two other small firms in 2011 and 2015 brought the company to its current 75 or so employees.
Two of those hires were direct second-generation family members. Ben Brown, Myles Brown’s son, had been hired by KPMG after college in 1999 to work in its San Francisco office as an accountant. Soon he’d climb the ladder to become a KPMG manager. Looking for young talent, BFBA’s partners asked him in 2001 to join the company. He said no. He liked his job and the challenge of managing big accounts — Levi Strauss, Wells Fargo, Visa — and he perceived a certain stigma in joining the family firm. It might seem as though he’d gotten his job because of the connection.
Ben’s answer shifted in 2004 after a three-week stretch of 16-hour days that prevented him from even seeing his oldest daughter while she was still awake. It was time for a change, and when BFBA asked again that year, he said yes.
The next year the firm pulled in Nathan Boyce, David Boyce’s son, hiring him away from PricewaterhouseCoopers’ Silicon Valley office. There he’d worked with venture-backed startups and publicly traded firms doing audits and setting up internal controls.
All along, the founders were thinking about what would come after they left. For many CPA firms, the succession plan is fairly straightforward: Find someone to take over the practice. They were starting to get inquiries from big national and international firms about being bought out but always said no. It wasn’t just their long-term strategy that kept them from selling: Many of their younger partner-track hires had left bigger firms precisely because they wanted to work in a midsized local company. Even though the founders might do better financially, they didn’t feel it was right to turn around and sell to a bigger fish.
“A lot of the culture here that we’ve created … you just wouldn’t have that in an environment where you were controlled by what the New York office says,” says Ben Brown. “Creating a place where you like to be and that you enjoy, there’s a ton of value in that.”
That decision earned them loyalty, but it meant a harder path: managing a transition to second-generation leadership. By 2013, Myles Brown, then 65, was inching closer to retirement — he’d been the firm’s managing partner since the company’s inception.
So at a strategy meeting at the Sutter Club in Sacramento that year, the partners discussed a successor. Family connections were to have no bearing on the choice, Brown says of their planning. “When we decided to look for my replacement, it was not a question of, well, ‘Ben and Nate because they’re family members.’ It was, ‘Who of the partners is best suited to be the manager?’” As they went around the circle, it became clear that the consensus pick was Ben Brown — by then a senior manager and partner at the company.
At a time when only about one-third of partners in accounting firms are younger than age 50, five of the 13 BFBA partners are 45 or under.
With family ties off the table as a decision factor, there was never a threat of an interfamily war of succession. Everyone wanted what was best for the business. Nathan Boyce’s father David Boyce says that Ben Brown was the logical choice for leadership. “All this administrative stuff — not that Ben loves it, but he’s extraordinarily capable of doing it well,” he says. Nathan Boyce wasn’t a partner at the time, so he wasn’t privy to those discussions, and David Boyce was careful not to share with him partner-level information merely because he was his son, according to Nathan Boyce. So even though Nathan didn’t know the announcement was coming, “There was no question from anyone, including me, that he was the right person for that job,” he says.
BFBA’s focus on company health over family ties has another component that many executives don’t often consider: a work culture that attracts talent. The founders started the company in part because of the environment they wanted — warm, collegial and loyal. The company has twice received best-place-to-work awards from The Sacramento Business Journal. Employees get frequent training, mentors and as much job security as is possible in a cyclical economy. BFBA has never had a mass layoff, opting instead to ride out downturns through pay cuts, including on themselves.
That aesthetic, plus size — being large enough to offer advancement opportunities to promising staff — has let them land young, talented partner-track accountants who will be future firm leaders, says David Boyce. At a time when only about one-third of partners in accounting firms are younger than age 50, five of the 13 BFBA partners are 45 or under.
Respect the Role
When the partners asked him to step in as managing partner, Ben Brown was willing but concerned. In working with family firms over the years, he and the other partners had run up against their share of business casualties resulting from a founder leaving the company to a second generation but retaining effective control, sometimes in secret.
So Ben Brown wanted a long glide path to move into his new role. In early 2014, he started shadowing his father, Myles, on the job. He didn’t formally take over as managing partner until January 2016.
That was the moment the firm’s disciplined adherence to its transition plan made a difference. As Myles Brown was the only managing partner in the firm’s history, some staff continued directing questions to him. But he didn’t let himself get swept into the current. “Myles did a wonderful job of [saying] ‘You need to talk to Ben about that,’” says Ben Brown. When Myles Brown stepped down, he stayed there.
Equally important was ownership of the firm as the founders retired. The partners started that discussion well in advance. Starting when Ben Brown became a minority partner in 2010, the partner group got together periodically to discuss the future of the company’s partnership agreement.
“Anyone who’s looking at transitioning out in the next 10 years should be thinking about a succession plan now, or even sooner.” Ben Brown, managing partner, BFBA
The existing partners trusted each other to look out for their financial best interests, and Ben Brown trusted them to do the same for him. Still, “trust but verify” is a proverb that accountants live by. So in one huddle among the partners at the Sutter Club, Ben Brown worried aloud: If the older partners retained something close to their full shares right up until retirement, Ben Brown and other younger partners would have to procure a huge amount of money in a hurry to buy the founders out when they left. “Hey, this thing’s not going to cash flow. It’s not going to make any sense,” he told the group.
By 2013, they’d worked out a solution that’s now company policy. Starting at age 62, a partner’s shares in the firm are gradually cut until they’re completely out by age 67. In conjunction with loans, that enables younger partners to use their growing shares to generate cash to pay off the older partners as they leave.
Still, they had to refine that plan: The founders partners weren’t all sure they wanted to be completely gone by 67. They’d given up good salaries and taken significant risks in starting the firm. Now BFBA was enjoying good income-earning years. So they negotiated a few years’ grace period, ranging from one to three years. Call it the founders’ prerogative, but everyone got onboard.
That partnership agreement is a key to BFBA’s peaceful handover of power. Over the years, they’ve seen other accounting firms fall apart during a transition because they couldn’t come to an arrangement that felt fair to the incoming and exiting partners.
Take Your Time
It’s not every day you hear an accountant adopt the tone of an evangelist. But Ben Brown has a message for the founders of companies, particularly of family firms: “Anyone who’s looking at transitioning out in the next 10 years should be thinking about a succession plan now, or even sooner,” he says.
In theory, the day could come when all the world’s family business owners create and follow through on time-tested strategies for turning over control to someone else when they retire. If that day arrived, the economic impact would be huge: Under the narrowest definition, family firms contribute about a third of U.S. GDP and employ more than a quarter of the U.S. workforce, according to a 2003 analysis of the numbers.
Over the decades, BFBA has identified a key trait of successful transitions: enough time.
It’s why BFBA’s partners built in a full two years for the leadership transition from Myles to Ben Brown. And it’s why they took three years to hammer out the partnership agreement. “It’s not like the kind of thing where you just say, ‘I’m going to spend eight hours a day for three weeks on this thing.’… You have to keep grinding at it,” says Ben Brown. After those three years of work, says David Boyce, “everybody is pretty happy.”
Planning ahead offers the space to let negotiations like those play out in a way that feels fair to everyone. “Stuff has to percolate. People have to think about it. You’ve got to get consensus,” says Boyce. “You have to take the time to do that.”
The same goes for the time that BFBA has spent working with companies over the years. For going on four decades, they’ve watched what works and what doesn’t in making handovers a success — and for that there’s no substitute.