Berman Hopkins' Business Advisory Team Thrives Under McRae

By Ken Datzman, Brevard Business News

The public accounting profession is perhaps at a defining moment as times are changing. As automation and technology, in general, become increasingly present in all aspects of business, accounting professionals can expect a shift toward more strategic and analytic roles.

Consultants say accounting practices need to be more strategically positioned as “business advisors,” now the fastest–growing segment within the industry.

Today, businesses across the nation are increasingly seeking advice and assurance in a broad range of areas beyond the typical tax and audit expertise that certified public accounting firms are best known for providing their clients.

Creating a more diversified selection of client services, looking beyond the tax season, is one way CPA practices can enhance their customer experience, generate new revenue, and continue growing.

There is a huge opportunity beyond the financial statement for CPA firms.

“What we are seeing and responding to are the different needs in the economy in the current business environment,” said Phillip “Phil” Hayes. For 10 years Hayes was the managing partner at Melbourne–based Berman Hopkins CPAs &Associates LLP before transitioning to the firm’s Succession Planning partner two years ago.

“Being a locally owned firm, we can adjust accordingly because we are the decision-makers. That’s one of the advantages of being an independent firm. We are positioned for opportunities in the market,” he added.

Businesses, for example, are seeking out professionals with expertise in cash–flow forecasting, budgeting, strategic planning, and coaching. Outsourced controller or “fractional” chief financial officer services are also in demand. The opportunities are many for firms willing to look past the traditional role that CPA practices have played in the past.

“There has been a real fluctuation in the marketplace across all industries,” said Carla McRae, a certified public accountant and the Business Advisory Services’ partner at Berman Hopkins, which also has an office in Orlando.

“The COVID–19 pandemic, labor shortages, people leaving the workforce, and an unprecedented number of people changing jobs over the last couple of years have all impacted businesses and organizations in a big way.”

All this has created new opportunities for her firm on the Business Advisory practice side.

She said Berman Hopkins has used an “outside–the–box” approach to providing value to clients through the firms growing Business Advisory practice.

McRae, whose experience includes having served as the chief financial officer for an Orlando–based software development company and as a controller for a large manufacturing business in Titusville, took charge of Berman Hopkins’ Business Advisory practice 18 months ago.

“When Carla stepped into that role, she worked alongside two other professionals,” said Hayes, who was succeeded by industry veteran Chris McDirmit as the firm’s managing partner.

McDirmit joined the practice as a partner seven years ago and has managed Berman Hopkins’ growing Orlando office. Berman Hopkins is one of the largest firms of its kind in Central Florida and proudly touts its more than six-decade history working with businesses and organizations.

“Carla has grown the Business Advisory Services department to nine full–time staffers. She has done a stellar job. What has been impressive is that Carla has been able to recruit and hire talent in the current environment. Staffing is challenging for all businesses, and the accounting profession is no different. Her team has generated significant revenue for the firm,” said Hayes.

He added, “When we first started Business Advisory Services, we identified a need in the economy, and that need has continued over the last couple of years.”

The fractional chief financial officer, for instance, has seen a big rise in popularity among startups in recent years, and among small– to mid-sized businesses. Solid financial guidance is one of the keys to scaling a startup. The fractional market is a specialty area for Berman Hopkins.

Fractional chief financial officers benefit companies that can add a seasoned veteran to their team at a fraction of the cost of a full–time person.

Whether managing a short–term project, such as implementing a new financial system, or serving in a long–term advisory role, the fractional chief financial officer can help businesses overcome financial challenges, as well as guide long-range planning, budgeting, cost accounting, financing, new business modeling, and more, said McRae.

“In that particular arena, we are focusing on fractional–support processes, primarily at the controller and CFO levels. These include significant and complex accounting processes and unique financial projects,” she said.

“A business may be growing and developing but not yet ready for a full–time CFO or doesn’t have the budget to support this highly educated position level within the company,” added McRae.

“This is when we have the opportunity to step in and take the approach of supplementing that piece of the puzzle that is hard for them to plug in at a certain point in their business model. We help them with whatever transition they are working through with their business.”

The acceptance of fractional CFOs and controllers has become commonplace. Companies have found that foregoing full–time hours for flexible financial leadership and expertise has provided the extra value they need.

In addition, fractional finance leadership is not just for early–stage companies anymore. This trend has also taken hold in middle–market and nonprofit organizations as well. It’s part of the fast-expanding business advisory expertise CPA firms are offering clients as they pursue new avenues of growth.

“Spotlight Reporting,” a business intelligence company, recently surveyed accounting professionals from the United States and other countries to get a better idea about firm operations and upcoming priorities. The survey results include:

• Nearly 80 percent of respondents plan to offer or expand advisory services in the future.

• Seventy–percent stated that they already perform mentoring, forecasting, and other advisory services.

• Nearly 60 percent identified themselves as a hybrid firm, offering both advisor and compliance services.

• Only 25 percent identified themselves as traditional firms offering only tax and compliance.

Client needs and expectations for fractional CFO services are changing because businesses are operating in a rapidly shifting environment marked by increasing regulatory, competitive, talent, and macroeconomic pressures, accelerated by technology advances, she said.

“Berman Hopkins’ Business Advisory team has seen great success with its fractional CFO support program,” said McRae.

“Being a full–service CPA firm, we have developed a niche that allows us to do significant financial projects for customers. There is a real need for the type of fractional services we are providing. Fiscal agent services, labor reevaluation, and inventory processes and procedures are examples.”

Clients not only need financial advice to ensure their operations are accurate and compliant, but they are also seeking forward-looking insights and strategic guidance to help them make proactive business decisions, she said.

McRae’s Business Advisory team is comprised of people with a range of professional backgrounds providing support services.

“We have multiple CPAs on the team and professionals with financial modeling backgrounds and expertise in a host of areas. We layer multiple experience levels to provide a well–rounded approach to each client need.”

Berman Hopkins has been growing and earning national honors from industry publications.

“Inside Public Accounting” named Berman Hopkins one of its “Best of the Best” firms in 2021. In 1994, IPA began ranking the top 50 “Best of the Best” firms, selected exclusively on their performance in specific key areas of management, growth, and strategic vision. Firms of all sizes are eligible for the “Best of the Best” list.

And, in its July–August 2022 issue, “Construction Executive” magazine, recognized Berman Hopkins as one of “The Top 50 Construction Accounting Firms.” Berman Hopkins was the highest ranked in Florida and No. 35 in the nation for its ability to serve construction clients.

“We are honored to be recognized in the Top 50 Construction Accounting Firms for the second year in a row by CE for our work in the construction industry,” said Robert Nevill, Berman Hopkins’ Audit partner and construction practice leader.

“We attribute our success to adding value for our construction clients wherever possible by providing a comprehensive view of the surrounding business environment, challenges, and opportunities.”

The magazine developed the Top 50 Construction Accounting Firms ranking by asking more than 700 U.S. accounting firms to complete a survey. The data collected included 2021 revenue from the firm’s construction practice, the number of CPAs in the firm’s construction practice, the percentage of the firm’s total revenue derived from the construction practice, the year in which the construction practice was established, and several clients served during the fiscal year 2021.

“We’re proud of the national honors we have received,” said Hayes, adding, “It’s been interesting because a lot of the things we have been working on for years have taken root.”

In December 2020, the versatile Hayes, who is in his 22nd year with the firm, transitioned the managing partner title toMcDermit.

Hayes was the company’s first non–CPA managing partner and led Berman Hopkins through years of growth. He came to the practice with a banking, sales, and finance background. He started his career in the 1990s in commercial banking with SunTrust, now Truist.

Hayes worked in business development for Berman Hopkins before becoming its managing partner. “This firm has provided me with so many career opportunities, cutting across diverse areas of the practice,” he said. “It has been exciting. I’ve met so many different business owners through Berman Hopkins. We have remained true to our mission to stay independent and continue creating promotions and partner opportunities for people.”

Hayes himself has created a thriving practice in the Employee Stock Ownership Plan market across the nation. He is educating and helping businesses establish ESOPs. In 2020, he launched a podcast under “The ESOP Guy,” with his own dedicated website (JourneytoanESOP.com).

“We branded The ESOP Guy under the Berman Hopkins umbrella to show the wide capabilities of our firm, way beyond the tax and audit services we provide,” said Hayes.

And it has been a big success. “There is a huge need for what I’m doing,” he said. “From last year to now my business has quadrupled. I have a new client in Boise, Idaho. I have a client in the state of Washington, in Ohio, in Florida — all over the map. They generally find me through my podcast, which has been a big driver of opportunity for my ESOP practice.”

Hayes added, “When you size up the marketplace, ESOP professionals are all over the nation. There are a few in Florida. They are scattered. The approach I have taken is called ‘sell–side’ advisor. I work with the business from the beginning and walk them through the whole ESOP process. Most of that work across the nation is done by investment banking firms.”

“The ESOP Guy” provides a pricing alternative to investment bank firms when it comes to the transaction fee. “And that has resonated with businesspeople around the country,” he said.

Hayes said his podcast aims to educate business owners and management team members interested in using ESOPs as either a growth strategy, succession strategy, or exit plan. Hayes said he started doing ESOP work years ago helping businesses in the region set up such plans.

The most common form of employee ownership in America is the ESOP, a highly tax-advantaged plan in which employees own shares through a trust fund owned by the company.

Employee ownership is commonly used to attract and retain workers, provide long–term wealth building, and support a work culture where employees are allowed to think and act like owners.

“The biggest thing I have learned in doing this for all these years is that there is so much misconception about ESOPs,” he said.

To create an ESOP, companies set up a trust fund for employees and contribute either cash to buy the firm’s stock, contribute shares directly to the plan, or have the plan borrow money to buy shares. If the plan borrows money, the company makes contributions to the plan to enable it to repay the loan.

“Communities benefit from employee-owned companies,” said Hayes. “ESOPs allow the people who have built the company over the years to have an ongoing legacy with that particular business. And the employees win because they are going to get a fair market value sale. ESOPs play a role in helping close the wealth–inequity gap.”

A new study conducted by the National Center for Employee Ownership, on behalf of the Employee–Owned SCorporations of America, finds strong, measurable evidence that “having an ESOP in place before the worst of theCOVID–19 crisis, helped employee-owned businesses to not only survive but also to take better advantage of growth opportunities than their conventional, non–ESOP counterparts.”

During the pandemic, the study shows ESOPs added rather than cut workers, and are likely to offer more generous benefit packages, including child care and tuition reimbursement plans. The average ESOP account balance going into the pandemic was dramatically higher — more than double — than the average 401(k) account balance ($132,000 versus $64,000) at a non–ESOP company.

According to the 2022 survey by the National Center for Employee Ownership, there are roughly 6,500 ESOPscovering almost 14 million participants. The largest ESOP in America is Lakeland–based Publix Super Markets, with more than 225,000 employees.

“Creating an ownership culture in America is a great thing, and ESOPs are a powerful tool toward that end,” said Hayes. “We’re excited to see the response we’ve been getting from business owners who are now considering ESOPsas a strategic exit route for their company. It allows employees to have equity in the companies where they work. The ESOP work we do is an example of Berman Hopkins’ capabilities as a CPA firm. As advisors, we are helping clients evolve. It’s exciting to see them grow.”