When merging a CPA firm, besides all of the logistical issues involved related to personnel, clients and vendors, technology integration planning is a key to a successful and happy marriage. This article discusses best practices to help ensure the merged firm will function as a cohesive unit.

Since technology plays a key role in servicing clients in today’s CPA firms, when the opportunity surfaces to sell, merge or acquire, technology considerations should be at the top of the due diligence list.

The first step in ensuring a healthy and happy marriage is to take the time and effort, prior to combination, to examine the systems, applications, hardware and procedures of the firm being acquired.

From an Acquiring Firm Perspective

Here are some due diligence issues that should be considered by the acquiring firm. The following should be obtained and or addressed prior to a site visit:

• Contact Information List:
• Number of users by name and position.
• Contact information for internal IT department (if none, contact information for the external support department).
• Vendor names from which IT hardware/software is purchased.

• Inventory List:
• All technology equipment (desktops, laptops, monitors/LCDs, printers, fax machines, scanners, copiers, smartphones, UPS devices, etc.). The list should contain item descriptions, serial numbers and the location of the equipment.
• All servers deployed within the organization and the role of each server.
• All backbone equipment including, routers, switches, etc. This list should also include the role of each piece of equipment in the technology infrastructure of the organization.
• Warranty information for all of the equipment.
• Phone/telecom system detailing the dates of deployment, number of deployed units, number of available units and pertinent contact information for vendors.
• All cell and smartphones deployed by the organization. The list should include model of phone, contract term, telephone company service provider, individual assigned device, wireless number.

• Miscellaneous Lists:
• Operating systems deployed throughout the organization on all equipment. This should include support for license and registration numbers.
• Mission-critical applications for the practice including name of product, vendor contact information, number of users and license and registration information. For this purpose, mission-critical applications would include applications such as:
• Practice Management
• Tax Preparation
• Engagement Management
• Document/Content Management
• Suite Products (i.e.: Microsoft Office)

• Other applications deployed within the practice including application description, license information, number of users, etc. Examples of applications in this category include:
• PDF applications
• Write-up applications
• After-The-Fact Payroll/1099 applications
• Accounting applications (i.e. QuickBooks — paying special attention to version information).
• Practice-specific applications such as those needed to support specific lines of practice such as: litigation support, healthcare, construction, non-profit, etc.

• E-mail management and deployment methodology and a description of the back-office systems controlling such deployment and management.
• Description of firewall, spam and anti-virus protection currently deployed.
• Copies of contracts for Internet and wired telephone company connectivity, including descriptions on bandwidth capabilities and costs.

• Record of remote connectivity applications such as virtual private networks (VPNs), etc.
• List of wireless technologies deployed within the firm, including make and model of equipment, wireless standard utilized (i.e. 802.11 a/b/g/n) and steps taken to secure and encrypt such systems.
• Copies of any current disaster recovery plans.
• Details on back-up systems deployed and procedures in place to archive and retrieve such data.
• Facts on security/alarm systems deployed and in place, including passwords and access codes.
• Information on intranets and individuals responsible for maintaining and hosting such sites.
• Registry of Internet sites, including copies of domain name registrations, vendors utilized to host and maintain sites, as well as passwords and access codes needed to access secure areas of sites.

Tips on Seamless Integration

Once an understanding has been achieved with respect to all of the above items, the acquiring firm needs to examine the best approach to integration.

The support of multiple versions or vendors of products that perform the same function for the organization is NOT highly recommended. Suppose, Vendor A is chosen to support the organization’s tax preparation needs, the same application should be deployed firm-wide. Mixing two applications or vendors that perform the same function is NOT recommended. Generally speaking, the more seats held by the organization, the better the position the organization will be in to negotiate its contracts and pricing. In addition, maintaining dual or triple applications that perform the same function can not only be costly but also creates havoc from an IT support and training perspective.

Conclusion

At the end of the day, consistency needs to be in place throughout the organization. Some of the most successful IT merger stories include those firms that have taken advantage of a “rip and replace” philosophy, in which the acquiring firm literally rips and replaces all technologies currently deployed within the firms being acquired. This includes all systems, applications, hardware, etc. This approach is generally a little bit more costly up-front, but from a seamless integration perspective, almost always the recommended way to go.

James C. Bourke, CPA.CITP, is a Partner at WithumSmith+Brown where he is Director of Firm Technology. He is a past president of the New Jersey Society of CPA’s and currently serves on AICPA Council and the AICPA CITP Credential Committee.