Scaling Up: Recent acquisition of larger Bodilly CPAs puts KMA on faster track
By all appearances, the luncheon appointment Jason Kadow scheduled in June 2012 was nothing more than a get-acquainted meeting with an executive of Bodilly CPAs and Accountants. At the time, Kadow was VP of the start-up firm KMA Accounting Group and was managing an office of seven employees together with KMA’s president, Cory Myers.
Kadow, 37, Myers, 38, and assurance director Jim Antony, 48, had recently left Meicher & Associates to start KMA, and Stephanie Barganz, one of three partners at Bodilly, was on a recruiting mission for a tax manager. The meeting, she hoped, would create a few leads.
Five months later, KMA Accounting Group acquired the much larger Bodilly to form KMA Bodilly CPAs and Accountants, now a 26-employee operation.
Now that’s what you call a power lunch!
“At the end of the lunch, I jokingly suggested, ‘If you want to sell, we’ll buy you,’” Kadow recalled. “I never really thought it would happen. It wasn’t planned at all. They were two and a half times our size!”
Barganz admits she was surprised by Kadow’s comment at the time, and didn’t give it much weight, but mentioned it to her partners when she returned to the office. Talk was cheap, they decided, and more discussions ensued.
“We didn’t think we could tackle taking on a larger business initially,” Kadow admitted. “But it was a gut thing. Was it nerve-wracking? Yes. Did we doubt ourselves a few times? Yes.”
What followed was a four-month whirlwind of negotiations and due diligence revealing some surprising similarities between the two companies.
“The technology we were trying to use and work with at KMA, Bodilly already had,” Myers said. “Planning and procedures we were trying to implement were already in place at Bodilly. [KMA] was making ground in those things, but Bodilly had already gone down that road.” The pieces fit.
Support from the group’s private investor and an increased credit line at Starion Financial helped the deal come together. Kadow (CEO) and Myers (president), lifelong friends from Two Rivers, “picked their titles out of a hat, more or less,” while Antony serves as vice president.
Since the Nov. 1 merger, KMA has moved into Bodilly’s west side office. “Any time you mesh cultures, it’s difficult,” Kadow noted. “They were around for 10 years. For them to accept us and work with us went surprisingly well. A lot of dominoes fell our way.”
Meanwhile, the former Bodilly partners – John Bodilly, Barganz, and Mike Konicek – are employees again, deferring both the rigors and benefits of day-to-day ownership to their new superiors. They remain income partners at KMA Bodilly, but not equity partners. Barganz admits the transition has been “bittersweet.”
The original KMA Accounting Group business plan included a five- to six-year strategy to grow into a $2.5 million to $3 million firm. “We didn’t think that original plan would go into hyper drive,” Kadow admitted, “but it did.” Now, they expect KMA Bodilly to grow 10% a year at a minimum, and want the debt paid off in five years, if not sooner.
Until that day, the partners will draw small salaries.
“Just enough to eat ramen noodles,” Kadow joked.
KMA Bodilly CPAs and Accountants
525 Junction Road #8200
Madison, WI 53717
608.664.1040 | cpamadison.com