Laura Sprouse, the new CEO of Top 100 Firm Brown Edwards, shares her path to leadership, and where she's taking her firm in the future.
Transcription:
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Dan Hood (00:03):
Welcome to On the Air With Accounting. Today I'm editor in chief Dan Hood. Leaders in accounting firms across the country are facing a major host of new issues and new challenges and new opportunities, and as more and more leader transitions occur, more and more new leaders are having to figure out strategies for approaching all that change. Here to share her take on all that is Laura Sprouse who has installed as the new CEO of Virginia-based Top 100 firm Brown Edwards & Co. at the very beginning of June. Laura, thanks for joining us.
Laura Sprouse (00:26):
Thank you, Daniel. Thanks for having me.
Dan Hood (00:28):
I want to start by getting a little sense of your career path. How did you advance to CEO at the firm?
Laura Sprouse (00:36):
Well, I've told everybody I've had a long winding path to get to this role. I've started out with the firm, it'll be 26 years ago in September. I've done a little bit of everything. I started out as a staff accountant. I did audit and tax work and started my career that way like most people in this industry do. But I had a different background that I brought to the table. Then as well, I also had an IT degree and back in the early aughts we started external IT division that went out and did software implementations, software resells network infrastructure, build outs for our clients and we were really trying to grow that practice and as I worked with that division, the IT division, and I'm still doing audit and tax work, we started hitting some stumbling blocks due to Sarbanes Oxley back in the day where we couldn't be commission-based receivers for our audit clients and where we needed to remain independent.
(01:37):
So it kind of slowed what we were able to do with that division at that point in time and I got pulled back into the firm as a tax and audit resource, but they didn't want to give up on my technical ability on the IT side. So I started helping our IT internal resources and I started championing things like going paperless back in the day, bringing software automation with the software that began as B dip and became PFX scan along the way and bringing that type of innovative technology to the firm. I continued down that path with not just working for our tax teams that are audit teams to implement software, but again working with those same teams to improve processes throughout the firm. I started working with the internal teams, helping with training. I started helping the HR team and converting to a new general ledger system and payroll system as well as the finance team.
(02:31):
And so I really got to peek behind the curtain a little bit more about firm operations at that point in time as I was really helping build the financials for the firm that I'd never seen before In my entire career, I was working with the HR team to ensure compliance with payroll taxes and payroll in general and it just kind of continued to evolve where every day I was just getting more and more into the day-to-day operations of the firm and the partner that I worked with on the IT side had known for years. It had always been my dream to be a partner when I transitioned over to the IT team, I had stopped pursuing taking the CPA exam. I thought I had a future path without being a CPA within the firm. And when I looked back at some point in time and decided, hey, this wasn't just a career goal for me, this was a personal goal that I'd had in college was to go back and pass the CPA exam and I went and did that after not really practicing in the industry for about five years just because it was something I wanted to do and that really projected how fast I started moving in the firm even though it really wasn't a hindrance, it really started me a lot faster.
(03:53):
I got voted in as a partner. They said, all right, your title's going to be firm administrator. You've kind of already got your hands in all of this, but it was never really a formalized job description of what I did. I just did everything that I could for the firm and took on everything that I could to learn everything that I could about what we did and as Jason and I really transitioned into our roles to gather, when Don Polo retired, Jason and I really hit the pedal to the metal with growth and the role truly expanded as I moved along that way. Jason and I worked so closely together for seven or eight years now and our roles as CEO and COO and I've been by his side for everything. He likes to tell everyone that COO was probably not the right title for myself, that I was more like a co CEO with them at least for the last couple of years.
(04:47):
So it feels like a good transition for us, but I think it feels like a good transition for the partnership as well. I was the first partner ever made without a book of business. I am an equity partner and have been since the very beginning, which was a pretty big move in that day and time for a firm of our size to invest in someone like myself. But I think I've earned the partner's trust over the past seven years and because I've been so instrumental in helping us grow and helping move the firm forward from a technology standpoint, resource standpoint and just how Brown Air is acknowledged in the industry today.
Dan Hood (05:28):
Right. That's awesome. I mean there's a lot of fascinating things in there because it's not the traditional path, right? In many ways it's a different, just for those of us are listeners who aren't familiar, you're, when you say Jason, you're talking about Jason Hartman, the current CEO, just for those who aren't aware, but your path is, as I said, there's a lot of elements that are super unique and one of the things, the IT background is fascinating. I wasn't aware of that about you. We've seen a couple of other firms where people with strong IT backgrounds have risen to the top and there's for some firms, not many, but we've heard the description of we're not an accounting firm, we're a technology firm that happens to deliver accounting and accounting and tax services. And I was curious about your take on that as someone with a deep IT background.
Laura Sprouse (06:16):
Well, we are still definitely a tax and audit firm who DA in technology. How about that? I think the great thing about our team is we are not afraid to embrace technology. We are saying from along back in the day, we'd like to be on the leading edge but not the bleeding edge. So we cautiously approach what we do. We take measured steps. I mean we're accountants. We take measured steps in decision making for what tools we're going to use and how we're going to use those tools and making sure we're trying to get the best of breed for what we do bring to the table for our team.
Dan Hood (06:52):
Excellent. And you described, obviously you and Jason have been working very closely together, almost co-CEOs as he described it or as you described him describing it. But I'm curious maybe some more because for a lot of firms aren't very good at succession planning, they aren't very good at managing that. Are there specific things you did to prepare for the June 1st transition? Are there specific steps you and he took or how you worked together for knowledge transfer or anything like that?
Laura Sprouse (07:18):
Jason and I have worked so closely, like I said, for seven years and over the last four to five years when Jason was tasked with determining who his next successor was, almost from the very beginning he's like, I believe Laura is my successor and he groomed me along the way to be that person. Now the partners hadn't voted me in. We would've had a different set of problems right now, but I was involved in everything. We would do so much m and a activity together. He might've made that first introduction to that firm. But after that, I was always at the table. I was in the discussions with all of these firms. I was developing the acquisition plan modeling the package that would be delivered to the acquisition target. So I had to hand in all the financial piece of it. I didn't have a finance team back then developing this. I was doing all the financial modeling, but also I was also the face of the firm when it came to orientation day and the top day to let the acquisition targets know that they were on board. I was there as the reassuring person letting them know what the next steps were going to be. So I was part of it from beginning to end, same thing, but dealing with, I helped co hold partnership meetings, executive committee meetings. I've sat in every meeting we've had since the very beginning.
(08:48):
I've been part of all of our insurance renewals. The one part of Jason's job that I am not taking on is he was the risk manager for the firm, which was a different role than a lot of CEOs hold just because I did not spend enough time at a certain level practicing the firm other than on the IT side. We selected another partner, Rob Adams out of our Charleston West Virginia audit office to become our risk manager for the firm and Rob and I will work together in that space, but I've been still part of all of that to make sure I'm the proper support for what Rob needs and making executive decisions when we need to. But that was one part that we didn't transition but day-to-Day firm operations from the very beginning I was the only report to Jason. As we've built out our team, as we've been growing all of the c-suite and all of our shared services team always reported to me. So it's not like that team is going to have to learn a new leader going into this transition because they were already reporting to me. So there's really not
Dan Hood (09:53):
Much transition to do at all. That sounds great.
Laura Sprouse (09:56):
It there's context vendors. I've been involved with banking all along the way, our attorneys, so he's just done a wonderful job of helping build me up as a leader and having me acknowledged as a leader to our community that we work in.
Dan Hood (10:11):
Right. Well, and that's a huge part of it, right, of the succession planning process and I think that's not as many firms are not anywhere as advanced or as efficient as you all are. I think they can take a lesson from that. So that's great. That's awesome. That gives us a sense of where you've come from, where the firm's come from. Let's look forward a little bit and talk about your growth strategies for what's coming up. What's the firm doing to continue to grow?
Laura Sprouse (10:39):
I am going to continue down the path that Jason Hartman and I have started and we look to continue to grow through CPA firm acquisitions. There are some geographic locations that we would like to expand into. Some are kind of seem like smart locations based on our current geography and backfilling into some locations that we'd like to get into. We're also looking for opportunities to get into other states where we have a centralized client base, but not necessarily an office location or a storefront for us to call home and other states. We also want to look at other affiliated services. Again, with my IT background, investing in an IT company is first of mind for myself, but it's not just for me. I think our partnership is very invested in finding the right fit for ourselves with a technology company, but also with HR entities, marketing entities, just so we can become a full stop shop for our client base and the type of services that we can provide to them.
(11:52):
I always hear from my partners, can we help our team or help my client recruit A CFO? Can we help them recruit this? Can we do these? So just really taking all that feedback that we've gotten over the years about what things our clients struggle with and how we can better serve them by providing those services to them. We are doing all that we can to remain independent. So we know growth is one of the best ways that we can do that and I am going to go full stop on trying to grow us as much as we can. Jason and I grew the firm from 25 million to 86 million and the last seven years, and I would love to be able to continue that trajectory with intentional growth that way, but continuing to mine the services that we can already have within the firm and that we already provide. We have found some service lines that we are really trying to support and really pushing them to grow at this point of time because we really do believe we have an exceptional service that we could take national and we're really working with those teams to grow and our Virginia, West Virginia, Tennessee based firm now is growing certain niches and now have a large client base in 10 or 11 states. So I'm really excited about what our team is doing and look forward to help support them continue to grow in those areas.
Dan Hood (13:19):
Very cool. Excellent. Alright, well I think that gives us an excellent idea of view and your growth up to the firm and what the firm's going to do. We are going to take a quick break, but when we come back I want to dive into some of the opportunities and the challenges you see both for your firm and then maybe for the profession as a whole. But we'll be back in just a sec. Alright, and we're back with Laura Sprouse Brown Edwards and company talking about her, as I said, somewhat unusual but a very interesting path to A CEO there and some of the growth strategies you have for coming up. But I want to take a step back and talk about what kind of challenges you've seen for the firm. As I said, there's a lot of people making the same sort of leadership transition you're making though as we said, you're a better prepared than many. I haven't been right up there in the management leadership ranks for a long time, but what sort of challenges are you seeing for you and for the profession as a whole?
Laura Sprouse (14:18):
Well, there's many challenges ahead of us, but the two that I continue to see is staffing issues and competition in the industry. Obviously the industry is in a general panic about staffing and how we backfill positions and the amount of turnover that we have experienced over the past four years and how to get past or staffing shortages. How do we augment our teams with outsourcing? How do we augment our teams with technology? How do we build our teams faster and better to have them grow faster than we've ever grown teams before? To be able to have that leverage model that we really need to be successful and to be able to find our future leadership, how do we grow them and develop them in a way that we have a future when so many want to exit the industry and at the rate that people are exiting the industry. So to me, I think that's one of the biggest challenges that we have in finding the proper tools to augment and the proper training and the right staff to be able to grow them the way that we need to. Obviously growth is going to be a challenge even though it's a significant focus of mind.
(15:36):
I don't have on rosy colored glasses and think that it's going to be as easy as what it was when Jason and I started our past that we've been on. Private equity has obviously changed the landscape and the pace of growth and the acceleration of firms being acquired by either rollup firms or platform firms. It's just staggering to think the number of firms that have merged away over the past four years. So we know it's going to be a challenge. So we've got to find a way to how do we combat that and understand that our model that I've used for years to build out to go to these firms with is not going to work the same and we're going to have to be more aggressive in our pricing that we go to market with for these firms that we do want to acquire. We have to bring something tangible and different to the table that is going to make us more attractive than some of the money that's being thread around today, this day and Tom. So I look forward to continuing to enhance our Brown Edwards brand and enhance who we are as an employee experience firm. How do we enhance our client experience so that people really do or will be attracted to us and I really want to enhance our brand that way so that we have a fighting chance against PE money in the future.
Dan Hood (17:03):
It is fascinating how their entry has changed a lot of things, but it's interesting that another area, and you have talked about it, right, looking at non accounting firms for acquisitions, that's also created a change, right? Because in many cases with firms you could say, well, you get equity partnership people, you'll become partners in, it's the same sort of deal. The long term value for partners in an accounting firm being merged in is very different from an IT firm for instance. They have a very different approach to what kind of money they want and when they want it.
Laura Sprouse (17:31):
We've experienced that. We have a wealth management team and when we've looked at acquisitions of other wealth management practices that is completely different as well to be able to grow that. And some of those numbers are staggering as well when you start thinking about it. But we figure out what's the right fits for us and we find ways to be aggressive in going after those companies. I think we're doing a lot, again, we're trying to help our industry by, we've gotten into the high schools, we're participating in alternative programs to really educate young people about what we do and that we're just not boring accountants.
(18:13):
We have excelled with our intern program and I'm so proud of it and I don't know if some of it's from what we've been doing in the high schools and alternative programs, but we've been very successful. We had a class of, for a firm of 475, we had 75 interns in-house for this tax season. So I think we do exceptionally well at recruiting from our intern class and we're just going to continue to invest in that to know what we can bring up through the ranks and build those teams out as best we can with this young talent that we do see coming through.
Dan Hood (18:46):
Well, I should say that's good news because in an area where there is not a lot of good news, the concerns about staffing are enormous as the pursuit of growth. I want to talk a little bit more about young accountants in a second, but before we do that, we talked about the challenges in terms of staffing and finding growth. Let's talk a little bit about opportunities and if you want to split this up between opportunities broadly and then opportunities you're particularly pursuing, that'd be great.
Laura Sprouse (19:13):
Obviously, I believe technology and AI is a tremendous opportunity for our industry. We cannot be naive about what the future can hold. I believe we need to cautiously approach because there are ethical considerations that we have to take into account as we continue to work with ai. But there's all different forms of AI and automation that we can use and how can we work smarter and not harder? How can we use these tools to enhance the daily lives of our staff so that we take away the mundane and get rid of easy routine task about automating them so that they can focus on higher value task and higher value assignments to provide better client service to our team. So I really do think it's an opportunity to one, improve client experience and employee experience through utilizing these tools and through automation and ai.
Dan Hood (20:15):
Awesome. Yeah, I mean you can see your IT record coming through because for a lot of people that are like, you see it and you say, well, of course these are great, these are tools that we can use to make ourselves better. A lot of other people say it's going to take our jobs or it's so complicated, it costs so much money and I don't want to do it.
Laura Sprouse (20:29):
It's not cheap and it is complicated, but again, we can't turn a blonde eye to what it is and really how it can make our lives better. Again, I started out this conversation talking about back in the day I brought bot dip, which is now PFX scan to the table. That's automation. And it was automation 20 years ago or 19 years ago. So we've been implementing these tools all along just in small formats and small bites. It's just the trajectory of it has changed so much and the number of tools that are available now, it just becomes overwhelming. So ensuring that you've got proper teams to be able to evaluate these tools and strategically consider how they will fit into your practice will be imperative.
Dan Hood (21:17):
That is absolutely huge because fascinating. I mean, back in the day in between 2000 and 2010, you could spend three or four years thinking about what will your paperless system looked like and then you wouldn't have, because wouldn't be thinking about any other things that would be it, right? What's our paperless thing and then what's our cloud thing? And you had a lot of time and buffer zones where you could really say, all right, let's figure this out and you had some time. Now you don't, right? Everything is three or four things you need to assess every week and we got to decide now. So having that kind of,
Laura Sprouse (21:46):
And there's seven tools that do the same thing. So which one's the optimal tool for your practice? And another thing that we have to focus on is an opportunity. It's how do we continue to streamline our practices? And I think the thing about accountants is once we build our process and we love it, we like to stick to it and we will make software fit to our process versus letting the software drop what our processes are. So it's an opportunity for us to continue refining ourselves too and taking out redundancies and again, working smarter and not harder.
Dan Hood (22:20):
The, yeah, if you're trying to make software fit a process that was built in the eighties, it's probably time to think about some changes. You had talked about all the things the firm is doing to drawing younger accountants in high schools, and that is genuinely a very large internship crisis, as you said, for the size of the firm, which is very cool. And it sort of leads me to one of my final questions, which is do you have any advice for young accountants? If you were talking to one of your interns or one of the people in high school who was considering an accountant, any advice for them?
Laura Sprouse (22:50):
My advice was some advice that I was given earlier in my career and it's don't say no. Take every opportunity you can to learn, embrace change, embrace the things that are being thrown at you. Don't see it as overwhelming, don't see it as obstacles. See it as opportunities. Look on the positive side of what these challenges bring to you and what it can mean to your future. I also want to say to 'em, don't give up. If you move into a firm and you find you got slotted into tax and you just hate tax, just don't walk away from the industry. Explore options. Ask to get involved with the a n side. Ask to get involved in advisory service. Find what your passion is, find the thing be the most passionate about that will excite you to move along this career. You've got to know that there's going to be challenges. You've got to know that it's going to be hard work. No one's ever said this profession was easy, but accept the challenge when it's brought to you and learn to embrace that.
Dan Hood (23:55):
That's awesome advice. We hear a lot of firm leaders who say, yeah, when I started I was in tax and I hated it, so I switched to something else. And it's amazing how many people who did that, but how many other people don't realize you can do that. You can sort of, Hey, let me try something else. Awesome. Alright. Laura Browns Brown, Edwards and Company, thank you so much for joining us. Any final thoughts? Anything you want people to know about Brown Edwards or what's coming up?
Laura Sprouse (24:19):
No, I think we've got a wonderful firm. I've been so proud to be part of this firm for 25 years. It's been a wonderful place to be. I encourage all of our young people to continue to look forward to the future, to look forward to helping build our leadership of our firm out and just get ready to go.
Dan Hood (24:42):
Fantastic. Alright. Lauras Brown. Thank you so much and thank you all for listening.
Laura Sprouse (24:46):
Thank you so much for having me, Daniel.
Dan Hood (24:48):
This episode ER is produced by Accounting Today. Ready to review us on your favorite podcast platform and see the rest of our content on accounting today.com. Thanks again to our guests and thank you for listening.