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May 2008
More Than NUMB3RS
By Ellison Clary

     Charley McNealy, Norman Manley and their team of professionals clearly contradict the traditional numbers-cruncher image of accountants. The partners and staff of the Charlotte office of BDO Seidman pride themselves in a genuine interest in clients, far beyond ledgers loaded with digits.

     “The clients we best serve are the ones looking for advice,” says Manley, a 29-year accounting veteran who came to BDO Seidman when it merged with Charlotte’s Dellinger & Deese in 2001. “It’s not about filling out tax returns; it’s about planning and goal setting and being an advisor.”

     To be sure, McNealy and Manley can reel off numbers. The Charlotte office of BDO Seidman has existed since 1973 and currently employs up to 70 people, depending on whether it’s tax season. It’s been expanding annually by as much as 15 percent and its size has doubled in the last half decade. The pair projects the Charlotte practice at 50 to 75 percent larger in five more years.

     BDO Seidman doesn’t break out financial results for its 35 individual offices, but the Chicago-based firm disclosed $589 million in revenue for the fiscal year ending June 20, 2007. BDO Seidman is the U.S. Member Firm of BDO International with its Global Coordination Office in Brussels, Belgium, and combined Member Firm revenues of $4.7 billion for the year ending September 30, 2007.

 

Strategic Advantage

     The BDO Seidman Charlotte office, operating in 12,000 square feet in Morehead Square, is the only one between Richmond, Va., and Atlanta and serves both North and South Carolina. As a result, McNealy, Manley and their colleagues are mobile, focusing on clients throughout the Carolinas.

     Helping them relate to professionals in other metro areas are local firms in an alliance network that McNealy and Manley call unique to BDO Seidman. Nationwide, the BDO Seidman Alliance has 150 alliance members, which are local and regional CPA firms that keep their independence but often collaborate with BDO Seidman. Carolinas cities where alliance firms exist include Asheville, Hickory, High Point, Greensboro, Raleigh and Columbia, as well as Charlotte.

     “In recent years, the marketplace has embraced BDO’s positioning as a distinctly different service alternative and we’ve seen a real alignment of our client service model with the needs and desires of the market,” says McNealy. “Our audit practice is serving a growing number of mid-cap public companies, large private companies, and not-for-profits seeking the combination of services, international reach, senior level attention, and responsiveness BDO offers.”

     Since the Sarbanes-Oxley Act of 2002, which established enhanced standards for U.S. public company boards, management and public accounting firms, BDO Seidman has gained 350 to 400 clients across the nation from the Big Four—PricewaterhouseCoopers, KPMG, Deloitte & Touche and Ernst & Young.

     Passed in the wake of corporate scandals such as at Enron, Sarbanes-Oxley requires larger public companies to have auditors to examine their internal control structure. The upshot, McNealy says, is a 40 percent to 50 percent increase in the work for a typical audit.

     So the Big Four increasingly have concentrated on their very largest clients, those in the Global 1,000. Meanwhile, this quartet of huge international accounting firms has struggled to staff and serve some of their not-as-large clients, thus creating great opportunities for a firm like BDO.

     “That’s where we have a strategic advantage,” McNealy explains. “What we’ve understood is, the smaller public companies and the larger private companies want a heavy compliment of partner and senior people interaction to help them solve their business issues—to consult with them.”

     Quinton Gandy appreciates that. “They help us make strategic plans,” the president of Cornelius-based Gandy Communities, Inc. says of BDO Seidman.

Gandy Communities is a real estate developer and residential builder and Gandy says the firm has worked with BDO Seidman’s Manley for 15 years.

     Gandy describes Manley as “very straightforward, very reliable” and he praises his integrity and honesty. “We’ve developed a real strong relationship and there’s a trust thing you develop as time goes on,” Gandy says.

     Manley says he approaches growth methodically. “When we obtain a new client, we need to understand their business and how we can best service them,” he says. “The more we understand them and their business, the more value we can add.”

 

Global Services

     BDO Seidman is part of what is now being coined as the Global 7, which includes the Big 4, Grant Thornton, and RSM McGladrey.

“We would not seek to serve every need of a Fortune 500 corporation” says McNealy, speaking of BDO Seidman. “We do want, and we have done specialty projects for these corporations.”

     For example, the Charlotte office leads the domestic BDO Seidman operation in preparing individual tax returns for people who routinely travel in and out of the country on business.

     “We have probably 500 or 600 returns we do for foreign nationals,” McNealy says. Several of the firm’s manufacturing clients employ hundreds of people who work both inside and outside the country.

     More stringent audit requirements have caused BDO Seidman to make changes. “The hardest part is dealing with the challenging environment put forth by the rule makers, the people who pass new accounting and technical pronouncements,” McNealy says, “They’re becoming immensely complex.”

     He recalls a recent accounting change that was about 40 pages long. It prompted another firm to publish an implementation guide that took 350 pages to explain it.

McNealy, who’s been with BDO Seidman since 1970, says his firm has an advantage because of the autonomy headquarters gives offices such as Charlotte, coupled with a flat management structure.

     “I’m one person away from our CEO,” he says. “We only have to go to one or two people to get decisions made. Because Norman and I are the leaders of the practice here, generally we have the capability to give most of our clients the answers they need to run their business or to conduct their personal affairs.”

     Manley, McNealy and crew offer a wide array of services, including assurance, or auditing; tax work; consulting in matters including litigation, investigations, restructuring, and risk advisory services; corporate real estate services; and through affiliate companies, private client wealth management, investment banking and business valuations.

     BDO Seidman serves companies in many sectors, including manufacturing and distribution, health care, financial services, retail and consumer products, energy, real estate and real estate development, media and entertainment, pharmaceuticals and biotechnology and technology.

 

Client Retention

     Even as the Charlotte BDO Seidman office picks up larger firms, McNealy says, it continues to concentrate on clients it has served for 20 years or more. Some are public companies, but many are family-owned and their needs run from succession planning to estate planning.

     An example is Jim Wright of FHG, Inc., a mechanical contractor to major oil companies such as Shell and BP. Wright recently transferred control of the company he started 25 years ago to his son and son-in-law and their wives. He has been a BDO Seidman client for a decade and he leaned on Manley to make the switch.

     Norman’s guided me at every major point in the last 10 years,” Wright says.

     On Wright’s office wall hangs a letter from the Internal Revenue Service. It confirms that the IRS declined to make any changes after auditing FHG tax returns. “You don’t get many of these,” Wright says an IRS auditor told him.

     Wright recalls how concerned he was several years back when he received notice of an impending IRS audit. He immediately called Manley for advice.

     Manley told him: “You should pay me to have that man come to my office and perform the audit so I can answer all the questions.” So Wright sent a truckload of files to Manley. “A week or so later, the IRS presented me with a ‘no change’ letter,” Wright says.

     Manley calls that “seeing where he made a difference,” and he calls it the most rewarding part of his work.

     To Manley, that kind of assistance epitomizes the personal attention that the firm carries out in its tax work: “Our tax practice is focused on more of a consultative approach. Most of the private clients serve are closely held business owners and high net worth individuals. Where we can benefit them most is helping them meet their goals. It’s about planning and goal setting and being an advisor to them.”

     He brings up an executive he began working with in 1984. The man was in his 90s when he passed away recently, but his business, which had grown substantially, had long since passed on to the third generation. “We saved untold millions of dollars in estate taxes,” Manley says, then adds, “The family would probably have sold the business if we hadn’t actively planned back in 1984.”

 

Taxing Times

     The 700 individual tax returns the Charlotte office handles far outnumber the 400 filings it completes for businesses, but the revenue from those 400 business accounts is about 70 percent of its annual output.

      Both Manley and McNealy work six days a week during the first few months of each year. That’s busy season.

     Manley toils on tax returns from 7:30 a.m. until 9:00 or 10:00 p.m. each weeknight and most of Saturday. He takes Sunday off and encourages his staff to do the same.

     Immediately after the tax filing deadline, he likes to wind down gradually. Usually, he takes a short break with his wife, then enjoys a longer family vacation in May.

     “You’re running on adrenaline, and when you hit April 15, it takes a little while to gear back down,” he explains.

     McNealy also has a hectic early year routine. “Our work schedules in assurance (audit) are 55 to 70 hours a week from January 15 through the end of March,” he says, “primarily because most public companies have their filings due between the middle and the end of March.”

     During other parts of the year, McNealy and Manley say they are committed to increasing their involvement in Charlotte civic activities and to encouraging their associates to do the same. McNealy is on the board of the Belk School of Business at UNC Charlotte and the Harris YMCA. Manley is an elder at his church and has served on the board of with Missions International, a worldwide evangelism organization. This involvement is reflective of the Charlotte office as a whole, where many people are actively involved in leadership roles in a number of civic and charitable causes, working to make a positive difference in the community.

     At work, McNealy thrives on competing with other firms and landing new clients, he says. Helping existing clients with either an acquisition or a sale also gives him a warm feeling.

      Internally, he enjoys working with other team members and helping them grow in their positions. And he likes helping a deserving person become a partner.

     Manley picks up on that. “I enjoy being a mentor,” he says. Even though most people have a masters degree in tax when they join the tax practice at BDO Seidman, Manley says they still need training in how to best advise clients. He hopes they’ll share his passion for making a difference.

     “We work with some very successful, bright clients,” Manley says. “To develop the kind of relationship where we’re their most trusted advisor—that’s what excites me in the morning. It’s not making the extra dollar; it’s knowing that I’ve got that kind of relationship.”

 

Ellison Clary is a Charlotte-based freelance writer.
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