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Accountants Have a Number of Ways of Setting Their Services Apart

San Diego County has a singular profile as a market for accounting firms. The region is light on national headquarters, heavy on defense, home to a quickly mutating life sciences and pharmaceuticals industry, a petri dish for startups, a carved bowl for action sports and a place in the sun for alternative energy companies.

With dozens of accounting firms in San Diego, from the small, local and highly specialized to the regional outposts of global firms, accountants work hard to stand out from the crowd — especially at the top.

While the four top-ranking firms on the San Diego Business Journal’s Accounting Firms list, Ernst & Young LLP, Deloitte LLP, PricewaterhouseCoopers LLP and KPMG LLP, have dominated the national and local scene, other firms, including CBIZ/Mayer Hoffman McCann P.C. and Moss Adams LLP, ranked Nos. 5 and 6 on the list, respectively, are also doing well in this down economy.

“The recession hasn’t hurt accounting firms the way it hurt so many other businesses because our basic services are always needed,” said Richard F. Kalenka, managing partner of PricewaterhouseCoopers’ Sorrento Valley office. “As companies have struggled to cut their expenses and then worked with fewer internal resources, we’ve found that they rely on more of our services.”

How do the firms market their services? It starts with the challenge of differentiating themselves from the other.

The firms’ service lists seem pretty similar at first glance.

Solid Foundation

According to Chris Allen, managing partner of Deloitte LLP’s downtown offices, his firm has four pillars on which business is built. Deloitte has a healthy audit practice and tax services, but finds its consulting and financial advisory practices are constantly in demand.

“Audit and tax services are what we’re known for, but our consulting practices are as big as our audit and tax practices combined,” Allen said.

In San Diego, Allen said, forensic and reorganization services, valuation services and consulting services that help companies grow are particularly in demand.

“Our typical client is a privately held company in the $10 million to $250 million range,” Allen said. “These companies face a lot of challenges even though they don’t have to deal with public company issues and regulations.”

A lot of those companies have struggled in the recession, with lost customers and unpaid bills, layoffs and losses. What they are thinking about now is how to grow, Allen said.

“How do they start growing again to reach their objectives?” Allen said. “This is a big focus in San Diego. We try to make sure they are right-sized and tailored to grow.”

Far-Reaching Practice

Ernst & Young, which heads the Business Journal’s list of Accounting Firms this year, believes size matters.

“At Ernst & Young, we differentiate ourselves in three ways: globalization, our culture and our commitment to entrepreneurship,” said Managing Partner Mark Stephens. “Ernst & Young has the leading brand among entrepreneurial companies. The marketplace validates this: We are the No. 1 in brand in IPO market share and we audit more of the entrants to the Forbes global list of top companies than any other Big Four.”

But regional firms, including Moss Adams, find that they can stand out on their ability to serve on a regional basis.

“The more regional firms are often better positioned to serve their clients — San Diego is a middle market town,” said local Moss Adams Managing Partner Carisa Wisniewski, a graduate of one of the Big Four firms. “We are very focused on specific industries and we ask our people to specialize in their practices; life sciences and technology, health care, not-for-profits including large institutions, construction and real estate, and manufacturing.

“We’re disincentivized to dabble,” she added.

At CBIZ/Mayer Hoffman McCann, Managing Partner Paul Nation said that it comes down to building relationships and a strong reputation.

“Ultimately, accounting is a people business,” Nation said. “There are all different kinds of clients, but they have this in common: They want to take the big problems off the table and to prepare for the future.”

Established Presence

And, he said, they don’t want to start over every year, trying to explain their business to someone who doesn’t get it yet.

“We have a long history of stability in San Diego and we have deep relationships with our long-term clients,” Nation said. “Ultimately, you compete on your reputation for service to your clients. We maintain an ability to deliver a large scope of services because our clients’ needs will grow and change.”

San Diego clients tend toward the startup and research stages, Nation said. That’s an area where a good accounting firm can help.

“We do a lot of work with startup companies. They don’t have a lot of resources so we provide a wide range of services, ranging from tax advice and building a capital structure,” he said. “We have a range of consulting experts with expertise in things like selecting IT systems, international tax specialists and the research and development credits at both the state and federal levels that are frequently overlooked because people aren’t familiar with them.

“Our people really understand the credit and how it’s audited,” he added.

To Ernst & Young clients, the firm’s size is an advantage, according to Stephens.

“Ernst & Young has one global leadership team that sets one single global strategy and one agenda,” he said. “This allows us to provide our clients with accelerated responses and greater consistency; access to the right people and broader, more experienced teams wherever they are based; and high-quality service wherever in the world our clients do business.”

Competitive Pricing

Competing on price can happen, like competing bids on contracts, Nation said.

“In an economy like this, price is always an issue,” he said. “You have to be able to do things cost-effectively.”

The firms all have business development staff who look for businesses that Deloitte’s Allen describes as “companies we want as clients.”

In the past two years, Deloitte has sought and won an increasing amount of work on government contracts and for government agencies, particularly at the federal level, he said.

“We have contracts directly with the federal government and agencies including the Department of Defense and the Department of Homeland Security,” Allen said. “We are also subcontractors in very large contracts where our duties involve auditing compliance with contracts.”

Deloitte also handles a great deal of work around information technology — not as surprising as that sounds, Allen said.

“We’ve been in the IT businesses since the business has been around,” he said. “IT systems were built for financial management.”

Niche Offerings

And many individual accountants draw in business from their own particular niches, a practice Kalenka of PricewaterhouseCoopers does his best to encourage.

“In the professional service industry the key differentiator is your people,” Kalenka said. “What we do is empower our people to serve our clients at the very top of their abilities and as a team, through a blend of experiences early in their career and exposure to a variety of industries.

“Our people tend to become passionate about a particular area and to form a great deal of expertise and experience in that area, whether it’s wireless or alternative energy,” Kalenka added. “We’ve made a significant commitment of resources to the life sciences industry, sponsoring conferences and awards.”

Kalenka said his firm often starts slowly with new clients.

“We are solution providers. We don’t try to solve every problem if we’re not capable of providing expertise,” he said. “It takes time to establish trust and we start with trust-growing, credibility gaining projects.

“Satisfied clients will engage us to do more and more, especially as we understand their business and find them opportunities they didn’t know existed,” he said.

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