Frank Longobardi, Executive Chairman of the Board & Nancy Catarisano, Founder & CEO of Insero Advisors

(upbeat music) - Hello and welcome, everyone. I'm Ryan Heckman, the CEO of Rally Day Partners, and this is the Founders' Journey Podcast. We'll explore the heart and soul of great founders and their journey to build the company of their dreams. You will learn about new industries and business models while discovering how to apply the Founders mindset to your everyday work and life. Hello and welcome to the Founders' Journey Podcast. I'm your host, Ryan Heckman, from Rally Day Partners, and I'm really excited to be welcoming Nancy Karasano and Frank Longabarty. Nancy is the CEO of one of our more recent investments in Insuro Advisors, which is an Accounting Business Services Company based in Rochester, New York. And Frank is a legend of the accounting services industry, which is code for a little older than Nancy and I. He's been building accounting services companies for damn near 50 years at this point, and was the CEO of Cohn Resnik, which is probably one of the more prominent by and build private equity stories in the industry and really a legend in the space. Broadly speaking, Insuro is part of fun too at Rally Day, and I was laughing with Frank and Nancy separately that it seems like there's two parts of our portfolio and fun too. There's a sexy technology businesses, tech services businesses that includes nimble gravity, which is an AI business with operations in Argentina and Colombia and Mexico, probably the coolest company in our portfolio. And then maybe on the other end of the spectrum is accounting services and Nancy's business based in Rochester. And I only laugh because I actually think when I look at it objectively, there is more interesting work and transformation taking place in accounting as there is in artificial intelligence. So this is gonna be a cool conversation. We're gonna talk about why accounting services is consolidating, why PE is so integral in the transformation of their industry. We're gonna talk about Nancy's decision to seek private equity capital and what went into that. And rely on Frank to sort of share or give us some wisdom around where this industry has been, where it's gonna go in the future and all really positive stuff. And we couldn't be luckier than to have this moment today to share the insights of these leaders. So with that, I'll first open with Frank, Frank. Welcome to the podcast, super excited you're here. - Thank you, Ryan, really happy to be here. And I am very excited about our profession. I think our profession is changing so rapidly. But I think there's a lot of really good things happening. - Well, why, I mean, you know, in Sero and the grand scheme of things is not one of the top 100 accounting firms yet. And yet, here you are and you are being announced, I think in the next couple of days as the executive chairman of Insero and its board of directors, why are you leaning so heavily into Insero and Nancy's vision? - That's a great question, you know, let me take you back a little bit of my background. So I started my own firm back in 1984 and grew it from a five person firm to 100 plus person firm before we merged into a JH Cohen after 23 years, the predecessor of Cohen Resnick. And I've had the journey of understanding what it's like to grow a startup firm from five people to 100 plus and then joining a large firm and ultimately becoming CEO in 2015. And at the time, JH Cohen, Cohen Resnick was probably doing about 550 million in revenue. When I left, we were north of 700 million in revenue. So it's been a fun journey. And what I love about Insero is that I see in them kind of where we were back at the tail end of my own firm before we merged upward. And I do believe they have, you know, Nancy is a really strong leader and in each strong leaders today, the kind of take firms to that next generation of growth. And I also love their partner group. You know, the partners are really dedicated. They're excited about the transaction. And I believe that they have good service lines. We have the ability to go to market by industry and they're committed to growth. So those things enticed me. And I have to have been, I also really enjoyed the rally day team, you know, when we met for the first time in Denver and you know, very impressed with the people around you, Ryan and I think that says a lot about the organization. But I'm really looking forward to helping them with their go-to-market strategy, their M&A activity. We need to probably get into offshoring at some points that are in another area that we tackle. And we have to build out our service lines. You know, I think every firm today is kind of looking at how do we build more of our tax consulting and advisory practice. So with that, I really felt like I could add a lot of value 'cause I've been there every step of the way as, you know, throughout my career. And I think it'll be, it'll be a fun journey to get us to a $100 million firm. - Well, I think that's modest expectation for our other guest, Nancy. Nancy, tell us a little bit about your journey, how you got here personally. And then maybe give us a little snapshot around what you and other partners at the firm were thinking about when you ultimately decided the best path forward for you was to seek out a private equity partner. - Well, first of all, accounting is fun and sexy. But still, we're a great, fun love and firm. And so, and I'm gonna prove it to you. But I started my career similar to Frank. I was 29 years old, you know, entrepreneur. You know, I'm gonna own my own business someday and started a small accounting firm. Well, I grew it to what is now a $25 million accounting firm, but I was really looking for the next phase in our strategy and the U.S. has over 90,000 accounting firms. And 50,000 of them are small businesses and, you know, have employees. And then many of them are so practitioners. So as an accounting profession, we have been challenged in the last, you know, in recent years with an older workforce all retiring, the baby boomers are retiring, less people coming into our profession and the need to really keep capital in the firm to grow additional services, to invest in technology. I've tripled my technology cost just in three years. So the capital needed to really be competitive in our industry was getting harder and harder. So we sought out in a partner retreat to say, where are we going? Are we gonna just hold back capital where, you know, our profits and try to do this on our own? Or do we seek out capital from private equity? And we knew we could get where we wanted to be quicker, faster by really taking an investment from private equity. - Yeah, that's well said. I mean, as the private equity professional on this podcast, I would just say, I don't think I've ever seen anything quite like what is happening here. I mean, there's predictions that of the top 100 firms in the country within a few years, half of them will be owned by private equity firms. And this trend only started four years ago, like in 2021, was it Frank helped me here, but was it Eisner Amper, was that the first to go? - Yeah, they were either number one or number two. - Yep, and they had a vision of that private equity could take them to the next step and they've grown tremendously since that investment in 2021. - Yeah, so I mean, it's just, it's a little dizzying would be maybe a word I could use, but if you zoom out, it kind of makes sense because as Nancy was alluding to every retiree requires capital to retire. And with the aging workforce and the number of retirees, growing these companies, we're having a very hard time supporting the growth of their business and the needs of their retiree population. So there was that happening, and at the same time, to be competitive with, on the other end, a shrinking workforce for entry level and call it mid-level work, automation was required. And that is another way of saying these companies needed capital to even remain competitive. And so for those companies burdened with retiree obligations amplified by capital required to sustain their businesses, it was sort of a moment of reckoning where the capital had to come from somewhere. Otherwise, an accounting firm, as Nancy said, with maybe less than 20 partners would have just a really tough time meeting the needs of their clients. I guess the challenge is, and it's been in the papers to some degree, is private equity a good part of the partnership ownership. Frank and Nancy, why don't you talk about the kind of good and bad, and we don't need to go in any particular order, but what are some of your concerns with the emergence of private equity and what are some of the upsides that you see already today? - I'll start, Nancy. Let's talk a little bit about the upsides and then we can get to the downside. But on the upside, the profession over the last five years has changed more dramatically than in the past 25 years. I mean, it's been an amazing journey and COVID had a lot to do with that. And then with private equity started in 21, the value of a CPA firm has been unlocked. And that value, when you used to buy firms, you would buy them at one time's income, one time's gross income, you'd pay it to the retired part. You know, you'd pay it to their partners upon retirement, they'd get paid out over 10 years, everything was deferred. And now you're seeing firms being valued at two to three times a revenue. And what that's gonna do to companies that are not taking private equity is it's gonna raise their cost of retirement to their partners. Because the partners are gonna look to say, hey, wait a minute, our value is much higher than what it is in our current bicellularity. So that's gonna be an issue that I think firms that stay independent will have to address. But you also raise the point of the cost of technology, the cost of M&A, offshoreing, creating your own base in a foreign market. All these things are gonna require significant capital. The firms also have to look at, how do we expand our service lines, whether it's advisory or tax consulting, all those things are gonna require additional capital. Much more so than we ever needed 15, 20 years ago in the accounting profession. So I think that's a lot of the reasons that private equity are gonna be sought out from CPA firms. And I think there's a lot of firms out there right now that are looking at PE on their own because of that. There's also the people issue. I think Nancy mentioned that we have an industry where it's hard to attract people and it's hard to retain people. And some of the firms may feel comfortable now because we have gone through a lower turnover after we went through the great resignation. But I've been in this profession, as you said, 50 years. So I've seen the peaks and valleys of staffing and sometimes we're overstaffed, sometimes we're right staffed and many times we're understaffed. So I do think that private equity can help retain some of the young people today who don't wanna wait 15 years to be a partner and then understand after they become partner, their payout is gonna be at age 65 when they retire over 10 or 12 years. That's not attractive to the young people today. And I think everybody knows the younger people want more of that gratitude early on in their careers and not later on. And I think private equity can help with that. You know, on the downside is I think partners have to get comfortable that you can't run the firm in the old style partner governance model where you had a 10 or 12 person board if you were a big firm or if you were a smaller firm, every partner was on the board. Everybody had their own opinion. Very difficult to run a business like that today. And I do think though. So partners that firms that are looking at private equity have to understand that that's a big difference. And those that wanna remain independent, they can. I mean, listen, I'm not saying that every firm is gonna be in the private equity space. I think there's a lot of good community-based firms out there that really know the niche that they're playing in and are very comfortable in that niche. And not looking to be $100 million firm, they're comfortable at $30, $40, $50 million and wanna continue to run their firm the way they see it. And I understand that. And I think you'll continue to see some of those firms do very well. - That's really well framed. Why don't we do kind of a backstage pass then in your case Nancy behind the scenes, behind the curtain, talk to us about the meeting before the meeting, the meeting and then the conclusion when you all decided that you were gonna take the plunge. I'm guessing it wasn't overwhelmingly in favor of the private equity option, but you ultimately got there. I think it'd be interesting just to give some of the texture on what as a leader you had to lead courageously through to get to this other side. - Like all firms, two years prior to doing this investment is when we started, you know, what's the long-term strategy? Where are we going? Can we do it on our own? Are we willing to leave the capital in required? I mean, I think educating your partners to know how much capital is really needed for all those things, whether it's the technology, the acquiring, additional service offerings, whatever it is, but educating them. But really educating the younger partners what Frank was alluding to. I think why my younger partners thought that this was important is it de-risked for them to be able to have to buy out all of the older partners. And to go through all those years, we not only had to make enough money to invest back in the company, whether it's acquisitions or technology or people, then you also have to use all that capital to pay out all those retiring partners. And the younger partners were saying, do I really want to do that, you know, and wait. It's funny that the accounting profession advises all our clients for years. And yet we had weird buyouts. We had to partnership governance models like Frank just alluded to. It just wasn't setting us up for success in the future, but that's how we were all, you know, structured. So I do think PE investments came faster than I think all of us realized. Last year, 38% of the deals were private equity. And I think having private equity coming into the profession, it helped even firms my size say, I'm going to have to compete now with firms that have a lot more capital than I have. And all my younger partners have to buy a sell out. And that's a lot. And so I think it was an easier decision for my younger partners. People all say, oh, you know, why would you do that to your younger partners? They're gonna have access to equity quicker, faster, more often in their career than I had. When I was 40 years old, I didn't have the ability to have the equity growth of the firm already. So I do think it was quicker once we got to the decision we would consider investment. But I'm not just saying this 'cause you're on here, Ryan, I talked to many private equity firms. You've gotta find the right partner. There's a lot of people out there and you have to find the right partner. - Well, just as you say, there's 90,000 accounting firms in the country. There's like 4,000 private equity firms. And just like in any industry, there's good ones and less good ones. I make fun of our industry as you know more than maybe anybody. And I feel like the bad reputation of private equity is well-earned in most respects. But I do think there's an emerging class of private equity firms that really believe strongly in the power of humans and of humanity. And the resource investment opportunity that we all have to invest in that next generation, as you said, so that they become better people and our companies grow quicker and stronger. And there's no better example of a people-intensive business than accounting. And I remember when we spoke to your partner soon after that meeting that you described. And I didn't know you really well at that point. And I said, Nancy, give me some coaching. Like, how should I talk about Rally Day and what's important to your people? And you just told me, Ryan, just be yourself and talk about what Rally Day does authentically and you'll be fine. Wasn't great specific coaching, but it gave me confidence. What was the receptivity to Rally Day's investment? And what have you been up to the last six months as you began this partnership? - Well, first and foremost, you even got our name to even reach out to us because we were on the best accounting firms list for the last 14 years. Culture and being passionate about our people has always been first and foremost. It was impressive to me right from the beginning that the way you reached out was because we were on that list that it was important to Rally Day that you recognized culture really meant a lot. And you've continued for the last five months since our investment. All we've done is had you help us build on strengthening our purpose statement. Not changing it, just strengthening it, bringing us the consultants that can help us really deep dive into strengthening that, working on our strategy and how we're gonna be there. And always putting our culture first because that is so important to you. When I heard you talk about your culture playbook, architecture, that's not how you'd normally talk to private equity, but that's how you talked right from the beginning. And I knew you'd resonate with my whole firm all of the employees in that way because you were able to make them feel comfortable that our culture is not gonna be compromised. What I want in this transformational part of our industry, I wanna grow with genuine care at the center of all of my growth. And we will change this industry that you can have good culture and still grow to be one of the top 100 firsts. - That's really kind of you to say. And one of the ways we talk about a strong culture is that there's no better reveal of a good culture than when a company grows dramatically and their culture strengthens just as dramatically. And that's really hard to do. Usually a company gets bigger and people say, "Oh, the culture went to hell." And that's very common. And you can almost argue that these are parts of opposing physics. And right back at you, a lot of our partners here at Related come from Buffalo and Rochester, as you know. And I was like, "You guys wanna go partner with an accounting firm in Rochester, New York?" And they were like, "Yeah, these guys are totally focused on people and in the end Rochester can be part of their heritage and the culture in every regard can be part of a growth strategy." And when I met you Nancy, it was just a hook line and thinker in terms of my love for you, for the company and for what we can do to the Rochester community to make them proud of what we're building. I think it's a tremendous opportunity. Frank, why don't you talk about being CEO at a larger firm like Cohen Resnick and some of the similarities in your business philosophy relating to people and why you think that's such an important part of building a platform company in this industry? - Yeah, it's a great question. You know, listen, when I join Jage Cohen, you know, the culture of Jage Cohen was obviously different than the culture of my firm, which was Hack-A-Long-A-Bardian company. But, you know, even as part of a larger firm, we were able to take a lot of our culture and help Jage Cohen kind of develop a, you know, I wouldn't say adopt our culture but start to implement some of the things that we did because they knew it was good for people. And as I became CEO, there was, you know, there'd be perfectly frank. You know, we had two firms of very large size. You know, one was probably doing 240 million. The other was doing about 200 million. We merged together and we had two firms with very, very distinct cultures. So when I took over, I developed our strategic plan and one of the key pillars was one firm, firm first. And really, you know, that was a focus, no matter who I spoke to, whether it was our staff people in our offices, we had 24 offices, was it was presentations to our partner group, was always emphasizing that we're one firm and we're firm first. It's not about individuals, you know, it's about the firm and how do we work together to make the firm a better place to be. And that was probably, I would say one of the most important pillars that we had within the firm, we changed our vision, we changed our mission and we always led with that as we had people. And it took a while to resonate because people from the previous firms, you know, some of them were, you had a push, right? You had to push them hard in order to get them on board. But the firm did really well. We grew for four straight years. And one of the other big pillars was developing future leaders. So we spent a lot of time about how do we train people? From the time they're on board it to the time they're ready to go into a partner academy, you know, we're starting to get ready for partnership. And everywhere in between, you know, we had technical and soft skill training that was very hands on, that I spent a lot of time myself being a part of, we had great people around me that really supported that mission. And I think our people really understood that we cared about them. And Nancy mentioned Genuine Care. And I love that we're a Genuine Care. And we did that quite, you know, I think quite extensively at Cohen Resign, where we really let our people know that they were, you know, they were the reason for our success. And we had to help them every step of the way. And I think that's really important. And then one of the other pillars I had was focused on profitability. Adia, you know, listen, we're in the business obviously to be profitable and the more we're profitable, the better we could take care of our people. And we had a big focus on client profitability. You know, we really did a major dissection of our client base where we rated our clients from a low of one to the highest six. And we had, you know, what, what you needed to do if you were dealing with tier one or tier two clients versus, you know, top, top tier clients. We looked at client profitability across partners, offices, industries. There's been a lot of time on that particular initiative. And they really paid off in terms of getting us to look at who was really the clients we should be serving. 'Cause like in any accounting firm, it's usually the 80/20 rule. You know, 20% of your clients are providing most of the value to the firm. And the other 80% are taking a lot of resources. So you need to kind of figure that out a little bit and start to change that paradigm a bit. But those were probably the biggest pillars that we had. And then obviously technology and trying to introduce, you know, new technology, AI, that was all a big part of our challenge as well. And, you know, I was just at the growth council, growth forum out in San Diego. And I can't believe how many technology companies attend these accounting seminars. I mean, there's more technology out there today than, you know, when I was CEO. I mean, there's firm, after firm, after firm that are, you know, dealing with new technological changes, whether it's in time and billing, whether it's for, or they're client accounting service practice, whether it's a new audit methodology, you have DAS, you have online. I mean, there's a bunch of different ones that are coming from market. And then you have a lot of AI that's being thrown at you. You know, a lot of companies out there doing specific AI to help with assurance, to help with tax, help with advisory. So, there's a lot out there and there's a lot to navigate for firms because technology could be a huge help. It's also a huge cost. And if you do it wrong, it could become very costly. Well, let's double click on that for a moment. Nancy, today you're a relatively modestly sized player in the industry, obviously with really big ambitions that we're going to be part of. But as a smaller firm, how would you ever compete with like an RSM who just announced a billion dollar initiative on AI alone? I mean, does it keep you up at night? I mean, what's happening with your kind of offense defense temperament right now? Well, clearly, all the big firms have been putting billions of dollars into this. But as a small firm, we have been very progressive and have always put investing in technology first. But the technology is moving so fast. We can invest in one that we don't even need. I mean, we had a bot software three years ago. Now, we don't need it anymore because the software came out that eliminated everything we wrote about for it. So, it's just going to keep going so fast that we did need capital and to grow and keep adding additional companies to be able to bring that profitability to keep reinvesting. But I have the benefit now with Rally Day. I'm going to be working with your AI company. I just signed an agreement. So, they are. That's all they do is AI. And they're going to be right along the ride with me and go through all my tech deck and see where they're going to help me. So, I think we're going to be so much stronger for having the PE, you know, all the resources that you bring, including Frank and his background. I mean, it's been amazing who we've been introduced to already. And to have Frank at my fingertips to tap into, he's introduced me to growth leaders. He's introduced me to technology people that he's known over his career. That's huge. I don't have to, you know, get to know these people on my own. He already knows who's good and who he is that got him there. So, it's been great. Yeah, and it's, it is a nice partnership and so far as being able to provide you with the resources of a Fortune 100 company at such an inflection point in your future. But it also takes that growth mindset that you have as a leader. And, you know, I want to talk a little bit about Rochester, New York, if we can. As much as I poke fun at Rochester, I grew up in a town of 1,500 people. So, I feel entitled to make fun of ourselves as kind of punching above our weight together, which is why I talk about it. But it's also Rochester's heritage is simply remarkable. If any of you type in Rochester, New York, into your AI tool or Google or whatever, what you'll discover is Eastman Kodak, Xerox, Baushan Lomb, Gleason, paychecks. I mean, there has been over the years just an amazing amount of innovation and economic strength that has resonated from this very small city in the upper part of New York. How much of that do you carry with you, Nancy? And how, how much does it fuel you to know that you could change the accounting services business right from Rochester as maybe Kodak did to photography 100 years ago? It's very exciting. And I do, I look at them, that they set the map. There's so many technologies coming out of Rochester. And I do want to be part of that transformation of the accounting industry. And I think right out of Western New York, we can, you know, lead the nation with a new kind of value creation right starting from us. So it's exciting to be part of that. Yeah. And in our strategic planning, it was so evident to me that it's kind of a paradox of strategies. Because on one side, you want to be people first, always. And if anything, we want to double down on the investments in talent development and culture as Frank alluded to. And then on the other end of the spectrum, you've got these opportunities to also automate more of our business and invest heavily in tech. And as leaders of this company, on this podcast, you've got the CEO, the executive chairman and the chairman of this company in the first six months that we have formed our partnership talking about what we're building together. To me, it's just really cool to be leading a duality like that where it's like people and technology at the same time. And Frank, why don't you talk about the dual mandate that we've given ourselves and why you think that's going to be a winning formula in the future? Well, listen, every firm today, I believe, has to look at growth, right? Growth is critical to the firm being able to attract people, attract clients. Firm should be always looking to move upstream as the firm grows and bringing in bigger and better clients. And as you do that, you need to develop services that attract larger clients. And those services are going to be services in the tax consulting area, like state and local tax, credit and incentives, R&D studies, cost segregation, all those things are going to be required to kind of keep the larger clients happy. And on the advisory side, you need to be able to do the same thing. You need to be able to offer different types of services that are going to be attractive to larger clients. So I do believe firms need to look to grow and they need to look at complementary services to do that. I mean, the reason why private equity loves us is the fact that you have two reasons. One, we have a really good recurring revenue stream with our audit and tax practice. And secondly, we have the ability to cross sell to our clients as we develop new services. So one of the things Nancy and I are working on with Ryan and Rally Day is, you know, what are those additional services we need to start to develop? And what types of firms should we be merging as part of our strategy coming in? And I think there's great opportunity for firms that are out there that would love to merge, you know, into a firm like ours that's going to give them the opportunity to help shape where we go, going to give them the opportunity to help create, you know, either adopt or help us recreate some of our culture. And maybe offer some of these services that we're looking to add as we build our platform. Yeah, never mind the technology thing, which, you know, at our size today, we can't write a billion dollar check, right? I mean, it's just not possible. But as we as we grow as a platform, you know, the big idea is to front load some of those technology investments so that we get the benefit of them sooner than if we just kind of allocated a certain percentage of revenue to technology every year and call it a day. I mean, what Nancy was alluding to is we do have an AI business called Nimble Gravity and they provide digital transformation services to fortune 100 companies all over the world. And they're on the front line of everything that's happening in AI across different industries. And they're really excited to get their hands on this profession. You know, they're, they've dabbled a little bit and they're hopeful that together with Nancy, they can be thought partners to not just helping insurow build out its technology capabilities, but do so on behalf of the whole industry. You know, I mean, there's a, there's an opportunity for Nimble Gravity to be part of elevating the accounting sector broadly with a very practical partner in insurow and Nancy kind of helping them figure out where is the biggest bang for the buck. And where can they really impact things positively for all the employees at the company? And that's going to be really fun work and exciting that Nancy has started that. Let's talk about growth mindset here for a moment. Frank gave us an opportunity, I think, to talk about that. But typically, when you think about the accounting profession, you don't think about it as kind of the most innovative art type or profession that has led with a spirit of innovation. At a very personal level, Nancy, how are you trying to help your company, but also like individuals at your company try to marry their technical strengths that the accounting profession requires with this other kind of growth mindset that the future might demand. I mean, what are some of the things that you're doing to cultivate that within insurow? And why is that important? Well, the first reason it's important is what Frank was alluding to. Most firms, smaller firms, 85 to 90% of what they deliver is core accounting services. The growth rate on that is going to be in the mid-single-digit growth here every year. If we can increase the advisory and all the other insulary businesses, increase outsourced CFO services, transactional advisory, all those tax extended, you will get double-digit growth. But you can't, usually, you're not going to get double-digit growth if you're just doing core accounting and tax services. So what I believe is the workforce that we're hiring now, they don't want to do the ticket in time. So they'd love that we're willing to invest in all technology, but take all the detailed stuff out of it and make them true advisors, make them problem-selfers, delivering, you know, getting them to advance their career in not, you know, the boring task. Because the new generations, they don't want to do what we did when we started in this profession. So we have to develop, train, and give them opportunities that are different than what the traditional accounting firm has done. And I believe with this investment, we can, we can go acquire more outsourced businesses to grow that even faster. And that's where you're going to be more profitable and the more profits we can, you know, pay more. And I think we need to make sure that everyone realizes with private equity, you can offer management incentive and units to employees that can share in that. They can share in that equity that they're helping to build. And they just get more invested in, wow, what do I need to do? To do that. And I think it's more exciting for them where they didn't have that in our profession before. The twist that you're making on the investment of technology is interesting to me. It's sort of like if you can make the more remedial or administrative tasks more automated, you can go to a higher level of care to your clients and to your fellow teammates within the organization. And so you're getting to a more human outcome by investing in technology. That's kind of a really cool aspiration. Not to go down a rabbit hole, but talk about the work that we've been doing together to enrich your workforce and talk about some of the hospitality you work you're doing with Susan Solgado. I mean, already we've started this elevate series to elevate our leaders to be better leaders, to really self-reflect. And if anybody wants to continue being an intro, they have to be working on themselves and really be willing to say, where is my strong points? But where can I improve? Because we all have to be improving ourselves. So we've had the benefit of you helping us with all of the leadership coaching that you've done. But our next series is going to be with Susan Solgado. And she's going to bring to us, you know, how, what can we learn from the hospitality industry? And it is so relevant to our client service. And I'm really looking forward to her session with our whole group, our leadership group. And what can we learn about client service? What do our clients want from us? They don't care that we're taking in time and having an accurate tax return that we're giving them. They want us to help them with their business problems, to be there, to, you know, and it's no different than the hospitality industry. We have to put that service level. Yeah. And for reference, Susan led people at Union Square, Danny Myers Group in New York City. We met her at a conference, and she has graciously agreed to do a series on how to bring the hospitality industry to the accounting sector. And I can't wait to be part of that. When is that schedule Nancy? Is that like in the next week or two or? Yeah, it's, yeah, it's a thing under the month. Okay, that's going to be really cool. And just the beginning, I mean, the Nancy early on wanted to make sure, I mean, there's the whole notion around developing talent, you know, technically. And I think we all know what that looks like. It's a lot of continuing education and getting better at accounting or the technical aspects of accounting. That's training. Distinct from training is enrichment. Training is an investment in productivity. Enrichment is an investment in potential. And it's going to be really cool after a year of these, you know, sessions that you're hosting, Nancy, to look back on all the best practices that we can learn from other industries and bring them to a sector that just has been starving for enrichment for decades. Frank alluded to it when he talked about the investments in quote-unquote soft skills. Frank, maybe pile it on here a little bit. But why are those thoughts skills so important to this ultimate success of an accounting organization? First, Nancy, make sure I get an invite to that session. That sounds great, actually. So that'll be wonderful. And I know Danny Myers runs a really great restaurant group and they've done very well and they've got great hospitality. Let's talk a little bit about growth mindset. I think firm sometimes forget that we have to teach our people how to grow. And I made a big point both in my own firm and with Cohen Resnick that we had to educate people all the time around how to be better business people. How to be that trusted advisor that we used to be and still are in many cases. And that meant they needed to know what we did as a firm. I remember one time I got a call when I was CEO from a partner and he said to me, "Can we do this? Can we provide this service?" And it just hit me across the head because what do you mean? Can we do that? Of course we can do that. We've got a group of 10 people that are specializing in that particular service and that's when the light belt bulb went on. And I said, "You know what? We have to teach our people, both our partners, our managers, and our seniors about who we are and what we do and what are the kind of services we are." We then develop checklist on industries and what are the opportunities within every industry and what are the things you should be looking for as you're serving a client. Because Nancy said, "Well, our job is to make our clients better. Our job is to make our clients just more profitable." And it's not just about doing their order or their tax return. So the more we can offer them, the better. But the only way you're going to do that is if you have great people, people that understand the firm, understand the industry and are willing to kind of put themselves out there. We used to do training about just getting outside your comfort zone. We used to do training on how to do a proposal. And what are the ways, you know, we would do mock proposals with our team. And we did a lot about what does it mean to be a leader and what are the things you should do as a leader. And all that stuff is, you know, Brian, you said it really well, and you said enrichment. You know, I hadn't thought of it that way. But it really is enrichment of the professional. And we brought it down all the way to our administrative staff. You know, we wanted our administrative staff to understand that they're in the client service business as well. You know, they interact with clients all the time. And so those things are really, really important. And we sometimes can get lost in the technical side of our business because it is very technical. And there are risks in what we do from an audit tax advisory perspective. But we also need to be sure that our people, our business minded, that they're out there to be a true advisor to our clients. That's, that's, that's, well said, switching gears to the future a little bit. Nancy, why don't you talk a little bit about Goat, the acronym that you, Frank and I were riffing on one night during strategic planning and kind of the platform building exercise that we're going through together. What's important for an accounting services platform company to do and tell us what you're up to in terms of building that platform out at insurote today? Well, Goat is pretty simple. And if we just stay focused on Goat, I think we're going to accomplish all our goals. Goat is growth, offshoring, automation and talent. And we are in the midst of every one of those already. And the growth, whether it be our strategy work, we've been in the depths of the chief growth officers and the consultants that I've been introduced to. And the acquisition targets, we have a great pipeline already. So in five months, we've done so much already on the growth, offshoring. We're going to grow so fast. We do need all the offshoring capabilities because we need to scale quickly. And everyone knows in the accounting profession, we're not going to be able to go higher, you know, easily all those extra talents. So we've got all the resources to be able to scale up quick. The automation we talked about on this already of automating and investing in technology and using AI. And then the talent and developing and really putting that leadership training, not training, that leadership enrichment in about, you know, and making the opportunities for people. Every acquisition that we do, we could provide another opportunity for somebody's career growth. They might want to get into another ancillary service. We're lucky as a firm right now. We're 25% advisory, 75% core. I want to be 60, 40. I want more advisory. I can't wait to have 50, 50, half of it, all advisory. Because then we would really be given back to our clients. So go as easy and we're going to stay focused on all of those core to accomplish our goal. Not to mention it has a dual meaning in terms of the greatest of all time, coming right from Rochester and, you know, I think what's really cool about this phase of our partnership is just, you know, we're, we're small and big at the same time. I mean, other, other organizations like in throw that may be confronted with, do I quote unquote sell out to private equity or to a strategic acquire or do I stay as we are today and just keep going and I'm hopeful that our platform can present an option C, which is sell up, you know, not sell out. We're looking for, you know, one plus one equals three when wins where we don't need to be viewed as acquiring anybody. I mean, we're trying to build an organization that elevates our industry and we just want great people to do that with other great leaders like Frank and Nancy to partner with and we're early days and the people that come to us sooner versus later can create that future that we all seek for our profession and for our organizations. We can just do it better together and it's a, this is a really fun time. I committed early when we started this podcast to not make it a infomercial for rally day or worse yet private equity. Why don't we spend at least a little bit of time talking about some of your fears, Nancy bringing a private equity partner in and Frank, you can probably talk about this maybe more globally and definitely more objectively than I can. But let's, let's put our rightful devil's advocate hat on for just a moment to honor some of the things that we do worry about, super honest about it. Let's look into its eyes. From day one, I talked to you several times about this. My biggest fear was the fear of the unknown. What's going to happen? Where are we going to be ultimately? Everybody knows private equity, you're investing for a period of time, but then where do we go? You made me feel really comfortable that I'm going to have many opportunities and it'll be our choice at the time who we want to be that next investor that's going to even take us to another level and I feel really strongly about that. I think when I talk to others, they tell me, oh the PE, they're going to be all over you on everything and you don't get involved in the operations. You don't want to be involved in the operations. You want to help me build the operation to even be stronger, better that when I go to get the replacement investor for rally day that we're going to be so strong, they don't want to change what we've built and what we've developed and that was my biggest fear in the beginning and isn't good for my younger partners. My younger partners that day we brought it to them, they unanimously voted yes because they did feel the de-risking but the opportunity that they were going to have because I think people also think you're just selling out to private equity. Know you're not, you're taking an investment to have a partner that's going to help you be stronger and better and bigger than you could have been on your own. What I mean, do you know that fear is real? Yeah, it's real and I look at health care as an analog and it's widely known that private equity solve some of the similar issues with their aging workforce and their needs to invest in technology but there's a downside to that and so far as incentives that might be different for a private equity firm different than say partners or employees or clients or the community and all I think about in this context is how do I as a private equity partner show up in a most healthy way first for Nancy as a leader because she is the most important person to us in this relationship. If Nancy is strong and we're supporting her the company is going to flourish so that's my first duty of care but of course it's healthy for me to hear the skepticism because I want to prove it wrong you know I want to I want to show that we can be a force of goodness in your sector and we take that really seriously Frank you've been around this consolidation for a long time I mean what are some of the valid concerns that are raised about private equity being so rapidly and increasing influence on this industry. I mean I think I think people have to realize the profession has been very static for a very long time right and it's been a partnership led model and it's been like that forever other than maybe some of the few deals that got done really early with H&R block and yeah Cbiz do you know do a a public offering but I think there's a lot of firms just have that fear of the unknown what's it going to be like and they don't you know they they don't want to lose control so I think controls a big issue to them and how they govern and all of a sudden now is Nancy alluded to they have the report to somebody from private equity and maybe there's going to be decisions they're going to be asked to make that they're not comfortable with so I think that's probably one of the biggest reasons I think the second thing that I hear a lot of is the changing culture you know what's the culture going to be like our people are going to see things very differently PE's going to come in and they're going to cut people they're going to cut costs and they're going to you know they're going to force us to get rid of clients that maybe we've been serving for 25 years because you know it's poor profitability at the client level and you know the way I respond is is listen I understand all those concerns and I'd have the same concerns if I was running my own firm today but you have to remember too that PE's making a big investment in the firm and they don't want to change the culture because they realize how important culture is to the success of a company into a firm they may force you to make certain decisions that are probably smart decisions about maybe calling unprofitable work I mean that's okay you know and taking a harder look at people you know which is okay as well and those are things that you know we did quite a bit at you know when I was CEO you know we looked at our people all the time we looked at our client profitability so I think those are things that a well-run CPA firm attacks every year has to just be part of your DNA and you know but but I do think that there's those concerns amongst the accounting firms because it's just not the way we've done business all these years you know so it's it's hard to it's hard to change but you know you are seeing a lot of firms that I recall two or three years ago that when I spoke to them they would say oh no we'll never do a private equity deal and now it's two or three years later and many of them have done private equity because I do believe they're they're seeing what's around them and one area we didn't talk about is competition and you know when you have competitors that have access to capital especially in your market that's going to have you know impact on you know on your market and on your business so I do think firms are starting to think about that a little bit more than maybe three years ago and where many firms might have thought that this was a really short phenomenon that was happening but we now see it's going to have a lot of legs and there's going to be you know there's going to be a lot more deals I think that are going to be done yeah sorry go ahead Nancy I didn't mean to interrupt. I want to say though if private equity is asking you to cut costs or cut clients that are profitable if you don't think it's the right answer you you know you have a way to come back and justify when it's not and if you're not making those decisions are you really the right leader I don't think people should look at it the private equity is making you do that you're making the right business decision that you should have made anyway but it's not the private equity is making you do that I think when you challenge me and ask me a question I feel like I'm developing to be a stronger leader I don't think of it as you've never asked me to do something that I didn't feel was the right business decision in the end yeah if you recall when we were forming our partnership Nancy I shared with you fairly intimately about what can happen if the private equity firm is pushing too hard and it's kind of this push pull concept that you and I talked about and my request to you was we would like for you to be pulling us 70 to 80% of time and and let me push that 20% of the time that maybe you welcome but it's maybe just a little uncomfortable talk to us a little bit about that balance and how as a leader you're reconciling having this new partner at the table but still maintaining that autonomy of spirit that has gotten you where you are today and will take you much further than I ever could well it's a great balance and I love it that you opened that concept up because if I'm not pulling and taking advantage of all of you that were business owners ran your own business I can tell you a problem and take advantage of getting that advice I mean I'd be crazy not to if I'm not taking advantage of the research for prospects that we could go after I mean you have so much more knowledge and resources that I should be tapping into so I feel if if a CEO isn't wanting that push pull with somebody else then maybe they aren't ready they haven't done their own self discovery that they're ready to want to be challenged a little more because we're not going to get to the goals we want to attain if we don't do things differently and I think it's a healthy push pull relationship yeah partnerships can be stifling you know if you have 12 cozy eos it's just tough to to get anything done and I do think that we can be a nice means of disrupting some of that and providing you as a leader with even more autonomy and more strength to go to bigger places than if if we weren't around so I certainly look forward to the challenge Frank give us uh why don't you take us home as the as a legend of this industry I mean and I say that kind of repeatedly but I really mean it I mean cone resonant is it's a legendary firm and you were CEO and the day that you joined us as executive chair was one of the biggest days of the year for us as a firm at the rally day level and certainly for Nancy tell us why we're going to succeed and maybe just give us a chance to do a little infomercial here on what we're building together yeah it's a great question listen I'm really first of all I'm very excited about our profession and you know having been in my entire life um I think it's a great profession and I've been very fortunate to be able to be a part of it and and and really understand you know the changes that have taken place in our profession and hopefully growing with those changes and I think a firm the size of insuro at 25 million with the ability to really bring in some strategic M&A partners this is just a really exciting opportunity I mean it's fun growing firms you know it's fun taking a firm from this level to that level and I know your ambition is more than a hundred million dollars in the next three to five years but I'm you know I'm trying to set the stage that we can we can get there you know there's a lot of firms out there that we're going to love to be part of this platform and we're going to continue to look at both you know firms that are accounting firms and non-accounting firms firms that can help us grow you know in other areas you know one of the big service lines that probably entices me the most you know within insuro is their is their outsourcing group you know they have a very strategic outsourcing group and I don't have to tell you that that market is just mushrooming I mean it's it is a huge market not only for accounting firms but for a lot of just cash firms firms that just only tailor to doing the books and records of small firms media and size firm along with FPNA I mean there's some some really great firms out there so I think there's a real opportunity for us to look at that market as well and start to tuck in some of these really really good firms and their technology has gotten so strong and that cash market that is really going to be exciting for us to grow and I think that could be a really fast internal growth area along with M&A so I'm I'm just excited there's a lot of things we can do together there's a lot of services that we're going to be able to add I think we have the partner depth and the staff depth that's going to allow us to kind of take it to the next step and we also have the partnership you know with with Rally Day that's going to make a huge difference in how we go to market and give us give us the capital and confidence to kind of get to that next step. Perfect if any of you listening to the podcast or from the accounting services space and just want a kindred spirit to talk to just you can email me through the Rally Day website that's very easy and I will connect you with Frank and Nancy these are these are stewards of of your industry and even if it's not a transaction or anything that's necessarily in it for them I know both of these leaders love helping others and would enjoy a conversation about how we can collectively elevate this industry together so please reach out at will we'd love to be part of your lives Nancy it goes without saying but thank you from the bottom of the heart at Rally Day for entrusting us with your dreams and vision we take that very seriously as you know thanks for participating in this podcast Frank totally excited to work with you to support Nancy I feel like we're kind of the one to punch you the good-looking legend of the industry and I'm the guy with some capital that can help from time to time right I think between the two of us we're going to be able to really help Nancy like see even her biggest aspirations so thank you for being part of our life we're really it's my honor and I'm really happy and I'm really looking forward to our journey okay guys thanks so much and thank you for your time today bye now bye [BLANK_AUDIO]