Introducing Wisconsin One
Following the recent announcement that Wisconsin-based CPA firm Schenck team members will be joining CLA, Denny Schleper has a short Q&A with Schenck CEO Dan Young.
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Following the recent announcement that Wisconsin-based CPA firm Schenck team members will be joining CLA, Denny Schleper has a short Q&A with Schenck CEO Dan Young.
[00:00:02]
Narrator: Welcome to “Own the Promise,” a CLA podcast created to share what guides every decision we make and every relationship we cultivate.
[00:00:15]
Denny: Hello, CLA family. This is Denny coming to you once again in the month of December, getting towards the end of a very, very successful year of 2018. Thank you for everyone within the CLA family for really transforming CLA from what we thought was that very good firm to really that great firm, and having truly a great year thanks to everyone’s efforts within the family. Obviously, as we look into 2019, we’re gonna be looking to say, “How can we become an even greater firm?”
And as part of that today, we have some exciting news that was announced last week, and I know everyone within the CLA family is aware that the Schenck CPA firm based out of Wisconsin and with multiple locations in Wisconsin will be joining the CLA family as of January 1st. Today I have with me Dan Young, who’s the CEO of Schenck. Dan and I first met each other back in January of this year, so we’ve worked together for about a year, trying to make sure that bringing these two fine organizations together made sense for not only all of the people, but also the clients that we all serve.
So, Dan, welcome to the CLA family, and I’d love for you just to introduce yourself a little bit.
[00:01:42]
Dan: Sure. Hi, Denny. Happy holidays to you, first of all. Yeah, I’ve been with Schenck for about 35, 38 years, something like that. Grew up in Appleton. Have a lovely wife by the name of Karen. We’ve been married a long time, and that’s another story we can share sometime. But I practiced in the area of—before I took this role as CEO—I practiced in the insurance side of things. I was partner in charge of the Green Bay office and was just recently elected, January, to the role of CEO.
And I kinda laugh now that—I tell the folks that this is the shortest tenured CEO president in the history of Schenck. I’ll last one year.
Denny: [laughs] Yes. Let’s go back, actually, Dan, to January of this year and as we carry through ’18, I know that a lot of things we had to work through, and whatever we didn’t see eye-to-eye, you eventually convinced me and I caved, right? That’s what happened through the…
[00:02:41]
Dan: [laughs] I didn’t know that you realized that, but I’m glad you do.
[00:02:48]
Denny: But we obviously made it through that process. Just share with the CLA family a little bit what, really, you’ve gone through in the last year, somewhat emotionally, probably, but also just some of the major milestones that have brought us to where we are today.
[00:03:05]
Dan: Well, when we first met, it was at the major firms group, I believe, back in January. And I think two days before I met with you, I had a crown, a dental crown, put in. And then that didn’t work, and then a day before I met you, I had a root canal, so you met me at my worst. I was in a lot of pain the first day, and just trying to survive that. But once we got beyond that, a couple things that we had to do here when I first took the role as president of Schenck.
[00:03:35]
We wanted to get our deferred comp in line, and we did do that. We acquired a firm in July 1 called Winter, Kloman, Moter, & Repp. It’s a firm in Milwaukee that had about $9 million of revenue, so we closed on that July 1. I believe we started our actual, serious discussions probably sometime in May. So from May until now, we’ve been working diligently together in terms of viewpoints and structure and things like that. And I have to say that’s been a pleasure working with you and the team. Everyone we met has been very, very professional.
[00:04:11]
Denny: And the same on our end, Dan. It’s been an interesting process. For those in the CLA family that are not aware, this would be the largest true acquisition that we’ve ever accomplished, having a firm join us. Roughly 90-some million dollars of revenue represented in the Schenck firm, all joining us into 2019. We also, through this process, have decided to create what we have today is six regions within CLA—we’ve decided to create a seventh region, and that is to take the entire state of Wisconsin,
so that would include our offices on the west side of Wisconsin all the way through to Milwaukee to really be part of one region and referring to, really, One Wisconsin as a seventh region. And Dan will be heading up as the chief practice officer that region as well. Dan, as we look to grow this region, tell us a little bit maybe about some of the specialties of Schenck from an industry and a service perspective that we’ll be folding together and hopefully expanding.
[00:05:25]
Dan: Yeah, so our traditional service lines are, you know, insurance, accounting, and tax. Then we also have specialty services—SALT, we have cost segregation. We do payroll. We have wealth advisory services, investment arms. Missing a few, but on the industry side, we have a number of the same industries you have, from manufacturing and distribution, to hospitality and retail, to government in the public sector, regulated sector, dealerships, [indistinct] processing. So we have a number of similarities, and I think you actually have a technology side of things as well, I believe, as well. So…
[00:06:04]
Denny: Yeah, that’s correct. You know, Dan, as you went through this process and made this decision, obviously the owners of Schenck had to come a decision and a vote of, do they want to move forward with this, and does it really make sense that this combination can be much, much more than one-plus-one for our people and our clients and so forth? Could you tell us a little bit, maybe, as to how that overall vote ended up? And along with the actual vote, could you share with us what you think were the overriding reasons that ultimately the Schenck partner group decided to move forward?
[00:06:44]
Dan: Sure. Let’s start with the reasons why first. When you called and said, “Hey, Dan, are you interested in talking to us?”, and… we’re always interested in talking. And I will admit that initially, it was like, “Well, we’re doing fine. We can grow and be very successful as an independent firm at Schenck.” But as we got to know you a little better and your culture, it was really amazing a lot of the similarities we had within the firms,
from the culture to client base to the Schenck promise—the Schenck WIGs, we call them— wildly important goals to the PW promise. The service integration model—you guys go to market with industry teams. So do we. The client base was very, very similar. We do middle-market, privately held companies. You guys do the same work. Everything kind of lined up.
And the most important thing, I think, was as we got to know the management team of CLA, you know, I trust them. We trust each other, I think. And that’s very important. Our roots are similar in both firms. We’re a Midwestern firm here. You guys, I know you’re—were all over the country, but at the heart, we have the Midwest, and I guess that’s what attracted us, first of all. And then as we started looking at metrics, those also lined up. Then we started looking at, you know, the deal points, and those lined up.
[00:08:13]
And so, that took us from May to probably end of July to get to what I just described. We had our first meeting as a shareholder group. We were, at that point, up until that point, just talking between boards, or select members of the board. You know, August was the first meeting we had. I remember it was August 10th where we got our shareholders together and we talked to them about the CLA opportunity, the One Wisconsin. And a lot of people were surprised, but we took a straw poll: do you guys want us to continue to have further to have further discussions with CLA or not?
‘Cause we’ve been approached before, and we said no. But this one felt really natural. We took that straw poll, and it was 58 to 4. So we proceeded with further discussions until we got to our November 13th annual shareholder meeting where we actually voted. And we had 100% of the votes cast, and 100% of them were in favor. And I don’t know about your firm, but we don’t get too many 100%ers, so it was a—it was a mandate. [laughs] So very good—it was exciting. So…
[00:09:20]
Dan: Yeah. That’s fantastic, and I think it shows a lot of credibility to the Schenck ownership group, not only to stay together as one firm, just like CLA has always tried to do, but to stay together as really one ownership group as well. So that’s very commendable. When we look about going forward, we talk about the industries and the service lines, but also just some of the geographic figures. If you look at kind of the three-state region of Minnesota, Wisconsin, and then further to the east, Illinois, it’s really gonna be a tremendous amount of volume.
Give us a picture, a little bit, of not only the overall size that Wisconsin region will be as CLA, but maybe just identify for us as well some of those specific locations that you have, so that we become familiar with those as well, Dan.
[00:10:15]
Dan: The Schenck firm was about $90 million in revenue in the state of Wisconsin. And I understand that the CLA Wisconsin revenue was about $66 million, so that’s about $156 million of revenue. Over 1,000 team members will be part of the CLA team in Wisconsin. I think I’m going from memory—correct me, Denny—but I think the revenue in Minnesota is about $174 million. And then in Illinois, it’s just shy of $90 million, or maybe it’s $80 million or something like that. So it’s a significant volume.
[00:10:49]
And we already joked that we were gonna catch Minnesota, so [laughs]… in terms of revenue. Well, the challenge is on. But we have, for as far as locations, we have ten or eleven locations, the Schenck firm did. And they were located in—our offices are located in Green Bay, Appleton, Oshkosh, Fond du Lac, Milwaukee, Oconomowoc, Brookfield. Moving up on the east side of the lake, you’re gonna have Sheboygan and Manitowoc. And then we have an office in Wasau and a couple smaller satellite offices.
Now, we add that, I think, the CLA locations where we double up our—CLA has an office in Oshkosh; so do we. CLA has an office in Sheboygan; so do we. I think you’re in Marshfield and Stevens Point, which is close to our Wasau office. Out west, we have Eau Claire, Rice Lake, Hudson—just going from memory—La Crosse, Tomah—I’m missing a couple—La Crosse. So I think we’re gonna have like 18 different locations within the one-Wisconsin region, so.
[00:11:57]
Denny: And, you know, one of the largest metropolitan areas, obviously, in Wisconsin, being Milwaukee. When we combine those two locations, Dan, am I right that that’s gonna be probably the largest—we’ll go CPA practice, but CPA practice in the Milwaukee area?
[00:12:18]
Dan: Yeah. I don’t know exactly what your revenue is in Milwaukee and Racine. Our revenue is about $20 million. Are you about $25 million?
[00:12:28]
Denny: I think that’s close. I think that’s close to correct.
[00:12:31]
Dan: Yeah, so I think that whole region, southeast Wisconsin, whatever we’re gonna call it, is about $55 million. And then we’re really excited about the fact that you have a location in Madison. And so, and our Oconomowoc office is just right in between those two locations. So we’re gonna be a force in that southern part of the state.
[00:12:53]
Denny: Well, I know everyone is, again, extremely excited about this happening. I hope that this podcast will reach, also, even though it’s still gonna be in December—reaches the wonderful Schenck employees in the group. And to that group, specifically, I know there’s gonna be an integration process, and there’s gonna be an integration process for everyone in Wisconsin as we form this new region and operate it to grow it and fulfill the careers, the inspired careers, for our people as well develop those opportunities for our clients.
I’m hoping it won’t be as painful as Dan’s root canal, but it is something that clearly takes work and effort. For everyone within CLA currently that’s gonna be helping with this transition and getting actively involved in trying to help this be as smooth as possible, as well as all of the Schenck individuals that’ll be going through these transitions, I just want to thank you ahead of time for all of that work and effort. And I do know that long-term, this will create tremendous amount of opportunities for all of us, not only in our communities, but for our careers and for the clients that we serve.
So thank you very, very much on behalf of both Dan and myself. Have a wonderful rest of December.
[00:14:19]
Dan: Happy holidays, everyone.
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Denny is the chief executive officer of CLA. As he goes about his duties related to the oversight of CLA’s direction, operations, expansion, and strategy, he is also an enthusiastic ambassador for the CLA Promise. He is fully committed to the firm’s position as a professional services firm that delivers integrated wealth advisory, outsourcing, and audit, tax, and consulting capabilities to help our clients succeed professionally and personally.
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