When J.H. Cohn LLC and Reznick Group combined two years ago to form CohnReznick, they formed the 10th largest Accounting, Tax & Advisory firm in the U.S. Recently the reins of the firm's advisory group were passed from Anthony Zecca, who lead the advisory services arm of the firm for more than 30 years, to Keith Denham, CohnReznick's new Managing Principal and National Director of the group. Denham sat down with Consulting to discuss his new role, the continued growth of the firm (including a recent acquisition), and how consumers are driving the need for innovation across industries.
Consulting: Talk a little about the groundwork Anthony Zecca helped lay and how you plan on building on that.
Denham: What Tony did that was absolutely world-class is he grabbed two groups that didn't know each other—from the leadership team down to the most junior consultants—and rallied them around an integrated vision that was what people were marching to when I showed up less than two years later. Huge kudos to the work he did to really get this thing humming at a very early stage. While I don't usually tend to say financial results are the first thing you should look at to measure the health of a consultancy, whereas a lot of mergers and integrations take a financial step backwards to deal with internal distractions and that sort of thing, last year the group grew at 25 percent. So Tony's efforts to get people focused on integration and the marketplace were the real value drivers of the merger, which you not only saw in terms of qualitative aspects but quantitatively.
Consulting: What's the future of CohnReznick's advisory group?
Denham: Our four-year strategy is focused around industry geographic and technical competency. From an industry standpoint, this is a firm at its root is all about real estate. I think you see that in the Audit & Tax side, and you see that in work the consultancy has done historically. We wanted to go out and attract the best talent in the marketplace related to Real Estate, Strategy & Operational and Technology consulting. I think there's a top-down and a bottom-up view way to approach hiring. You can say there are certain hot things in the marketplace that we can hire professionals at the entry- through mid-level for and keep them busy and profitable from Day One. That's a quick way to generate financial success and probably the most common way people go about things. We've taken more of a top-down view from an overall services standpoint. We're building upon the great leaders we have in terms of being able to advise people in the C-Suite. That's a harder way financially to go about things but it's more about maximizing the value you can add to an organization. It's also more sustainable, because those C-Suite relationships will last through whatever technology or trends come and go.
Consulting: What's the firm's current billable headcount? Growth on the horizon?
Denham: We're at just over 300 people. We ended the year at 25 percent growth, we're signing up for financial growth of that this year as well. We're probably looking to add a headcount number a little ahead of the revenue number, mostly because at this point there's more scale of the things we're doing well that are going to allow us not to have to rely on subcontracted SMEs from the outside for big, complex projects. Within two years we will go from a low percentage of our hours executed offshore to at least 10 percent executed within our own facility within two years. That's going to be fantastic especially on the technology side not to have to rely on our offshore partners but to actually build that on our own.
Consulting: What are the clients demanding?
Denham: Clients are sort of in an "innovate or die" mode. Let's take retail as an example. It's evolved from where 10 years ago you could kind of get by without a real online strategy. Even for the Wal-Marts or Staples or companies that do this well it's still a fraction of the revenue that's out there. At this point, we've got a consumer that absolutely expects an integrated omni-channel experience, that there's consistency between what they get in stores and online, what their mobile experience looks like. The amount of technology that retail, which is not a high-margin industry, has to invest to meet these expectations is unprecedented. You can't make a decision as a retailer not to make that investment. You need to provide that experience because the consumer is driving it.
Consulting: How will the recent acquisition of NOI Strategies help CohnReznick's overall strategy?
Denham: We can't be more excited about the integration of that crew. Tama Huang and her team is world-class in their abilities to drive value in the most strategic operational and technology issues that big real estate entities are facing these days. "Real estate companies" aren't simply traditional commercial real estate companies, but really any organization that has large holdings in real estate, that can range from private equity to large financial institutions. In addition it also goes the other way—if you're a manufacturer or retailer or any firm with real estate considerations, the value this team is able to add in not just complex and high-demand commercial real estate entities, but those same leading practices and operational improvements are applicable to almost anybody with a real estate footprint.
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