One way to gauge a company’s growth is to look at its bricks and mortar locations — footprints of its movements in the business world. Another is to track its management team. By both measures, WithumSmith + Brown, an accounting firm that occupies 30,000 square feet at 506 Carnegie Center, has grown dramatically since its humble beginnings in 1974. And now that the company has grown to a global firm on its second generation of leaders, it is looking to radically transform the way it does business as the accounting profession of the near future bears little resemblance to the way it was in the 1970s.
The company’s first headquarters was a Victorian Colonial at 83 North Main Street in Milltown, occupied two years after the original partners had set off from the much larger Haskins & Sells (now Deloitte & Touche) to work on their own. In 1976 the firm opened its first satellite office at 194 Nassau Street in the heart of downtown Princeton. The downtown location eventually moved to Vaughn Drive and then in 2016 to Carnegie Center on Route 1.
More offices were opened in Pennsylvania, New York City, Massachusetts, Maryland, Colorado, Florida, the Cayman Islands, and four other offices in New Jersey — Morristown, Paramus, Red Bank, and East Brunswick, where its downtown New Brunswick office relocated last year. In all there are now 12 offices, with a staff of nearly 1,000, with more than 500 CPAs.
Just as WithumSmith’s physical footprint has evolved, the management team has made its own successful transformation. Frederick Withum, Leonard Smith, and Ivan Brown, the original founding fathers, are now all retired or semi-retired. (Smith and Brown occasionally come into the office.) The managing partner and CEO is William Hagaman, based in the firm’s East Brunswick office. Tom Suarez, one of the first six employees in the original Milltown location, is now the partner in charge at the Carnegie Center headquarters.
But 43 years later WithumSmith + Brown has grown to a nationally ranked top 30 firm. At this point Withum is one of the largest accounting firms in the state. Various publications rank the firm in the state’s top five by revenue.
Suarez says one of the first big decisions the company made was to open a Princeton office in 1976. He recalls Smith telling him, at the time, that “if you say you’re from Princeton, people are going to know where that is because of the university.” Withum was not the last firm to capitalize on the town of Princeton’s association with the university. A few years later, the Route 1 corridor saw a science and technology boom that brought a whole slew of new clients to Withum’s neighborhood, and the firm expanded to meet the demand.
While rapid growth can be the undoing of some companies, it has been helpful to WS+B. “Being a top firm has made it easier to recruit new talent over the years,” says Suarez. “There are always jobs for good CPAs, and the salaries at Withum are quite good as well.” The firm’s strong growth over the years has also allowed it to recruit “stars” from other firms who bring special expertise in the various business sectors that are extremely important to Withum.
WS+ B is also closely associated with HLB International, an international affiliation of accounting firms that helps U.S.-based clients who need to do business overseas from time to time. Suarez pointed out that any of WS+B’s clients might need a firm that understands French or German accounting systems, for example, and it is a lot more expedient to work with HLB than for WS+B to set up a full blown operation in Paris or Berlin. Similarly, WS+B can offer a successful navigation of U.S. accounting systems to overseas companies that need to do business in this country.
But WS+B also understands the importance of being involved in the communities they serve, and many of their professionals generously donate their time and talents to charitable and professional organizations to which they feel committed. WS+B initiated a Withum Week of Caring to encourage the Withum family to give back a small portion of their time to their communities, in lieu of working in the office. The Withum Community Cares Team works to connect the 1,000 staffers with a variety of non-profits, including the Salvation Army, Habitat for Humanity, the Trenton Rescue Mission, and many others. In addition, many of Withum’s senior executives sit on the boards of some of these non-profits.
Suarez grew up in lower Bucks County and has lived in Princeton for the past 20 years. His parents owned a small business. Suarez says he got into accounting after a guidance counselor recognized his talent for math and steered him in that direction. It also happened that the accountant of the family business was a close friend of his parents, so Suarez saw him a lot growing up. “I just always found him to be a pretty interesting guy,” Suarez says. He studied accounting at Rider, and Withum was his first job after graduation.
Despite the dull reputation of the accounting profession, Suarez says it turned out to be an interesting job. “I’m dealing with business owners on a regular basis, and I’m helping them solve their problems and helping them through their issues,” he says. “For me that’s exciting because it’s something new and different every single day. There’s always a new challenge.”
Smith grew up in Franklin Lakes and studied accounting at Penn State, although he now spends most of his time in Florida. Smith said that he “always enjoyed working with numbers, accounting is a great profession, and would do it all over again.”
Withum’s client base represents a broad spectrum of industries, and it ranges in size from individuals to small, entrepreneurial startups to billion-dollar publicly held companies. Withum provides a long list of services, including advisory services, assurance and accounting services, forensic and valuation services, private client services, Withum Insurance Advisors and Withum Wealth Management, and management consulting. The firm serves more than a dozen major industries including automotive accounting, construction, consumer products, financial services, government, healthcare, insurance, life sciences, manufacturing and distribution, and technology services. This kind of broad industry diversification has been one of the keys to WS+B’s success.
Suarez and Smith agreed that the accounting firm is so diversified that the number one business segment actually changes from time to time, maybe even year to year. For example, in 2017 financial services was the number one business segment, but at that it only represents 12 percent of Withum’s overall business at this time. Financial services firms were a very small part of the firm’s business as recently as five years ago.
The accounting profession has changed dramatically since Withum’s founding. The job of an accountant in the near future would be almost unrecognizable to that of an accountant of 1973. Pencil and paper audits disappeared during the 1990s as computerized records took over. And soon, computers with artificial intelligence will take over many of the functions currently done by humans.
The age of artificial intelligence increasingly means that the accounting profession and WS+B face new challenges in the coming years. “Accounting will be affected more by technology in the next two years than in the past 40 years combined,” said Suarez. So what will be the nature and substance of that change?
“Computers will actually be doing some of the audit procedures,” Suarez says. “We’ll be feeding information to the computers and they’ll do the testing. We’ll just program them to produce the outcomes that we’re looking for, and then we’ll have to be able to analyze that information. The vernacular is going to be ‘an audit in a box’ and the box is a computer.” The accountant’s job will shift to taking the information produced by the audit in a box and making it useful to clients — in other words, the accountant will become more like a consultant.
WS+B’s current firm-wide mix of revenue is about 35 percent for traditional auditing services, 35 percent for tax related services, and the balance for consulting activities. But all that is about to change. In the last couple of years, WS+B has started a major push into ramping up consulting activity. Just in the past 18 months WS+B has acquired two consulting firms that will be essential to the firm’s growth going forward.
In May Withum acquired a Rockville, Maryland-based firm called Portal Solutions. Portal Solutions creates digital workplace solutions for organizations to share and connect information. It offers advisory and technical services, including website solutions and the implementation of cloud services. Portal Solutions actively serves professional services firms, including accounting, law and government. Artificial intelligence has also significantly added to WS+B’s need to have more in-house people who can help with the IT work necessary to keep up with the dramatic changes in IT and its effect on the accounting profession.
Suarez points out that the accounting profession will be a whole new ballgame in coming years. Rapid acceleration of the use of AI will mean fewer auditors and the need for more consultants.
All of this also changes the nature of the recruiting and training process in the accounting profession. New employees will have to be brought on who have never done, and will never do, the detailed, time-consuming work of an auditor. It means that these new employees will have to achieve an understanding of the meaning and purpose of the various data, without ever being the one who created the data to begin with. So much for grass roots, ground up experience in the accounting business. But this challenge goes a long way toward explaining WS+B’s recent push more into the consulting area.
“I think accounting is a great profession and will continue to be a great profession in the future,” Suarez says. “But I think it will look a little bit different in the future.”
WithumSmith+Brown, 506 Carnegie Center, Fourth Floor, Princeton 08540. 609-520-1188. Tom Suarez, partner. www.withum.com.