Schenck Business Solutions

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Schenck Business Solutions

P.O. Box 1739
200 East Washington Street
Appleton, Wisconsin 54912-1739
U.S.A.
Telephone: (920) 731-8111
Toll Free: (800) 236-2246
Fax: (920) 731-8037
Web site: http://www.schencksolutions.com

Private Company
Incorporated: 1972
Employees: 500
Sales: $50 million (2006 est.)
NAIC: 541611 Administrative Management and General Management Consulting Services

Schenck Business Solutions is a Wisconsin-based accounting and business consulting firm that counts itself among the top 35 such regional firms in the United States and among the top six independent accounting firms in the Midwest, based on its size and revenues. The company is comprised of nine branch offices, with headquarters in Appleton, Wisconsin, and a combined work force of around 500. Schenck performs accounting and auditing services, payroll management, investment management, retirement plan administration, and estate and trust planning, as well as assistance with mergers and acquisitions, valuations and litigation, and tax planning and compliance. Specialized divisions offer technology consulting and services for the health care industry. The company also offers industry-specific services in the fields of government and nonprofit administration, manufacturing, real estate and construction, and transportation.

LAYING THE FOUNDATION: 1930–64

Schenck Business Solutions began as a sole proprietorship in 1930. Willard J. Schenck opened an accounting practice in Appleton, Wisconsin, with only a desk, an adding machine, a used typewriter, and a filing cabinet, in an office for which he paid $20 per month in rent. The 1930s were challenging years in the American economy, but there was an expanding market for professional accounting services, as business owners confronted new financial regulations and requirements in the wake of the stock market crash of 1929. Independent practitioners in Wisconsin typically served the accounting needs of small business owners and farmers, as well as small-town school and government interests. Due to industry restrictions on advertising and promotion, accountants built up their practices through referrals, word-of-mouth, and networking within their communities.

Schenck President William D. Goodman would recall, in On Balance magazine, that the world of accounting looked very different during those years: “We were not allowed to market, clients rarely changed accountants, competition didn’t exist as we know it today, and technology issues were different.” An accountant’s practice size—and income—was limited by the number of clients one accountant could serve effectively. Sole proprietors frequently turned to one another to manage the ebb and flow of client demand and to increase their client base. These working arrangements sometimes turned into formal partnerships, as was the case when Vincent Derscheid, Quentin Kuenzli, and Don Sturtevant joined Willard Schenck’s firm in 1964.

GROWING A COMPANY: 1972–2000

In 1972 the firm expanded again and was incorporated as Schenck, Derscheid, Kuenzli, Sturtevant & Johnson, S.C. The next year, Vincent Derscheid was named president. In 1976, a dozen years after Schenck first took on partners, the company undertook its first merger, which resulted in the opening of an office in Fond du Lac. A year later, another of the original partners, Don Sturtevant, became president. The 1970s were years of rapid growth and change in the industry, as well as in the Schenck firm. With the lifting of industry restrictions on advertising and promotion during the decade, accounting firms began to recruit clients through the media. This new era of competition allowed clients to compare the services offered by a variety of accounting firms, and Schenck & Associates decided that the way to attract a diverse clientele was to provide a wider variety of specialized services with expertise tailored to meet specific industry needs. This made mergers and acquisitions an attractive growth strategy. By the end of the 1970s, Schenck & Associates had acquired a third office, in Sheboygan, and the company had begun to zero in on several areas of specialization—including health care, technology, and human resources—for which there would be growing client demand.

Computer technology had been used in accounting, bookkeeping, and data processing since the 1960s, but the age of user-friendly, point-and-click computer technology was still years away. During the 1970s, accounting firms were increasingly called upon to be intermediaries for their clients, helping them generate and use computerized financial data to improve management and problem-solving. Schenck & Associates responded by separating its tax services and information technology services in 1974 and investing in both areas to drive company growth.

In 1980, before the era of desktop computers changed the world of business and office work, the company was helping clients identify, acquire, and, if necessary, learn to use computer technology in their own businesses, as well as writing programs tailored to customer needs. No prepackaged software suites were yet available to computerize office tasks. Hardware platforms were not yet standardized, either. Schenck’s dual focus on accounting and technology gave their clients access not only to expertise in accounting practices and industry-specific financial reporting needs, but to people knowledgeable in evaluating, purchasing, operating, and troubleshooting systems that would meet other business needs as well.

Throughout the 1980s, Schenck & Associates continued to acquire or merge with companies whose expertise in particular industry segments complemented the accounting and financial services expertise of the growing CPA firm. In 1983, Jeffry D. Knezel became president. Nearly ten years after the company was incorporated, and almost two decades after it was founded, a fourth office opened, in Green Bay.

In the mid-1980s, special attention was also paid to developing expertise in the emerging fields of personal financial planning and medical and healthcare practice billing and business building. The company’s acquisition of Wealth Management in 1986 did not build much business right away, but when asset management services were offered in 1992, client demand for personal financial planning rose significantly. In 1987, the company took another step toward both specializing and diversifying with the merger of Gaardner-Miller & Associates, Ltd., a specialist in business services to healthcare practices. During this fast-paced decade of business growth, an office in Stevens Point was opened, the fifth business location for the company.

COMPANY PERSPECTIVES

High quality and timely client service is the purpose of Schenck Business Solutions. The most talented, best-trained people will deliver complete and innovative service. Mutual respect and integrity will exist between clients and Schenck personnel, enabling clients to exceed their financial goals and objectives.

During the first half of the 1990s, Schenck & Associates focused on strengthening its core business services and developing areas of expertise, while the second half of the decade saw rapid growth through mergers and acquisitions. The Stevens Point office, which had been added through a merger in 1988, was sold in 1994 to allow the company to focus on its core markets elsewhere. The same year, the company’s technology focus led to Schenck becoming a reseller of computer hardware, software, and maintenance services; clients who relied on Schenck for traditional accounting services also trusted the firm to help them enter the computer age. Small-business clients looked to the company for guidance in buying and using accounting software and hardware, while government contracts called for assistance in with data storage, document imaging, and the exchange and retrieval of digital documents. For Portage County, Wisconsin, Schenck technology consultants designed a document storage and retrieval system that digitized “seven basements full of paper,” as reported in Accounting Today in 1997. The solution was tailored to the needs of the county, and at a price that cost three to five times less than proposals made by other technology service providers. This led to contracts with more county governments for similar systems.

In 1997 Kermit L. Ellefson was named company president, and between 1997 and 1999, five new offices were opened through merger or acquisition: two in Milwaukee, and one each in West Bend, Oshkosh, and Manitowoc. In addition, a new Green Bay office was created with a dual merger and the inclusion of the existing Green Bay staff. In 1997, there were four affiliates contributing to the company’s growth: Wealth Management Inc., which brought in $815,000 in fees the previous year; Strategies & Solutions Inc., the computer sales and support arm of the company; and two fledgling affiliates, Schenck Retirement Plan Administration to assist companies in designing pension and other retirement compensation plans, and Schenck Finance Group, which provided valuation services and other assistance in conducting mergers and acquisitions.

Schenck & Associates was not the only accounting and business services firm growing through mergers and acquisitions during the 1990s. In April 2000, the Practical Accountant reported that approximately half of the country’s top companies in the industry had enjoyed acquisition-driven, double-digit revenue increases during the previous year. Schenck & Associates’ 29 percent growth was attributed to mergers, as well as to its ongoing strategy of developing expertise in specialty niches, to serve a diverse client base. In Practical Accountant, Schenck President Ellefson explained why he thought Schenck had been so successful in the competitive merger market, noting, “When other firms looked at a firm to merge with, most of them had not developed nearly as many specialties as we had. So we were attractive to them.”

STRATEGY FOR THE FUTURE: 2000 AND BEYOND

In addition to developing expertise in a variety of industry niches, and selecting acquisitions and mergers for strategic and geographic growth, Schenck & Associates solidified its focus on two specialty areas—technology and healthcare practice management—at the start of the 21st century. The 2000 acquisition of Business Data Systems Inc. brought the Schenck Technology Solutions division to Milwaukee. The next year, the company merged with the Milwaukee-area medical billing services firm, R. F. Koehne & Associates, to enhance its healthcare services division, Schenck Health Services Solutions. As 2001 came to a close, the company changed its name to Schenck Business Services, which more accurately represented the scope of services offered to the business community. From its original focus on accounting and tax services, Schenck had steadily created a company in which, by 2001, up to 40 percent of its annual revenue came from nonaccounting business services.

KEY DATES

1930:: Willard J. Schenck opens an accounting practice in Appleton, Wisconsin.
1964:: Schenck adds three partners to the practice.
1972:: The company is incorporated under the name Schenck, Derscheid, Kuenzli, Sturtevant & Johnson, S.C.
1976:: The firm’s first merger creates an office in Fond du Lac, Wisconsin.
1983:: The Green Bay office opens.
1987:: A healthcare division is created through a merger with Gaardner-Miller & Associates Ltd.
1999:: Through acquisitions and mergers, the Manitowoc, Milwaukee/Fox Point, and Oshkosh offices open, and the Green Bay office expands.
2002:: Schenck & Associates becomes Schenck Business Solutions.
2003:: William D. Goodman becomes company president.
2006:: Schenck Business Solutions is named Best Accounting Firm of Wisconsin by Corporate Report Wisconsin.

In 2001 Schenck opened offices in Madison and Stevens Point—the latter of which marked the company’s return to a market it left in 1994. The next year, a refocus on its core markets led the company to close the new Madison office and combine two Milwaukee offices at one location. With these moves, Schenck Business Solutions entered a period of growing revenue through its existing offices, rather than through merger and acquisition activity.

In 2003 William D. Goodman, formerly a managing partner at KPMG, was recruited to be the company’s president. This came at a time when regional accounting firms were responding to a sea-change in the corporate world brought on by the Sarbanes-Oxley Act of 2002. This legislation was passed in the wake of the collapse of Enron and the implication of Chicago-based accounting firm giant Arthur Andersen LLP in the scandal. The Sarbanes-Oxley Act placed restrictions on services that the “Big Four” accounting firms could provide, which opened the door to midsized regional firms to offer services to larger clients that the larger providers were barred by law from providing. In 2004, Schenck Business Solutions began working with six public companies, helping them comply with new regulations imposed by the Sarbanes-Oxley Act. Company president Goodman anticipated that this work would increase tenfold by mid-decade.

When Schenck Business Solutions marked its 75th anniversary as a firm in 2005, Goodman noted that the company’s growth and development strategies, including mergers, consolidations, and building niche expertise, are all driven by the growth needs of their clients. In On Balance magazine, he noted, “As our clients grew, they demanded a larger breadth of services, more resources, a larger presence in their industry. We are first and foremost a CPA firm, but our name helps prospective clients identify us as a firm that provides other consultative services.”

In a 2006 company profile in Fox Cities Business, Goodman also pointed out that one of Schenck’s strengths is in knowing how to match its internal expertise with the core expertise of other companies. For example, once the software-writing industry began developing full-featured programs for accounting and business management, the company chose to focus its technology expertise on customizing this software for specific client needs, rather than on writing proprietary software programs. In Fox Cities Business he explained, “Our clients want us involved because we understand their business, but others are better at the web and technology, so we try to maximize everybody’s expertise.”

Using standard accounting or business management software, from entry-level programs such as Intuit’s QuickBooks and Peachtree by Sage, to Sage’s MAS 200 and MAS 500 programs for 500 or 1,000 employees or more, also enhances Schenck’s emphasis on client education, because these programs offer comprehensive documentation and online user groups that provide many support options for clients who want to increase their own in-house expertise with a computerized accounting system. Shareholder Kara Blair, who joined the company in 1973 and became its first female shareholder in 1988, points out in the Fox Cities Business article that the Schenck “philosophy has always been we will do as much or as little as the client wants us to do. We train the client to use the software so that when we get the data, it makes sense. We are more in a training capacity and work with the client in giving us a good product to work with.”

In 2006 Schenck Business Solutions joined AGN International, Ltd., a global association of independent CPA, accounting, and consulting firms. The company became the 53rd North American member firm, as well as its second largest. Schenck president Goodman cited the association’s focus on technical training and industry niche expertise, and its international resources as factors that made the alliance attractive. Also in 2006, the company was named Wisconsin’s best accounting firm by Corporate Report Wisconsin. In 2007 the Schenck Business Solutions included nine offices in Wisconsin, serving clients throughout the Midwest with both domestic and international business concerns. Its 59 shareholders and more than 480 employees provided a spectrum of business consulting and management services, from accounting and auditing, payroll processing, tax planning and compliance, and investment management, to estate and trust planning, retirement plan administration, and valuation of business and real estate assets. Schenck Business Solutions appeared well-positioned to respond to emerging market conditions in accounting and business management while expanding its clientele in public and private business as well as in the government and nonprofit sectors.

Pamela Willwerth Aue