Rick Dennen Breaks The Door on CPA Commercial Growth Strategy

Who is Rick Dennen?

What Target Markets or Niches does Oak Street Funding and First Financial Bank Work With?

Oak Street Funding

Oak Street Funding is the national platform for the bank. The main function of the company is to deal with intangible-based recurring revenue stream asset classes. He began with the insurance industry, and developed actuarial models for every product and carrier combination that exists. This helped predict the future commission stream of an insurance agent. "We started small. We went from $5 million to $10 million to $20 million in loans. We developed in the insurance space." Soon after, the bank bought the company and he expanded into registered investment advisors.

"It comes down to recurring revenue streams, whether it is the audit, tax consulting, or understanding what are some of the dependent variables that would impact both positively and negatively on the consistency and maintenance of that book in the revenue stream."

Inside of this niche at Oak Street, there is another niche of subprime auto finance companies. Oak Street also does backup servicing for niche loan portfolios that exist inside of larger banks. "We act as a backup service or unsecured as securitized assets and portfolios for some niche companies."

First Franchise Capital Corp



First Franchise Capital Corp does quick serve restaurants as well as businesses with very targeted concepts. "We have certain criteria on what we are looking for. We have a portfolio of quick-serve restaurants that go across the United States."

The company also focuses on all traditional commercial bank products including a large real estate portfolio.

What Trends Do You See Developing in the M&A Space For Accounting Firms?

Dennen reflects on the fact that we are heading into a time where there might be a recessionary period. This will result in rising interest rates, increased energy costs, increased inflation. He encourages people to not give up hope.

"There's always going to be jobs and accounting, in the good times, and in the bad."

The trends will move towards steps were people can-

• Balance remote work environments
• Have good compensation
• Maintain a steady job
• Enjoy easier recruitment processes

Who Buys Small to Mid-Size Accounting Firms?

• People who consolidate with others— "They have a vision that says we can aggregate a few firms, and we can share resources, allowing our bottom line to increase."

• Capital chasing deals—"The amount of capital in the markets today is at an all time high. There were record numbers when you look at M&A in some spaces, like insurance and advisory." 

According to  Dennen, buyers look at mid-sized accounting firms and identify it as a recurring revenue stream that is predictable. They have the resources to grow and manage the businesses. 

Advice for an Accounting Firm That is Looking to Grow Through Acquisition

• Management teams need to stay true to their skillsets
• Find out what your core competencies are
• Identify what your strengths and weaknesses are.
• Understand it and accept your abilities and limits.
• Invest in human capital 

"I think human capital is most important within the CPA profession. Having the right human capital, the right management, and team alignment on your strategies is critical."

• Define who you want to be in the future
• Be intentional about who you are targeting
• Create and build a strong network 

"Go to the networking events, be a part of the state CPA societies, be targeted and send letters to say, this is who we are, this is what we are trying to accomplish, and this is how you can contact us."

• Work with brokers

"Good brokers know the markets." 

Tips for Buying and Selling in the M&A Space

• Stick true to what your goals and culture are
• Hire good lawyers that are going to structure the deal
• Avoid getting into a deal frenzy, especially when ownership wants to make the deal. "Not letting an acquirer speak to customers or employees are two big red flags right out of the gate."
• Watch out for unethical sellers

What Do You Look for as a Company When You Are Financing a Deal?

• A solid management team
• A good structure
• Firms who collaborate
• Synergy

What Are The Revenue Size Practices for Loans That You Abide By?

"I don't want a firm that's got $500,000 in revenue with one partner. A company that has $500,000 in a 10 person shop is a safer bet. If one partner leaves, you have nine people that can figure out how to maintain the $500,000 book. We focus on larger, more diverse firms because of the decreased risk."

What Multiples Have You Seen in the Accounting Space?

"I have seen a six to eight, maybe a nine, I suspect those numbers are because of the amount of capital that is in play right now."


Denen says that the multiples are going to increase because aggregators are not leaving. "It is not the largest market in the world, but I think it's a really good market and one that could afford some consolidation. Therefore those multiples will increase over time."

Effect of Covid

"Many opportunities for firms have arisen, causing them to be more profitable. Rates are low, capital is available and if I sell my firm today, my margins will go from 40% to 60% There has never been a time that has been more profitable."

Closing Remarks for CPA Firms and their Commercial Growth Strategy

"You have to find a balance that shows you have consistent consulting revenue at high margins, a good client base, as well as audit and tax on the side. This is a powerful argument to drive good multiples on your transaction."

Visit CPA Marketing Genius to find out more about our services

We provide coaching and Done- for-You Services including web design, SEO and marketing—geared towards helping CPA firm owners grow their practice to new levels.