IVCA Q&A: BDO Seidman LLP Partner Stephen R. Ferrara

IVCA Q&A: BDO Seidman LLP Partner Stephen R. Ferrara

May 19, 2009

CHICAGO - “ BDO Seidman LLP partner and regional business line leader Stephen R. Ferrara has seen many changes in the industry during his comprehensive experience as an industry leader.

The IVCA recently talked to Ferrara as he pondered a variety of current issues regarding BDO Seidman, the general economic climate and some variations between the not-for-profit and for-profit business sectors.

IVCA: BDO Seidman is a multi-service accounting- and consultant-based company. What type of services become most important to your clients during these economically challenged times?
Stephen Ferrara: I'm on the assurance services side, which basically means audits and attesting to financial statements. What our clients need at this point is for somebody to come in and talk to them on how to improve the efficiency and profitability of their business.

We help them as they're trying to renegotiate with their lenders through the downturn. Looking forward, we help them by identifying potential issues that could become problems so they can address them proactively.

IVCA: What general style of communication - “ developed over the evolution of the company - “ do clients best respond to on a one-to-one basis?
SF: Business is always about relationships. I've been in this business for almost 30 years. One of my constant challenges - “ having to do with younger workers who have grown up in a technological age - “ is emphasizing face-to-face communication with clients.

With e-mail, for example, it becomes a game of ping pong with issues just bouncing back and forth. Even with the current forms of electronic communication, at a minimum there should be at least a face-to-face meeting with clients every quarter. It's simply easier to identify opportunities and challenges they are experiencing that way.

IVCA: In the various categories of industry experience that BDO Seidman has experienced, what type has been the most expansive in the last 10 years? Why?
SF: That's a tough one. Niche markets that serve a specific need have experienced nice growth.

Health care has grown exponentially as more of the population ages as well as technology with the growth of the last 20 years instead of just 10. We've also seen growth with any service-focused businesses that have emerged as the country shifted from manufacturing to service.

IVCA: When dealing with a technology-based environment where common procedures and businesses can change rapidly, how do you advise clients that work within these shifting and changing conditions?
SF: They have to be thinking about the life of a technology. Can it become obsolete?

They need to be always anticipating the next step in the evolution.  For example, I have a client that distributes CDs, DVDs, etc. As we move from the stores where people buy those items to online where people buy them now, that company has to deal with this major technological challenge.

IVCA: In the various industry categories you service, it's interesting that not-for-profit groups are a significant inclusion. What does BDO Seidman learn from for-profit companies that it can teach not-for-profit firms and vice versa?
SF: We have a very strong not-for-profit practice. We acquired a firm years ago in Washington, D.C. that developed a great reputation in the not-for-profit arena. As a result, we developed a critical mass to develop those type of businesses across the country (centered especially here in Chicago).

I sit on the board at a nature museum in Chicago. In my dealings with the employees at that museum, my personal experience is that sometimes those folks who work at a not-for-profit firm don't look at themselves as part of a business.

You know what? You are running a business that depends on donors. We have to develop efficiencies to use the money we receive in an appropriate manner. That is the real challenge at not-for-profits (especially during the downturn).

Conversely, I think the environment in a not-for-profit group is much more conducive to success than for-profit businesses just because they tend to be more genteel. They are focused on quality of life and less with - œgrabbing the brass ring-  or personal earnings potential.

The interaction and conduct there is a good lesson for people in for-profit businesses who sometimes lose sight of the human element.

IVCA: What sector within the main wheels of the economy (banking, industry, etc.) most needs to run fluid again if the recovery is going to be sound?
SF: It's interesting you ask that question because I was just at a breakfast meeting with some bankers. I personally think one of the biggest challenges now is that the banks have all this TARP money and they are afraid to put it to work because they don't know what businesses will be around.

They are being much more conservative in lending money. I have clients now that are ready to be acquisitive and their lenders aren't willing to give them the money to help them do the deals. I really think the banks need to open their purse strings and start lending again to help stimulate the economy.

IVCA: What characteristics are different in the BDO Seidman Midwest offices as compared to the other parts of the country? Are there advantages and disadvantages?
SF: My impression in the Midwest is that the highs are not as high and the lows are not as low. We have good Midwestern conservatism in businesspeople here.

Even in Michigan, which is a state I'm responsible for and is probably taking the biggest brunt of this downturn, they are slugging through it. They are holding their own because of Midwestern values. That is a true advantage in this down economy.

IVCA: How does membership in the IVCA expand your reach in the VC community?
SF: When Arthur Andersen folded, there were some opportunities within the accounting community to develop VC and private equity offshoots. BDO Seidman was fortunate in picking up public-company work. We were very focused on making sure we didn't drop the ball on that public sector.

In Chicago, we're a little behind in transactional services business.

In the last year or two, we decided to jump into the fray and really focus on that as a growth area for our firm. We're hoping our membership in the IVCA will help us get it going. We have been auditing some private equity funds and hopefully we can communicate that aspect of the business through our membership as well.

IVCA: Since BDO Seidman is so richly diverse, what area (either in services offered or industries consulted) is primed for growth and/or renewal?
SF: I think our firm is very well positioned as the fifth-largest accounting organization in the world with more than 1,000 offices across the globe.

As the world becomes smaller and the additional globalization of businesses occurs, outside the big four accounting firms there is really no firm with our capabilities on an international level.

Also, our work with public companies is still better than most. We have a strong SEC practice. With the continuing complexity of accounting rules, we're very well positioned to work through those rules and make sure companies apply them properly.