In a nation where only a third of small businesses last for at least 10 years, 75 years is an improbability. Apple Growth Partners has turned that improbability into a firm with more than 100 accountants, business advisors, and other experts, as well as multiple locations throughout Northeast Ohio.
2018 marks Apple Growth Partners’ 75th year in business, a milestone that’s a testament to the people behind the firm and a commitment to healthy growth both internally and for the firm’s clients. Apple Growth Partners has undergone several changes since 1943 when it was founded by an accounting student named Jay Heinick. Different leaders, service offerings, and company names dot the firm’s timeline, each telling a story of how those events help shaped the company’s future. While Apple Growth Partners has gone through many evolutions, let’s start with the hiring of the man who inspired the firm’s current name.
The Early Days of Apple Growth Partners
Stan Apple joined what was then known as Heinick, Slavin in May of 1963. He was hired right out of college as an entry-level bookkeeper. At that time, there were seven total employees at the firm, including the two partners and a receptionist. None of them could know that this hire would end up as the only accounting job Apple would ever have or that his name would become a big part of the company’s image.
In those days, Heinick, Slavin more closely resembled the old image of accountants wearing green eyeshades and combing through paper documents. Things were much different then, as bookkeepers followed tried-and-true methods that had been around for decades.
“Everything we did was manual,” Apple says. “There were no computers. I think we even had a couple of calculators that weren’t electric. Every time you hit a key, they went ‘cha-CHUNK’ because it was all mechanical. You didn’t see a printout of your total on a screen. It was a total on an adding machine tape.”
Still, the accounting world was starting to change. In 1968, Apple was named as a partner and the firm changed its name to Heinick, Slavin and Company. A year later, Apple became managing partner. Along the way, Apple adopted a new mindset to act as more of an advisor for his clients instead of just being a stereotypical bookkeeper.
Changing the Company Mindset
Under Apple’s direction, the collective attitude of the firm began to shift. Apple and his coworkers began to act as more of an advisor for clients instead of serving as just a standard bookkeeper. This meant playing devil’s advocate with clients and assisting them in making decisions that could dramatically affect their business. Apple made it a point to meet with his clients and develop connections with them to the point where he would meet with clients during his lunch break to provide advice. This came at no charge to his clients, apart from them providing lunch.
Another key element to Apple’s plan was to hire and develop people who could help expand the firm. Two of those new employees were Dave Gaino and Joe Palmer, both of whom joined Heinick, Slavin toward the end of 1979. Gaino was hired as a senior associate, was named partner in 1984, and managing partner in 1996, while Palmer joined as part of the management consulting department and was made partner the next year. Both could see the effect Apple had on the firm and how it could make an impact in the years to come. In fact, in 1985, the firm changed its name to Heinick, Apple & Company.
“Stan was simply a huge personality,” Palmer says. “He was a very demanding individual whose primary goal was client service. There was a mindset of doing good, professional work, doing it right, and going a step beyond to be as active as possible in a community.”
The shift to improving the firm’s level of service and being more visible to clients came at the right time for the firm, as the accounting profession was about the go through a few big changes.
The Shift in the Accounting Market
With the amount of advertising that goes on today, it may come as a surprise that accounting firms weren’t plastered on billboards or peppered throughout commercial breaks. That wasn’t because accounting firms didn’t want to market themselves to prospective clients; it was because the American Institute of Certified Public Accountants (AICPA) strictly prohibited them from doing so.
“You were not allowed to give a business card out to a stranger unless they first asked you what you did,” Gaino says. “Marketing literally was prohibited by law. If someone needed an accounting firm, they had to ask a friend who they knew and would have to call you.”
The CPA advertising ban was in effect from 1922 to 1977. During that time, there was a belief that advertising would make CPAs look less professional or affect impartiality. In 1978, the AICPA changed its Standards of Ethical Conduct to permit CPAs to advertise, giving firms like Heinick, Apple and Company the chance to reach out to prospective clients.
Another major development for Northeast Ohio CPA firms in the late ‘70s and early ‘80s was the decline of the tire industry. While Akron wasn’t as big as Cleveland, Columbus, or other major cities, it was home to several of the big, national CPA firms, known then as the Big Eight, because of the presence of Goodyear and other major tire companies. When some of those tire companies were impacted by globalization and bought out, the big CPA firms changed as well. The impact in the tire industry led some members of the Big Eight to close their local offices and release the clients and partners affiliated with those offices. Those partners would go on to create several regional firms.
“The market opened up,” says Gaino. “Clients became approachable and there was a growth in entrepreneurship. When the tire companies moved out, they spawned dozens if not hundreds of small businesses. Back in 1980, we probably picked up 10 small rubber shops that were made up of scientists, engineers, and entrepreneurs that spawned out of the takeover of the tire companies by foreign owners.”
With employees who could bring in business, Heinick, Apple and Company was ready to expand its departments and build up specialties and expertise in new service areas. Partners like Gaino and Palmer were a start, but it was time to consider acquiring a local firm to expand the extent of Heinick, Apple and Company’s capabilities and expertise.
The First Merger
In the ‘80s, Heinick, Apple, and Company was a strong tax firm, but leadership wanted to find a merger candidate that could bolster their audit and assurance department. Another Akron-based firm, Kausch & Graf, was looking to “merge up” in 1989 and was a perfect marriage in terms of capabilities.
“A friend tipped me off that Kausch had entered into merger conversations with a Cleveland firm,” Gaino says. “I jumped in and asked, ‘why them, why not us?’ They went back to their office and opened up conversations. A few months later, we closed on our first merger.”
The addition of Kausch & Graf bumped up the collective firms’ work staff to around 40 people, roughly double the size of Heinick, Apple and Company a decade earlier. The firm also changed its name to Heinick, Apple, Palmer, Gaino, McCann. While the merger was a great marriage in terms of adding audit experts and key employees, it took some time for both firms to adjust to how the other worked.
“The firm has always been highly-focused on client service and on great client relationships,” says Sue Peirce, a former staff employee at Kausch & Graf who coordinated the move over to the Apple office. “I think that was the biggest difference in culture. At Kausch & Graf, there was high emphasis on technical strength. At Apple, there was still a high emphasis on technical strength, but there was an even greater emphasis on relationships.”
Another challenge was that the combined firm had no systems or operations team in place to make for a smooth transition. This was the first significant merger of regional firms within the Akron market, so it was a learning experience for future acquisitions.
“We hadn’t done any of the work we do today in terms of assessing culture,” Gaino says. “I’m not sure we could even spell ‘culture.’ We just took these two fairly different firms in terms of culture, put them in one building, and set about putting it together.”
Despite the differences between the firms, the merger was a success and added a few key employees to the firms’ staff. That included Peirce, who was promoted to manager in 1992, named a shareholder in 1995.
Uncovering Creative Service Additions
Adding to the audit department wasn’t the only area of focus for growth. During the ‘80s, the firm wrote an accounting software program similar to QuickBooks. The firm also added a technology subsidiary that conducted major ERP implementations, which it eventually had to sell off after the Sarbanes–Oxley Act of 2002 imposed severe restrictions on CPA firms offering this type of non-attest service. At other points in the firm’s history, it had departments for payroll processing and retirement plan administration before selling them off so that it could deepen expertise and expand services in its core departments. The firm was evolving; it was just a matter of identifying successful business opportunities that made sense for their current and potential clients.
One of the first such opportunities was Joe Palmer’s foray into the area of corporate mergers and acquisitions. In Joe’s first such engagement, he created a survey among ambulance companies so they could benchmark themselves against industry peers. This study provided valuable information to these companies and, when the industry began to consolidate, Palmer became the No. 1 go-to guy to negotiate on behalf of the ambulance companies selling to consolidators. Palmer ended up overseeing over $1 billion in transactions! Joe used this early experience as a springboard to expand his expertise and influence into the high-growth area of business valuations and helping companies position themselves for sale.
In order to deepen expertise and specialty areas, in 1993 the firm became a part of the Moore Stephens Network. This arrangement gave the firm access to national and international resources that could benefit clients. The arrangement also allowed the firm to leverage the network’s name, resulting in the company rebranding as Moore Stephens Apple in 1999.
Thanks to these additions and creative investments, the firm grew significantly after the Kausch & Graf merger back in 1989, employing more than 50 staff members. Stan Apple decided to dial his workload back and step down from his managing partner role after 27 years in the position. Dave Gaino was chosen as his replacement in 1996 as Apple shifted to principal of tax and chairman emeritus. Business was good, but the firm was struggling in one key area: recruitment. To expand their reach to new talent, it was time to add a new location.
Expanding into Cuyahoga County
With a strong hold on Akron, it was natural to look to Cleveland as a new place to grow and find new talent. The firm tried to reach out to potential recruits in the Cleveland area to attract them to work in their office, but found that it was difficult to get them to come South to Akron. At the time, there was a perception that Akron was too far from Cleveland for regular commutes, which scared off potential recruits who would rather find an employer in Cuyahoga County.
Instead of opening a whole new branch, it was decided that Moore Stephens Apple should try to acquire an established firm to expand into the Cleveland region and strengthen existing service areas. Gaino knew Jim Gornik, a former coworker of his from Ernst & Young back in the ‘70s, who was partner at a firm based in Westlake, Ohio. This firm, Hillow Gornik, was looking for a long-term growth plan and a merger partner with more infrastructure, so it was a natural match.
“At 20 people, we didn’t have the resources to have an internal accountant preparing our financial statements every month, so we were preparing our own financial statements,” says Gornik, who joined Moore Stephens Apple as a shareholder. “We didn’t have a head of HR, a head of marketing, all of those infrastructure position, and of course Apple did, and it was a good marriage.”
The two firms merged July 1, 1998, bringing the collective strength of Moore Stephens Apple up to around 60 to 70 employees. More importantly, it gave the firm a foothold in Cuyahoga County with the new Westlake Office and this opened up the market for recruiting.
In 2004, the firm found another merger partner in Turner and Nemeth, a small boutique CPA firm in Mayfield Village that specialized in the business valuation and litigation support fields.
“At that time, there was a lot of merger activity going on, so there were several firms that we had been talking with on and off for a couple years,” says Bob Nemeth, former partner at Turner and Nemeth. “Based on culture, fit, and need, this seemed like the best choice.”
The merger helped Moore Stephens Apple fill a void by adding valuation and litigation support as a new department while gaining a new office in Cuyahoga County. Meanwhile, the people coming in from Turner and Nemeth gained a bigger platform from which they could work, and Nemeth was named a principal in the business valuation department.
“We are probably one of the largest firms in Northeast Ohio in the valuation world,” Nemeth says. “A lot of people may have one or two people in their firm who do this kind of work, but it’s pretty rare that you’ll have this many people and this diverse of a practice.”
With the additions of both offices and service areas, Moore Stephens Apple was now poised to serve customers from all over the region. The rate of growth was impressive, but it meant that the firm had to make a few changes to keep up with that progress.
Philosophical Changes, a New Name, and the Birth of the Healthy Growth Checkup©
By 2005, the firm had grown to around 100 employees, including those from its various subsidiaries. It reached a point where the firm need to reevaluate its leadership structure in order to develop internal systems and not have anyone spread across too many areas.
The typical leadership model for a CPA firm was to take a firm’s best producer and make him or her its managing partner. Given that this method would pull that person away from production and into a job he or she may not have been trained to do, it seemed like a flawed approach for a larger firm. Instead, Moore Stephens Apple moved Gaino into more of a chairman role and hired qualified executives to run the internal functions of the firm. The firm hired Mark White, a former CPA turned HR consultant, as its first CEO. Karl Driggs, an MBA, was named COO.
The duo proceeded to put important internal systems in place and develop a strong operations team. The firm began to create special programs for internal development and employee performance reviews. White and Driggs also spearheaded a firm-wide effort to memorialize the firm’s shared values, which is a set of essential tenets that help shape the firm and its employees.
“Probably of all the things we’ve done over my 35 or so years, the most profound thing we’ve done is becoming a values-driven firm,” Gaino says. “It’s really been our guiding force since about that time. It’s what enables us to hold together as a firm, to shape our culture, and make us an attractive firm for recruiting and an attractive candidate to potential merger firms.”
Another major change for the firm was a switch to another name. After an international court case involving the commonality of brand names was settled out of court, accounting firm associations started changing their branding rules. The Moore Stephens network no longer permitted firms to use its name, forcing Moor Stephens Apple to rebrand.
The firm had used partner or alliance names in the past, but now it was time for the company to try something new. After working with a positioning agency to determine a new name, leadership decided that it was best to combine a known name with what the firm does for their clients. When it came to the latter, “healthy growth” was a natural fit.
The firm had stressed the idea of healthy growth ever since Gaino started developing the Healthy Growth Checkup© back in the ‘80s. After an eye-opening experience with a client who was completely unaware of his financial situation, Dave discovered that he had to dig deeper and ask every client the right questions to help them uncover areas of concern or opportunities for growth. Over time, the Healthy Growth Checkup© grew to the point where it included questions involving business functions outside of accounting. The firm found strategic partners that could step in and help if the Checkup ever uncovered an issue that was beyond the firm’s expertise. Thanks to the Healthy Growth Checkup© and Stan Apple’s long-time influence on the growth of the firm, leadership decided to rebrand as Apple Growth Partners, which is still the firm’s name today.
Adding Brott Mardis and Filling GAPs
Just a year after the name change, Apple Growth Partners found an opportunity to acquire another regional firm. Brott Mardis & Company was an Akron-based organization that was looking to merge with a larger firm that could help them take care of their client base.
“I think Apple Growth Partners saw the merger as a strategic opportunity,” says Chuck Mullen, former shareholder at Brott Mardis. “We were a very well-established firm and we were on the selling block. I think Apple saw it as a way to increase its bench strength, because we had some really good technical people at Brott Mardis.”
The two sides began talking in the fall of 2007 and merged Jan. 1, 2008. Mullen came over as a shareholder and became the head of the tax department a year later. One year after that, the Westlake and Mayfield Village offices combined in a new location in Independence, Ohio, giving Apple Growth a pair of offices along Interstate 77.
The infusion of talent from Brott Mardis was a welcome sign for Apple Growth, because a recession was about to affect the country. Like many other businesses in Northeast Ohio, Apple Growth Partners had to make a few tough decisions, including selling off a few of its subsidiaries and right-sizing its workforce to around 70 employees. To make matters worse, the firm was still trying to recover from an 18-month period in the mid-2000s when it had lost three partners, Joe Palmer to retirement and the firm’s heads of tax and audit to various illnesses.
Not only did Apple Growth Partners need to fill those roles, they had to find new people who would be a good fit for the company’s succession plan to provide continuity of management in light of upcoming retirements. The firm also had to deal with the challenges of finding high-quality job candidates out of college thanks to a natural population dip between generations, as well as the fact that it now took five years of college to complete a CPA degree instead of four, which drove some potential students to other degrees. There were only so many good recruits available, and every CPA firm was fighting to hire the right people.
Instead of having to rely solely on recruiting out of college, Apple Growth Partners decided to develop their own leadership candidates. In 2013, the firm created the Growth Acceleration Program (GAP) to fill the gaps. They took six internal candidates and provided them soft skills, management and business development training. The firm’s leaders hoped that the GAP participants could develop into good candidates for the succession plan. In the end, the GAP training was a success for all participants and helped solidify the business’ future leadership group.
The 2020 Plan
Even with the recession and the struggles to find new leadership talent before the GAP program, the firm continued to grow and cultivate new relationships. The firm officially exceeded the $10 million revenue mark in 2012. Apple Growth Partners left the Moore Stephens network a few years later and became an independent member of the BDO Alliance USA to help expand the resources of the firm.
Business was going well, but Apple Growth Partners’ leadership knew that the firm needed to continue to grow after another large regional firm was acquired. The heads of the firm didn’t want to end up being absorbed into a massive national company, so in August 2015 they created the 2020 Plan. The goal was simple, but aggressive: double Apple Growth Partners’ revenue to $20 million by 2020.
“The 2020 Plan has put everyone in our firm on a common map,” Peirce says. “It’s helped us articulate what we were already doing before in a much more disjointed fashion. It’s like finishing a Rubik’s cube; all the pieces were there, but putting together the 2020 Plan allowed us to link those pieces and turn everything in the right place.”
While aggressive, leadership recognized that the firm shouldn’t just grow for growth’s sake. Acquisitions were going to play a major role in the 2020 Plan, but they had to be about who they were acquiring and not how many dollars it would add toward the revenue goal. Within a few years, Apple Growth Partners identified a pair of potential merger candidates.
Acquiring KPFF and Schlabig and Associates
A merger was not part of Bob Neides’ goals back in 2016. At the time, he was a shareholder at KPFF, an established general practice firm in Beachwood, Ohio. Apple Growth Partners was looking to expand further into the Cleveland market and bolster their existing service offerings. A mutual acquaintance reached out to Neides to set up a meeting with Stan Apple and Chuck Mullen. Neides didn’t plan on going, but he agreed to go as a personal favor.
“Quite honestly, I went to the meeting with the idea that we were going to have a nice conversation and that I would tell them that I didn’t have any interest in pursuing anything further, but that it was nice to meet them,” Neides says. “When they told me their story, starting off with a description of their firm, Stan asked me to tell him a little about my firm. I said, ‘You actually just described my firm; the only difference is that you’re about four times the size of our firm.’”
Both firms had similar cultures and approaches to treating clients and staff. Apple and Mullen told Neides about the 2020 Plan and the prospects of building such a sustainable firm intrigued him. Neides went back to his office and the firm decided to pursue the merger. KPFF officially joined Apple Growth Partners January 1, 2017 and continues to operate out of its Beachwood location, giving Apple Growth Partners another location in Cuyahoga County.
Around the same time as the KPFF talks, Apple Growth Partners met with another established regional firm, Schlabig and Associates in Kent, Ohio. Schlabig Partner Bob Fisher had known Mullen through the BDO Alliance and started discussing a merger during managing partner roundtables. Schlabig also had a growth plan in place with a goal that the firm would either reach 30 employees or merge up with a larger firm by 2018.
In addition, the firm was likely going to have a significant number of staff members retire in the next five years, so Apple Growth Partners’ younger staff and technical expertise was appealing. In turn, a merger would provide Apple Growth Partners with a presence in Portage County. Also, Schlabig’s Managing Partner, Tom Hager, specialized in social security optimization, which would give Apple Growth Partners another boutique service offering for its clients. The talks continued over the course of a year until the two firms merged July 1, 2017, with Fisher joining as a shareholder and the managing director of the Kent office and Hager named as a Principal.
“What’s exciting to me about our future is that we can continue to service our clients through a larger company,” Fisher says. “We can continue those relationships and offer additional services. It’s comforting to know that we won’t lose those clients that we’ve had for 20-plus years because we’ve got the infrastructure internally to serve those clients for many years going forward.”
With the two new mergers, Apple Growth Partners has grown to over 100 employees and now boasts roughly $17 million in revenue, which is on pace to surpass the 2020 Plan goal. Leadership suspects that it may try and merge with another regional firm before 2020 if there’s a fit that makes sense for both parties. One key incentive for new firms is that incoming partners and staff members can advance and take a leadership role at Apple Growth Partners. For example, Chuck Mullen came over from Brott Mardis in 2008 and joined the executive committee. In 2016, he took over as chairman, less than a decade after joining Apple Growth Partners.
“I think a lot of managing partners are homegrown, and I was not,” Mullen says. “To this day, I’ve still spent more of my career with another firm. I do think it gives me and the firm a unique advantage in acquiring other firms because I’ve been on the other side of the table.”
The open mindedness to try new solutions and promote based on skill is part of why Apple Growth Partners is growing so fast after 75 years of existence. In that time, Apple Growth Partners has gone from a small shop started by an accounting student to a notable independent CPA firm that combines a small firm’s approach to client service and the resources and technical bench strength of a large firm.
“It’s kind of fun to see how we’ve grown, how we’re now allowed to advertise, how computers have changed what we do,” Apple says. “We used to record history. Now our goal is to help clients determine their future.”
Part of achieving that goal depends on what plans Apple Growth Partners has for its own firm, from short-term campaigns to long-term milestones.
The Future of Apple Growth Partners
For the next three years, the plan is set: reach $20 million by 2020.
“I would say that once we reach our $20 million goal, we’re going to work on controlled growth,” Mullen says. “We want to be able to have a period of sustained, controlled growth and get really comfortable at providing these new lines of services that we offer in addition to being comfortable with our new size. As always, we remain committed to Northeast Ohio and to serving privately-held businesses.”
Identifying good opportunities for healthy growth has always been a staple for the firm, from adopting new service areas to finding people who have a passion to take charge and deliver results for both clients and the company. Each milestone or notch in the timeline has an important place in the firm’s history, but to truly sustain the growth that Apple Growth Partners has had over the decades, its comes down to a philosophy of being open to new ideas and taking advantage of opportunities when you find them.
Over 75 years countless numbers of employees and partners have influenced Apple Growth Partners’ evolution. Thanks to a history of developing talent and open mindedness, the firm is ready for another 75 years of fostering healthy growth.