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Building an accounting powerhouse

Photo courtesy of the Bonadio Group

Thomas Bonadio remembers sitting at his desk one evening in 1994, despondent about the state of his business.

He had just split with partner Frank Insero, who took his personal clients with him to a new CPA firm. Cash was short, partners had gone without pay and Bonadio was running out of options to get them through to the busier period.

Then Bubba entered.

“I had borrowed all I could and was at the point where we wouldn’t be able to pay employees soon,” Bonadio recalls. “So we had this janitor, who goes by Bubba, who we were going to have to let go. So Bubba came into the office and saw me there and said, ‘I hear you’ve got a case of the shorts.’”

Bubba was referring to the company’s short position on cash, Bonadio notes.

“He asked how much we needed, and I told him about $80,000,” Bonadio recalls.

Bubba, an Eastman Kodak Co. retiree, reached into his pocket.

“He pulled out a checkbook, wrote a check for $80,000 and said, ‘I want 6 percent interest. Pay me back when you can,’” Bonadio says. “Then he put the check down, took the trash and left.”

The infusion helped Bonadio, 66, navigate his firm through the difficult period after the split and has since led the Bonadio Group on a steadily upward trajectory. The firm has continued to grow both locally and regionally through a series of mergers and acquisitions of smaller firms. It ranks No. 1 on the Rochester Business Journal list of CPA firms and this year ranked No. 40 on the list of Accounting Today’s 2015 Top 100 Firms nationally.

The firm has close to 700 employees, and Bonadio, CEO and managing partner, has seen revenue grow from close to $2 million in the year of the split to more than $100 million today. As he plots the course for further growth, Bonadio maintains the commitment to the region that led him to start the firm 37 years ago.

The beginning

In the late 1970s, Bonadio had a choice.

As an up-and-coming accountant at the Rochester office of Arthur Andersen LLP, Bonadio knew his only real option for advancement would be to leave the area. But with a large Italian family in Rochester and no real desire to leave, Bonadio and fellow Arthur Andersen employee Insero chose another path.

In 1978 they founded Bonadio, Insero & Co., working mostly on tax-related work.

That large Italian family came in handy early.

“I had my mother, who had worked with (Nixon, Hargrave, Devans & Doyle LLP) as our first employee,” he says, “though I don’t know if you can really call her an employee because we didn’t have the money to pay her.”

The firm saw steady growth, moving into First Federal Plaza within a year and to the Times Square Building by its second year. By 1986 they had 10 employees and had moved to more spacious headquarters in Brighton.

Things got more difficult in the 1990s, when the company was hit by the recession and by differing ideas for the firm’s future. Insero’s outlook on management styles and how closely to work with clients differed from Bonadio’s, and the two split amicably in 1994.

That time—at least before Bubba’s check—was the most difficult in the company’s history.

“After we split, we had all the overhead and half the revenue,” Bonadio recalls. “We had hit rock bottom.”

Path for growth
But, staying afloat, the Bonadio Group formed a strategy for growth that has pushed it upward ever since. Bonadio says the firm is built on the cornerstones of great employees, great customer service, a plan for growth and “excellence in everything we do.”

The firm has organic growth of 5 to 10 percent annually, and in the last decade has undertaken 11 mergers that have helped it establish a presence beyond Rochester.

In December, the firm announced a merger with Syracuse-based Testone, Marshall & Discenza LLP. Bonadio noted at the time he had been talking with the firm’s partners for four years, and merger talks had picked up early in 2014.

The merger created what Bonadio calls the largest CPA firm in Central New York, with 130 new employees spread out across offices in Syracuse, Utica and Geneva.

The Bonadio Group also has been able to take advantage of some breaks, Bonadio notes. The collapse of Arthur Andersen created opportunity for smaller CPA firms, one that Bonadio pounced on.

As the firm’s reputation grew, the mergers came more easily.

“We did mergers with 11 firms during that time, but we probably talked to 90,” he says. “I would be getting a call a week from CPA firms. Many of them didn’t have the planning and waited until they had a year before their principal was going to retire.

“Our growth made us a great candidate to bring firms on, and we were able to be picky and make sure the culture was the right fit,” he says.

The Bonadio Group started with smaller deals, and as it established a presence outside of Rochester began taking on larger firms.

“In Buffalo we had a merger with one small group, and that led to a larger one and then an even bigger one,” he says. “It was the same in Syracuse. As we built on our success and got bigger we were attracting bigger and bigger fish.”

The firm’s growth, however, has not been haphazard, Bonadio says.

“We’ve been very strategic, and, unlike a lot of CPA firms, we’re very careful about working on our own business,” he says. “We are now on our fourth different strategic plan, so we’re always looking three to five years down the road.”

Bruce Zicari, who has been a partner at the Bonadio Group for 19 years, says Bonadio’s vision has been key in helping the firm grow. He notes Bonadio was ahead of the curve in many initiatives, including providing client services beyond accounting and tax services.

“He’s always thinking into the future, and I think he’s got some great vision,” Zicari says. “He’s not only looking to grow the firm but also to create opportunities for everyone here.”

Attracting talent

The firm’s growth has created what Bonadio describes as a perpetuating circle of success.

“As we’re growing we’re attracting great people, which makes for great client service and in turn helps you grow even more,” he says.

Bonadio finds much of that talent locally. He makes visits to college campuses, including his alma mater, St. John Fisher College.

“We have many partners now who I recruited right off the campus when they were 21,” he says.

It also has bred company loyalty. Now stretching into his fourth decade with the company, Bonadio says he can walk the halls and recognize second- and third-generation employees.

Growth has allowed the Bonadio Group to give its employees an option Bonadio lacked as a young man.

“We’ll never be in a position where someone is ready to advance in the company and we have to tell them to wait because there are no positions available,” he says. “They can see the potential for growth and opportunities here. At many firms they would have to wait for someone to die before they could get promoted.”

Bonadio says the firm does best with candidates such as he once was, those with connections to the Rochester area and a desire to lay down roots here.

“The advantage we have being such a big name is getting the best of the best from these schools,” he says. “But it’s not for everyone. If they want to eventually go to San Francisco and work for Google, then we’re not the best fit. But if they want to have a family here and are connected to Upstate New York, they’re perfect for us.”

But while the company has great success in recruiting young talent, it has more challenges when looking for seasoned professionals, Bonadio notes.

“We lose some experienced people when they move to larger cities or move into private industry,” he says. “It’s always a challenge to attract qualified people like technical tax experts and experienced auditors, and we have about 35 or so open positions right now.”

That is where mergers can be a blessing, Bonadio adds.

“We can get a lot of great people from those,” he says. “I always tell people, one of the best mergers we ever had was a company with 30 great people and no clients.”

Community commitment
After his initial gamble to stay in the Rochester area, Bonadio has been investing in the region ever since.

He has made community service a core value of the firm, leading it into a number of charitable endeavors and donating more than $1 million last year alone.

“We believe strongly in helping and giving back,” he says. “All 70 of our partners are involved in some kind of charity, and I tell them to pick one they’re passionate about and become a real leader, not just someone who contributes.”

Bonadio has led by example. He has been involved with a number of groups, including a leadership position on the St. John Fisher board, where he helped the college navigate a path of growth, and he took a lead role in negotiations that brought the Buffalo Bills training camp to the Pittsford campus.

After then-president Katherine Keough died, Bonadio served as co-chairman of the presidential search committee that chose Donald Bain as her successor. Bonadio admits Bain, who had served as chairman of the history department and provost and dean of the college, initially seemed an outside-the-box selection.

Bain won Bonadio over during the search process, however, and together they helped lead the college to more than a decade of growth.

Bonadio says St. John Fisher, like his own firm, grew thanks to a strong vision for the future.

“They looked at where the jobs of the future will be coming from and then built up around those areas,” he says. 

Bain says in addition to the guidance Bonadio provided during St. John Fisher’s period of growth, he also served as a model alumnus for its students.

“Here’s a guy who built a company from the ground up with hard work and honesty and skill, and that’s a great example to our students,” Bain says.

Bain calls Bonadio a “man of great skill, wise judgment and impeccable integrity.”

“Plus, he has a terrific sense of humor,” Bain adds.

Bonadio, and his wife, Heather, have two daughters and four grandchildren. The time that he is able to find away from growing the firm and investing in his community efforts often is spent on the golf course.

Looking ahead
The Bonadio Group will not be slowing down anytime soon, Bonadio says.

Boosted by the firm’s strong and growing reputation, Bonadio has his eye on new opportunities, including some potential to expand its downstate presence. The firm has an address in Manhattan but no office and, Bonadio says, it is seeking a “culturally compatible” partner who can help the firm grow there.

Bonadio also believes there are opportunities to grow in eastern New York and into New England but says he does not look much farther than that.

“We’ve had offers in the Sun Belt, but I don’t really have a desire to go and be the 15th largest firm in Houston,” he says. “We want to build off the name we’ve created here,” where there is plenty of room to grow.

“I think we’ll be a juggernaut for the next decade here,” he says. “I’ll be shocked if the $100 million in revenue we have now isn’t $130 million in the next couple of years and if we don’t do a few more mergers as well.”

But with his eyes on the future, Bonadio says honoring the company’s past is important as well. A few years ago someone pointed out to Bonadio that the firm had a duplication on its custodial staff, with one company hired to provide service plus one additional employee.

Did Bonadio want to eliminate the duplicate employee? The answer was a firm no.

“I said, ‘That’s Bubba,’” Bonadio says. “And Bubba stays.”

Thomas Bonadio
Position: Managing partner and CEO, the Bonadio Group
Age: 66   
Education: BBA in accounting, St. John Fisher College, 1971
Family: Wife, Heather; daughters Renee and Danielle, four grandchildren
Residence: Pittsford
Activities: Golf, spending time with family, walking, watching Buffalo Bills and New York Yankees
Quote: “We’ll never be in a position where someone is ready to advance in the company and we have to tell them to wait because there are no positions available. They can see the potential for growth and opportunities here. At many firms they would have to wait for someone to die before they could get promoted.”

10/2/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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