Forming strategic alliances can improve business

Strategic alliances are gaining popularity as more businesses try to maximize their attraction in new markets and improve services while minimizing financial risk.

Gary Shamis, managing partner at Leading Edge accounting firm SS&G Financial Services in Cleveland and one of the founders of Leading Edge Alliance, says the purpose of these formalized agreements between companies or organizations is to combine certain resources and create win-win business scenarios.

"Most of the time, what makes a strategic alliance unique is that there is some financial reward," he says. For example, during the 1980s, a lot of accounting organizations were merging to remain a viable alternative to the then-Big Eight accounting firms. "Most firms, in order to compete on a local basis, needed some national and international resources and exposure. They joined together because of the locations of where they conducted business."

Over time, huge disparities grew among these organizations. "I had a conversation with some colleagues with the same concern. The Leading Edge Alliance grew out of dissatisfaction of the disparities seen by the three founding accounting firms—SS&G, EKH&S in Denver and Kostin Rufkess & Co. in Connecticut," he says.

Those three firms talked to others of a similar size, client base and philosophy. Ultimately, 18 firms joined four years ago to create Leading Edge Alliance. Today the organization has 40 member firms across the country.

"We have broadened our service base and can now offer more to our clients," says Shamis, including providing the quarterly Leading Edge magazine.

There are some precautions necessary to ensure your alliance will succeed. "With the Leading Edge, we have geographic exclusivity, so we don't directly compete against other member firms in our market."

Criteria for membership requires that the firm be a market leader (among the top three) with a largely privately held client base.

The firms are similar in size, type of clientele and philosophy and share similar service issues.

The Leading Edge has broadened services to expand its presence through Kreston International, a global network of experienced independent accounting and business advisory firms, and formed alliances with payroll companies, and investment banking and technology groups. "These are all alliances that enhance our capabilities and expand the services we can deliver to our clients," says Shamis. e