Shadowing Practice: Private Equity Pays On Day One. They Still Said No - Learn English Speaking with Video
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Welcome to Back Capital and Control, Power, Ownership, Business Models, Private Equity, ESOPs, Independence, and all manner of things affecting today's accounting firms.
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Mark Kovaleski from MMB.
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Mark, it's great to have you on the show.
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Tell us a little bit about you and your journey.
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Thank you, Rob.
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Appreciate you having me on.
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Yeah, so MMB & Co, we're a regional CPA firm, have five locations in upstate New York, servicing different clients in different industries,
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traditional firm, mostly audit tax, consulting, business valuation.
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I've never been the interesting good -looking guy in the bar
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but now everybody wants to buy me a drink
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so it's interesting to see what happens but a little disconcerting as well
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that a lot of the interest that we get are from folks
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that really don't know who we are what's best for our clients
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and our people not necessarily what's best for the partner group
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or somebody that's reaching retirement age like myself the culture
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that we've built here and spent a lot of time developing is something that's sacred to us
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that we don't want to jeopardize
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you said to me off camera
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that your biggest concern about p is not the first investor
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but the second what did you mean by
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that you get to pick your first dance partner you don't necessarily get to pick your second dance partner
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so when that time frame comes if it's three four five years
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when it gets flipped you might have some say being on the board
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but the private equity firm is making welcome to backed the dedicated accounting show that talks all about capital and control, power, ownership, business models, private equity,
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e -subs, independence, and all manner of things affecting today's accounting firms.
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Our guest today is Mark Kovaleski from MMB.
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Mark, it's great to have you on the show.
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Tell us a little bit about you and your journey, Mark, so our audience have context about you and your firm.
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Thank you, Rob.
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Appreciate you having me on.
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Yeah, so MMB and Kovaleski, we're a regional CPA firm, have five locations in upstate New York, servicing different clients and different industries,
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traditional firm, mostly audit, tax, consulting, business valuation, but as most other firms expanding rapidly into the advisory side of things.
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And my personal journey was I was born downstate.
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I came to school in upstate New York.
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I met my wife.
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I dragged her down to New York City for five years.
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We had our first child and she said, I'm moving back to Rochester and I'm taking your daughter.
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And if you want to come, you're invited to.
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So here I am 28 years ago, all with MMB.
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Wow.
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Tell us the headcount at MMB, a sense of your size and ambition, Mark.
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Sure.
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We're about 250 people across the five markets that I identified and a top 200 IPA firm.
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I believe we were 143 at this last showing.
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Where do you sit on the private equity and dependence continuing, Mark, where you are?
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A great question.
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Continue to evaluate it very seriously, but we've made a concerted effort to remain independent at this point in time
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and are sort of shouting that off the rooftops.
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It's been a journey in terms of considering it and making sure we understand what's available to us,
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but we believe what's best for our people and our clients is to remain independent.
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There are many disruptors in the accounting sector right now.
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One is AI, another is private equity.
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It's shaking things up.
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I wonder how often a private equity and investors
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or firms reaching out to you and what does
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that feel like it's it's true it's truly amazing rob i i literally daily almost i get a phone call
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or an email or a text message
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and you know it's it's it's flattering i was telling somebody
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the other day i've never been the interesting good looking guy in the bar
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but now everybody wants to buy me a drink
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so it's it's it's interesting to to see what happens
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but a little little disconcerting as well that a lot of the interest
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that we get are from folks
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that really don't know who we are they know what our relative size is
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but they don't understand our culture
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or understand you know who we are as a firm why is
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that important mark if you've got a good business model
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if you've got good revenue
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if you've got good clients i don't care who you are i just want to buy you
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and give you a ton of money and you walk off
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and we'll take over that's a great way to say it rob
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and i think there's more like i said what's what's best for our clients
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and our people not necessarily what's best for the partner group or somebody that's reaching retirement age like myself, that's a whole different story.
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We built the firm.
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The Rochester office goes back 50 years.
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Our Albany office goes back over 100.
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And the culture that we built here
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and spent a lot of time developing is something that's sacred to us that we don't want to jeopardize.
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So is that what made you decide to stay independent?
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You've got something you want to protect and you felt it maybe would have been compromised with external capital? For sure.
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And I think another big component of that is too, is we have a very dynamic young partner group here that somebody gave me an opportunity to be at the table.
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I want to extend that same opportunity to them.
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We put a chart together with all of our partners and what their expected retirement dates are.
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And that is a beautiful chart that goes out many years into the future.
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We have somebody at 2055 that's on that chart.
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So we feel we have the next generation of leaders here and we want to give them that opportunity to lead.
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We just interviewed a guy called Randy Nail, recently managing partner at a firm called Hogan Taylor.
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They're in the top 100, fiercely independent.
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And Randy brought a PE consultant in to make the argument for private equity.
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And he said, give us the good, the bad, and the ugly.
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And they all voted on it.
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And they voted not to take private equity.
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And he said, it's our younger partners that were actually the most vociferous in saying, we want to stay independent.
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We want to stay as we are because we feel like we're part of something.
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We feel like we're building something.
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We feel there's a future here that we want to take ownership of.
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Does that story resonate with you?
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Absolutely.
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Absolutely.
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I don't think I know that partners at a firm like our size are entrepreneurial spirits,
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and they want an opportunity to have that seat at the table and direct the firm into the next generation,
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rather than just being used to call a line partner and being told what to do by management.
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A lot of firms say they need outside capital for technology and talent.
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You've told me you don't need it.
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How does that work?
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Well, fortunately, the firm is very strongly capitalized.
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So any investments in which we've made significant investments in technology have been able to come from our own coffers.
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So if the point of time comes where that gets to be too big of a dollar amount, we also have great relationships with other lending partners
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that we could go to without having to give up any of our ownership in the firm.
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Are you acquisitive, Mark?
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Our strategic plan calls for somewhere between three and five acquisition targets to be identified by our executive committee every year.
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Identified, not necessarily closed.
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So there are a lot more opportunities that are presented to us
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that we end up passing on than we end up accepting.
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I'm intrigued by your succession.
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You talked about these young partners.
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What's the average age of a partner at M &B?
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So our average age is just over 48.
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That's impressive.
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And you make a lot of new partners every year, don't you?
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We do.
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I just actually was reading the IPA report today, and the average age of partners in CPA firms is going down.
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It's 52 or so.
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But I think what's even more important is the number of partners that we have nearing our retirement age, which is required at age 65.
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We only have two partners right now that are over age 60.
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So again, why we feel very well positioned for the future.
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We'll be making three partners this year.
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Last year, we made seven new partners.
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And it's a big part of our succession planning strategy to make sure
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that we have that talent in the pipeline for when we do reach that retirement age for some of the older partners.
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Thank you for mentioning Inside Public Accounting.
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I co -host that podcast with Chelsea Summers, and we talk a lot about the IPA 500 and the performance metrics.
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They're our strategic data partner for this show.
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So, yeah, there is a lot going on.
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How deliberate has your approach to succession been?
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I can just hear a few firm leaders saying, oh, well, they got lucky.
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They just got a swathe of young people coming into the firm.
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So they're putting some money into them.
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But it's not being particularly intentional. For sure.
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Ours is definitely intentional.
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And again, I think we have a lot of partners for a CPA firm of our size, but that's intentional to make sure, one, we have the succession plan for the future.
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And two, it's our model that when we go out and provide services to our clients, that we're bringing experienced people out there that understand their business
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and not the proverbial busload of college graduates that are needing to be educated by our clients.
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Is there any evidence that that would be harder to do if you had external capital, Mark?
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Good question.
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I do think there's some opportunities that we've seen already from some
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that have taken private equity money in our markets where they have had people leave that were, I would say, up and coming or new partners that didn't want
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that direction of their career to go and wanted that proverbial seat at the table to be an entrepreneur.
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So we've had opportunities to bring in some talent from some of our competitors.
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I've heard that a lot.
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I've interviewed thousands of accounting leaders and hundreds of managing partners and CXOs.
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And there's a lot of disquiet, shall we say, a lot of uncertainty lowered down with people
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that didn't have a vested interest in the decision to either stay independent or go PE -backed.
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And so this disruption, this turbulence down there, this is not what I bought into.
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I didn't sign up for this.
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I don't want a part of this.
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And regardless of what I'm being paid, I'm going to look at some other things.
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And you've seen that firsthand.
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Absolutely.
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Different PE models could work differently.
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I think if there is a way
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that you want to incentivize some of your younger folks
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that can be accomplished through PE it's just not practically what
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we're seeing where maybe some of the older partners are having their retirement buyouts funded
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and maybe not paying as much attention to the younger part.
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I ask my guests often about control in the firm.
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There is a sense sometimes, maybe a perception from the outside, Mark, that when private equity comes in, you lose a certain independence or autonomy control in your decisions.
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Has that scared you?
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Absolutely.
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I think that it has to be the case.
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And some of our clients, we're getting asked
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that question more frequently during the RFP process is what is the firm's intention on taking private equity money or staying independent?
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Because a lot of our clients have been down that same road and have made a decision to remain independent,
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understanding what some of the concerns might be going the PE route.
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And I just think it's important, Rob, that you find a partner
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that you're going to have for the next 10 15 20
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years that's one of the really great parts about our job is
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when you could be working with third generation companies
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and working with the grandchildren and understanding their business
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and what the family is trying to accomplish again that's nobody
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knows we'll see what happens with everything in the private equity shakeout
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but that's another concern that you could be on your second third firm at
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that point in time yeah just for the record though, Mark, this show doesn't take a stance on whether P is good or bad.
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And likewise, you have friends that own private equity -backed firms, and they're doing okay.
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So it can be a good thing, right?
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Absolutely.
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I think it's depending on your particular situation.
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Private equity might be the right route, or independence might be the right route for you.
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It just depends on what your individual makeup of your firm looks like and what you're trying to accomplish in the future.
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One of the things I admire about LNB is the degree to which you invest in female partners.
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As a father of two daughters, and I have two dogs in my house, they're both female as well.
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But I'm impressed by that.
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I came across a stat recently that said 54 % of CPAs are female, but only 11 % are in leadership roles.
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Now, I don't know to what degree that's true, but it sounds like it might be right.
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You're over 50 % women -owned at a firm of your size.
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How did that happen?
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That's correct.
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I get asked that question all the time, Rob, and I don't have a great answer.
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I just think we've been fortunate to have a bunch of terrific women join our firm and stay with our firm.
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If anything, I would say at an early age, probably not dissimilar to a lot of other CPA firms where we provided a lot of flexibility.
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So maybe during those years when you were considering your career path or trying to stay home with your children, that we had the flexibility to say, okay, if you want to be a partner,
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there's a path for you here.
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If you don't want to be a partner, there's a path for you here as well.
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So we've just been very fortunate to be able to retain that group of people.
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And I don't think we've done anything particularly special besides just having the culture that we've established firm -wide.
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Well, things don't happen by accident.
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But I guess the payoff for that is
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when you are in a position where there's over 50 % women owned at the firm, what does that allow you to do?
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What experience does that offer your clients?
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It's what career path does that are for people younger in the firm that see people like them in leadership positions.
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Yeah, I think from you nailed it with the second part, I think from an internal positioning standpoint,
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when we're recruiting people from college or recruiting experienced grads and we could tout that number where these these ladies could say,
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yes, there is a career path for me here.
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And they not only are saying that, but they're living that value based on the numbers
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that we have yeah you mentioned earlier you're acquisitive
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and you look at quite a few maybe you look at two
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or three acquisitions five a year
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but you pass on a few what makes you walk away it's a recurring theme
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so far rob but the the fit the the culture
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that we've established here it's got to be the right mentality
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for us it's got to be the the right fit for
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the people i call it the the beer test i i want to be able to go out
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and have a beer with my potential partners after work.
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So that's a big thing.
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If you look at a smaller transaction, there might be a couple of owners that are nearing retirement age that don't have a great succession plan.
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The people behind them, they could have a good client base, but we're not just looking to acquire revenue.
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We're looking to acquire talent as well.
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We've had silly money, crazy multiples in the PE story.
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It's calming down a little bit now, but is it still your contention that PE -backed firms are overpaying and being overpaid?
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Yeah, I'm sure they don't feel that way, Rob, but I do think that the multiples that we're seeing, like you mentioned, are just much higher than they were in the past.
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The days of one -times revenue based on retention over a three -year period are long gone.
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There's a lot more money being paid up front, and kind of just that model
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that we use to acquire firms is becoming more of the PE model
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so it's a higher multiple it might be a little bit of scrape on the partner comp
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and then you know cash payment down front much higher than what it used to be.
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Is there going to be a bubble that bursts?
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Really curious to see what happens you know we're getting to
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the point of the first turn that's coming up here right
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so there's going to be a lot of a lot of firms
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that are be going through that second bite of the apple
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so I wish I had a crystal ball I don't but it's going to be really interesting to see.
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Well, interesting is one word.
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You said to me off camera that your biggest concern about PE is not the first investor, but the second.
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What did you mean by that?
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Sure.
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So I think the PE firms, there's a lot of good PE firms out there that are, as I mentioned, are the right answer for some of these firms that are looking to sell.
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You get to pick your first dance partner.
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You don't necessarily get to pick your second dance partner.
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So when that timeframe comes, if it's three, four or five years, when it gets flipped, You might have some say being on the board, but the private equity firm is making that decision.
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And we've just seen a lot in our client base, forget about CPA firms.
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The first marriage is great.
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They leave you alone.
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They let you do what you want to do.
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And then you kind of lose a little bit of control
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when the second bite of the apple comes in terms of how things are going to work out for you.
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So, again, I think that the private equity firms have their own interest to make sure
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that second bite is productive for everybody.
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But so it's not like it's not going to happen.
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And it's just something that could cause concern.
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We sometimes hear from people in PE -backed firms that this decision's taken well above my pay grade.
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I'm not involved in them, but it's not what I signed up for.
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We're hindered at that earlier.
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I hear that from a few leaders too, that what they were promised or the whole deal is not quite how they wanted it to play out.
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It's difficult for them to walk back.
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But you must talk to one or two people like that, that have what we might call buyer's remorse.
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Would they admit that to you?
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I think what I've heard from some peers that have gotten that route is, as long as you're remaining profitable and productive, there's a higher likelihood of them letting you alone.
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When things start to go the other way, that's when they start asking for weekly charge hour reports and weekly billings and AR reports,
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etc. That's just a little bit different of a model that we've followed in the past.
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Yeah, I've heard that actually from a couple of P -back firms that they're given a huge amount,
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well, as much control and independence and autonomy to make all the decisions and run the firm as they want to.
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And that's generally a very good model.
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But as you say, you'd feel some tension in that if you weren't hitting your numbers.
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As long as you don't see a competitive disadvantage, is your plan to always stay independent?
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Yes, yes and hopefully that time never comes.
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But again, we continue to remain current
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and up to speed on everything that's going on in our industry in case we had to pivot.
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But our goal is to remain independent for generations to come.
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So what kind of thing would make you even consider a pivot?
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What might a competitive disadvantage look like for M &B?
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I think if there is that cutting edge technology that we're out above our skis in terms of paying for, that could be one.
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If there's a talent concern that we have in terms of acquiring either kids right out of college or experienced hires, that could be something as well.
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Or if there's a new business development area where the PE firms are being able to really capitalize on,
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but we don't think that occurs in any of those particular areas.
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We're big enough too that you hear a lot from a PE firm that, okay, now we have the ability to provide all these additional services.
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We're big enough that we provide those services or have the ability to do it through one of our alliances.
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What's the most difficult thing about staying independent in what seems to be PE -dominated world?
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Great question.
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Quite honestly, Rob, I think it's the financial side of it, right?
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If you look at a typical CPA firm and your retirement buyout is, you know, based on some multiple of revenue
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or your compensation that's paid out over a 10 -year period if the firm continues to do well, you know, the PE model is paying that out on day one in cash.
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So I think that's the hardest thing to, it's not about the money, but I think that's one of the biggest factors that firms are considering.
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You're watching Bakkt, the accounting show that's all about capital
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and control and ownership and operating models and business models and comp and growth in accounting firms.
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You're watching Mark Kovaleski, managing partner at MMB & Co.
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Mark, what would you say to a managing partner who's seriously considering private equity right now for his other firm?
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I would say to them that they have to be knowledgeable of what's going on in the industry.
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And it would be foolish.
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We made a decision as an executive committee
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that we needed to at least explore this on behalf of our partners or we wouldn't be doing our job.
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So I think you have to remain understanding of what's going on in the industry
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and really assess what the partner group wants.
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You know, we did that as an executive committee, spoke to some key stakeholders here at the firm
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and tried to get an idea of what their thoughts were going forward and had some pretty loud feedback,
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as you mentioned earlier, from the younger partner group that was fiercely remaining independent.
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So I would just say you got to check the lay of the lay
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and understand what's going on and continually assess it.
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Well, you've set the direction of travel, exciting times at MB &Co.
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What gives you most excitement
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and passion for the next three years mark on your journey i feel we're just
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so strongly positioned with our people it's it's It's not only a young partner group.
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It's a dynamic group of employees that are all handpicked to fit our culture and our style going forward.
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And that really creates opportunities not only here from a retention standpoint, but that's what your clients like to see as well.
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I know when you talk about how AI is transforming the business, at the end of the day, it's still a relationship business.
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AI will help that, but you have to have the right people in place to be able to serve the clients.
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And I feel like we're very, very well positioned for that.
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Well, amen to that.
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It's been great talking to you today.
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Mark Kovaleski, thank you so much for joining us.
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Thank you, Rob.
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Appreciate it.
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This is Bakkt.
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I'm your host, Rob Brown.
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We're exclusively on YouTube.
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We may turn into a podcast, but right now you can get it on the Accounting Voices channel.
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And we're dropping an episode, a show every week, talking to really interesting people on all sides of the BACT debate.
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Whatever vision you've got, you need provision.
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However that's coming, you need resource.
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And we're gathering the stories behind the headlines.
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Subscribe to the show so you don't miss any of these that we're dropping.
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And we'll see you next time on BACT.
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About This Lesson
Practice real-world business English with this video conversation between two professionals discussing private equity and accounting firm ownership. You’ll learn to follow natural dialogue flow, understand industry terms, and mimic conversational tone—perfect for english speaking practice and improving fluency. The discussion’s moderate pace and clear pronunciation make it ideal for shadow speak exercises, helping you master everyday business communication.
Key Vocabulary & Phrases
- Private equity: Investment funds that buy and manage companies, often to sell them later for profit.
- Regional CPA firm: A local or area-focused accounting firm providing audit, tax, and consulting services.
- Advisory side: The part of a business that offers expert advice (e.g., strategic planning) rather than just transactional services.
- Remain independent: To stay owned and operated without external investors, a common goal in professional services.
- Flip: Slang for selling a company after improving its value, often used in private equity contexts.
Practice Tips
For effective shadowing, pause the video after each 5-10 second segment and repeat the speaker’s words aloud, matching their pace and intonation. Notice how Mark uses casual phrases like “dragged her down” and “shouting that off the rooftops” to add personality—imitate these to sound more natural. Focus on pronouncing “private equity” and “business valuation” clearly, as these terms are key to the conversation. Use this video as a shadowing site resource 2-3 times a week to build confidence in discussing business topics. Over time, you’ll improve your ability to follow fast-paced exchanges and speak with clarity, making learn english with videos a fun, practical way to advance your skills.
Grammar in this video
The structures the speaker uses most, with the exact words from the video:
| Structure | In the video |
|---|---|
| Present perfect have/has + past participle — a past action that still matters now | I've never been · we've built · we've made |
| Passive voice be + past participle — the focus is on what happens, not who does it | was born · have been compromised · being told |
What is the Shadowing Technique?
Shadowing is a science-backed language learning technique originally developed for professional interpreter training and popularized by polyglot Dr. Alexander Arguelles. The method is simple but powerful: you listen to native English audio and immediately repeat it out loud — like a shadow following the speaker with just a 1–2 second delay. Unlike passive listening or grammar drills, shadowing forces your brain and mouth muscles to simultaneously process and reproduce real speech patterns. Research shows it significantly improves pronunciation accuracy, intonation, rhythm, connected speech, listening comprehension, and speaking fluency — making it one of the most effective methods for IELTS Speaking preparation and real-world English communication.