Mark Vorsatz has been with Andersen since its inception and as a leader throughout the whole journey. ” I don’t know all the answers, but I know most of them,” Vorsatz joked. Vorsatz has had the benefit of evolving with the company, being able to grow and build the team himself. He knows whoever replaces him won’t have it the same way, which is why he’s been proactive in building and identifying the company’s rising leaders.
Ladders spoke with Vorsatz to learn more about the company’s compelling history, plans for the future, and its continued global growth.
Andersen certainly has an interesting history. We’d love to hear about it from your perspective.
“I was a partner at Arthur Anderson for 15 years. While I always served a full client load, I served in a bunch of different management roles and had an opportunity to have a front-row seat. In ‘97 when Andersen Consulting, now Accenture, was still part of the organization, we were by far the largest professional firm in the world. At that point, we had like 200,000 people.
When the firm imploded in 2002, we did a lift out with a group. It was six locations, about 180 people, and we worked out a transaction with HSBC where we were wholly-owned subsidiaries there for five and a half years. They were very good to us. That period of time, we expanded the scope of our tax practice and we also added three locations that we built from scratch in Philadelphia, Seattle, and Chicago.
At the end of 2007, we did a management buyout. About eight years ago we started looking at international solutions for our clients and we concluded that we needed to build something ourselves. So a little over six years ago we did our first transaction with a little group in Switzerland.
We rebranded the firm in September of 2014, which was a very complicated process. We bought the rights to the brand in the U.S., we bought the rights globally, we filed trademarks in different jurisdictions.
So if you roll the clock forward today, we control the mark and any variation on it in 183 countries. We currently have operations in 73 countries. We have legal services in 64. In the US and the UK we are tax only. Outside the U.S. and UK, our strategy is tax and legal. So unlike anyone else in our profession, we do not have an audit practice, we do not have a consulting practice. We have a very focused strategy and this has been the plan since inception.
What’s the plan for growth going forward?
We’re growing at a fairly rapid rate. We’re presently in 171 locations and this year we actually added a net of 50. We think on a sustainable basis we can add somewhere between 15 and 20 countries per year and 25 to 35 locations per year. We have fairly ambitious goals.
I currently have another three years on my present term, but I have presented to the partners a five-year plan that, optimistically, the goal would be to be in 161 countries in five years. The largest professional services firm today in terms of geographic coverage is PwC in 158. The largest law firm in terms of geography is Dentons in 79 countries. We currently have legal services in 64.
If we are successful in executing on our strategy, we will systematically ramp the organization. I have been in my current role, or some variation of it, from inception. In my first year, I not only ran the San Francisco office, but I also gave all the partner reviews in the firm.
Today we have 747 partners, so we’ve grown from 23 to 747. I obviously can’t do the partner reviews anymore. That would be a little too challenging. So we’ve had a strategy to evolve our management structure over time. It started in the US where we evolved to regional management partners, we had functional people put in responsibilities to where now I have a handful of people who directly report to me.
By any measure, we are likely the fastest growing professional services firm in the history of the world. Just this past year we increased our headcount by almost 40%. While we don’t think that’s necessarily a sustainable trend, we do see headcount growth in the 25% range on a fairly systematic basis.
Six or seven years ago I was evaluating markets by myself…researching countries and calling people. I now have four full-time people that just research countries. I have five full-time people that make calls to firms. We’re at various stages, we’ve targeted over 2,000 firms…independent organizations globally that we’re at some process of discussion with.
Africa is a very high priority for us to substantially finish our platform. We’re currently in 22 countries. We have a very ambitious goal next year to add 18 countries. So as far as management goes, we’ve gone through a lot of changes.
What’s been the biggest change in the past year?
“I would say the maturity of developing people outside the US…formalizing how we operate in different regions. What we’re trying to do is to operate both geographically and functionally. So that was a big change culturally for many of the practices last year.
We’re replicating that in Latin America and, in 2020, in Africa and the Middle East. To the best of my knowledge, no professional service firm operates seamlessly by function on a geographic basis.
In 2020, we’re going to put a lot of emphasis on what we call the global client initiative. We like to provide one-stop shopping for multinational companies. That requires an integrated approach and when you are adding firms as quickly as we are, that is probably our biggest challenge.
So as a consequence, I have an expression that ‘familiarity brings confidence.’ This year we did regional partner meetings. We did one for Europe and Venice in May. We did one in Costa Rica for Latin America in August. We did one in Dubai in October for the Middle East, Africa and India. Then we just did one in Santa Monica in November for the U.S., Canada, and Israel.
We invite select people from other regions, but probably our biggest challenge- and I think the biggest challenge of any business- is to get people to work together in a fairly integrated fashion. I think that’s where we may be a little unique.”
What’s been the most surprising aspect of the role of CEO?
“People will be surprised by this, but I always thought we would do what we’re doing. When Anderson imploded, I didn’t want to go to a Big Four. There were several of my colleagues that didn’t want to go to a Big Four either. We thought that the world had changed, we thought that consulting, audit and tax didn’t have a lot in common anymore. We thought that the business model had matured in a way where it was no longer a positive integrated solution.
I still believe that today. Consulting is the fastest-growing part of the Big Four. It is the most profitable part and it’s a different business model. It runs with different leverage, and it has no connectivity with tax or audits. In fact, the audit is a liability for it because it restricts its market because of the independence issues.”
Has being a cofounder changed your role as CEO at all?
I’ll tell you this, my path has been much easier than it will be for the next person. The original group all came from Arthur Andersen. I knew everybody and there was this built-in pecking order. There was never any question that I was going to play the role that I’m playing. As we built out in the U.S., up until 18 months ago I interviewed every U.S. partner candidate. A number of those I sourced.
Every firm that has joined us, I have been directly involved in those conversations. People are acclimated to me being in this role and therefore I get away with a lot and I have a lot of latitude.
When we decided to expand nationally and subsequently, I basically said, ‘Look, nobody wants to be managed. I think I know what I’m doing. If you guys want to put a bunch of approvals on me, then get somebody else to do it because I have a day job. I have a full client base. I love working with clients.’
So my take was, we have to be nimble. To some degree I’ve been instrumental, or certainly have participated in the exercise to get us where we are today.
In three years, we have added 130 locations in 56 countries. Our partners have a comfort level with my decision making and my ability because I’ve made money. The first $100 million is a lot harder than the second $100 million.
So I would say I have been very fortunate because the firm has evolved with me and I’ve evolved our business structure.
I’m in the process of putting together that I’m going to launch in January, what I call a ‘leadership committee.’ I’m going to work with the regional partners to identify 15 to 20 partners globally who are under the age of 50 and I’m going to work with them for the next couple of years. I’m going to give them projects to do. I’m going to teach them about how the firm runs. I’m going to teach them some cultural things…some things what to do, some things what not to do…and I’m going to try to groom the next group of leaders for the firm.
But whoever succeeds me isn’t going to have the benefit of having evolved with the firm and having hired everybody, so it’s going to be harder. So what I have to do is, in order to ensure that this is sustainable, I have to work with some of our younger partners.
I have been managing partners for 33 years. I often joke that I don’t know all the answers, but I know most of them. I’ve seen a lot of things and I’ve made a lot of mistakes. I’ve learned a lot. My challenge is to develop a group that can take the baton and run with it with much greater challenges than I’ve had.”
How do set the company culture and vision in such a global company?
“We believe in certain fundamental principals in our selection process, which we’ve gotten much better at. Some of the mistakes I made early on were because we were adding groups because somebody knew somebody who knew somebody rather…than doing a more comprehensive evaluation of a marketplace.
Now it’s rare that we meet with a firm and walk out of a meeting and say, ‘Hey, we don’t think they’re very good.’ In January we’re meeting with 13 firms in Ukraine. We’ve done a lot of spadework on this. The people that make the calls, who are very capable, put together what we call profiles, which are a four to five-page summary of the discussion about those firms. We feel very comfortable with the quality of all of those firms. Some are big, some are small.
It used to be that the company had to be big and not small, today you have to be fast and not slow. So our whole structure is very nimble. I have a lot of discretion in how we handle issues. I have 100% confidence that the 13 firms we’re going to meet within the Ukraine are all very good. I will bring a group of seven other partners. We will meet with all those firms. We debrief, we’re very collaborative in how we go about the discussion. Some of the people that come are members, some of them are collaborating firms. We don’t treat our collaborating firms any different than membership, it’s just there’s no economic sharing.
Generally, we operate on those decisions much like a democracy where my challenge is to get everybody to a solution. Sometimes we can’t get unanimity on a solution, but we do sort through and listen. You don’t always get your way, but you always get your say. From a management standpoint, I don’t want people to accept a decision, I want them to own the decision. So all of the people traveling with me to Ukraine will be from Europe. They will all be people who have key roles in Europe, including the two guys that co-manage Europe.
I just had a team of five partners in Africa meet with firms in Venin, Togo, and Liberia. They came back with consensus recommendations on who we should do a deal within each country. We’re cutting the list to one to meet with each of the firms and bring another group of colleagues with me. So unlike a lot of professional service firms, we evolved from a management structure of a partnership to operate more like a corporation. My view of most of the large professional service firms is they operate more in a corporate form than a partnership firm and we don’t.
We’re very collaborative in our decision-making process and engaging in that process. So as a consequence, the people who participate with me in this process, they own it and they share in the responsibility to be successful.
We’ve had issues where the majority view was different than my own on a particular conclusion and I went with the majority view. Someone who was with me who used to be a partner at one of the big four and never worked at Andersen, said to me ‘In my prior firm no one would have ever asked my opinion and for sure if the CEO had a particular point of view, they would have never gone along with the partners on a different outcome.’ I said, ‘That’s the difference in running a corporation and running a partnership. Sometimes I have to accept that maybe my view is wrong.’
If we really want people to act like owners rather than employees, obviously the biggest challenge we have is our growth. We have 747 partners now. I don’t know every partner anymore. When we started we had 23 and I gave every partner a review. I know all the managing partners, and I know a number of partners in each market. I have a little bit of intelligence on pretty much everybody.
The challenge when you grow is to continue to keep it like a family. I’ve got now over 700 brothers and sisters, about 5,000 children and we’re kind of growing like rabbits. The real challenge for us is to keep this like a family business. We have to have consistency, we have to have quality, we have to have some type of systematic approach on things…but in my opinion we have to operate in a decentralized way, we have to innovate, and we have to learn from each other.”
What advice would you give to someone interviewing at Arthur Andersen?
I would say be yourself. I just sent a note to the people in our administrative functions today and the title of it was ‘Draft athletes.’ We have to have a broader vision of the people we hire.
I’ve sourced a bunch of candidates because my wife and I go to a number of different restaurants and I find people who just have really good skills. We met with someone who’s a hostess at a restaurant and we’ve known this young woman for about a year. She has really good interpersonal skills. The restaurant is always super busy. It’s a very big restaurant and she does a really good job of managing the customers and managing people, and she’s got interpersonal skills and she’s got a lot of talent.
I said, ‘Hey, you ought to talk to us about a job.’ So I sent her to the head of our recruiting and operations. Then the head of marketing sent me a note back and said, ‘What did you have in mind?’ Which was a polite way of saying, ‘What the hell are you doing?’ And I said, ‘You know what, she’s got talent. She’s what I would call an athlete. I don’t care if she hasn’t graduated from college yet. She is an athlete and we can help her be a great athlete and we have to help her figure out what she’s interested in. But I’ll tell you what, she’s got a lot of skills.’
So, this note I sent out this morning said, ‘We have to hire people that have skills.’ There are certain things you can teach. Another person actually from the same restaurant that we hired at first, the head of marketing said, “She doesn’t have very good writing skills. She graduated from college, but doesn’t have very good writing skills.” I said you can teach somebody how to write. There are certain skills she has that are not teachable. She has outstanding interpersonal skills. She really is very good. She’s an athlete.
So, I would say to somebody, you know what, if you have ambition, if you have passion, if you’re motivated, there’s no better place that you could come to than here because we’re growing fast. There are tremendous opportunities for professional growth, a tremendous opportunity for financial growth, and we want to invest in people because people are our product.
So, I would say to somebody who was interviewing with us, if you want to be great, we are a great place for you because we think we can help you achieve your potential, and you matter to us. We care. And if you’re successful, the firm’s going to be more successful. And we all win that way.
So, that’s what I would tell the person. If you just want to have a job as a placeholder, or you don’t care, or you’re just here to fill out your time, we’re not the place for you. But if you want to achieve your potential, which I think most people do, this is the place for you.”