Joe Damiano’s accounting firm used to have a firm answer for private equity: no thanks.
“We were sitting there saying, ‘We’re fiercely independent. We do not want to do private equity,’” Damiano said. “We want to have a partnership-owned business.”
Then the market changed, and so did SAX.
Damiano, CEO and Managing Partner of SAX, and Ira Robbins, Chairman and CEO of Valley Bank, are longtime friends who each spent decades rising through the ranks before taking the top job.
Straight talk
Two longtime New Jersey CEOs, Ira Robbins of Valley Bank and Joe Damiano of Sax, were candid — and blunt — on key issues in the workplace during recent SAX Symposium. Here are their thoughts:
- Part 1: On cleaning house — and why loyalty can’t stop change
- Part 2: On private equity, growth — and keeping your culture in the process
- Part 3: On AI — what it will replace and what it can’t
They spoke on the keynote panel, “Leading Without a Playbook,” at the SAX Symposium, held late last month at MetLife Stadium.
Both told an audience of more than 500 that they have watched outside money pour into their industries. Both say the trick is growing without losing who you are. They were candid about what it means.
This is the second of a three-part series on what they had to say.
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Damiano said SAX grows three ways.
“It’s organic growth, which is the most important growth,” he said. “Then you have lateral partner growth, where you’re bringing in resources and they sometimes bring clients with them. And then you have merger and acquisition growth.
“So, it’s a three-legged stool.”
By 2023 and 2024, one leg was gone. As private equity bought into accounting firms, the deals stopped coming to SAX.
“The third leg of that stool had dried up in ‘23 and ‘24,” he said.
He went to the firm’s executive committee with a blunt choice.
“We’re going to either have to merge up someday, because we’re not going to be able to compete in this marketplace, or we have to pivot, and we have to figure out a way to compete in the marketplace,” he said.
SAX pivoted. But on its own terms.
“We did it in a period of strength for the firm,” Damiano said. “We had strong financial statements. We had strong conviction that the firm could continue to stay and be the legacy of SAX, and we found the right partner, which is very important. You can’t just go for the money.”
The firm took a minority deal.
“We wrote the transaction the way we wanted to write the transaction,” he said. “It was a minority deal. We still retained control of the firm. We still made the business decisions of the firm.”
His biggest fear was that he’d push his partners into the deal and the acquisitions wouldn’t follow. That fear was misplaced.
“We’ve now done probably 12, 13 transactions in 18 months, and it’s not slowing down,” he said. “We have another big one that’s about to be announced in a few weeks.”
Firms that stayed independent may not be so lucky, he said.
“They’re not growing at the pace that we are growing, and they will probably have to merge up, because they can’t attract the talent that they need to continue to evolve and grow into the future,” he said.
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Change doesn’t always go over well inside.
Damiano said partners with ownership stakes can get comfortable with how SAX used to operate.
“When you try to push them to do something differently, they definitely snap back,” he said. “And you have to have the conviction to say, ‘No, we’re not doing that anymore. We’re doing this.’ … It’s either you’re on the bus or you’re off the bus.”
Robbins offered a gentler way to handle that pushback. He splits culture into two parts: beliefs and behaviors.
“Even as an organization grows, your beliefs don’t have to change,” he said. “How you think about accountability, integrity, ownership can still be who you are, even though we’re not a one-branch bank sitting in [Passaic], New Jersey, anymore.”
Behaviors are another matter. At a small bank, accountability meant the boss calling everyone into the office. At a $65 billion bank, it means incentive plans and performance management.
So, when people resist, Robbins said, a leader should figure out which one they’re really reacting to.
“Maybe the culture belief is not changing, but it feels different to them,” he said. “The ways of working feels a little bit different.
“So, as a leader, I think it’s important sometimes not to sit there and say, ‘Oh my God, they’re revolting against the culture of the organization.’ Spend the time to sit down with them and convey to them, the culture really isn’t changing. It’s just how it shows up looks a little bit different.”
He pointed to the symposium itself. SAX has always helped connect its clients, he said, going back to when he first knew the firm in Clifton.
“Look at today. It’s the exact same thing you’re doing, just on a very broad scale,” he said. “People may sit there and say, ‘God, this doesn’t feel like SAX,’ when in reality, this is the core ethos of how you started. It just looks different.”
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Robbins welcomes the outside money flowing into his own industry.
When he started in banking, he said, there were about 10,000 banks in the country, and 18,000 before that. Today there are about 4,500. But he said private credit, private equity and fintechs have filled the gap.
“I think there’s more competition today than we’ve ever had,” he said. “I think it’s an amazing thing.”
Valley is part of that shift. Robbins said the bank recently bought Bluevine, a fintech with 185,000 small business clients.
“They’re not a bank, but small businesses bank with them,” he said.
More access to capital, he said, means more people can turn an idea into a business. The challenge for Valley is staying sharp.
“It just means we need to narrow down and focus,” he said. “What is our target client? What’s our value proposition?”
SAX is no longer fiercely independent. Damiano’s bet is that it’s still fiercely SAX. He has a name for the mindset he wants at SAX.
“We used to call it DEFCON 1 versus DEFCON 5,” he said. “We should always be like DEFCON 3, so that you never feel comfortable.”
