Cross Border Accounting and Private Equity with Katrina Nacci

In a previous episode of the Big Four Transparency podcast, we talked about how much money some accounting firms are saving already by moving away from credit card processors and the fees that those come with and moving all of their payments from clients towards ACH and other forms of direct bank transfers. Now I've worked at a startup that didn't have any kind of tracking or any kind of a real solution around that and it made accounts receivable and accounts payable an absolute nightmare. But look no further because the sponsor of today's podcast is Forwardly. I met the awesome people of Forwardly over at Bridging the Gap conference, did a demo of their product. I am disappointed because personally I can't work with them unfortunately because of some restrictions on Canadian banking. But for any US listeners who are looking for a new solution for your accounting firm, Forwardly is a great solution for you to handle all of your payments, AR, AP, as well as a great approval workflow. So check them out. They're linked in the podcast description. Thank you very much. Hello and welcome to the Big Four Transparency podcast. I'm joined today by Katrina Nachi, an independent cross-border accounting advisor. Welcome to the pod, Katrina. Thanks for having me, Dom. My pleasure. So we spoke a little bit on LinkedIn and before this and something that was really interesting to me as well as when we're coordinating time zones is you're actually practicing out of Germany, correct? Yep. I've been in Frankfurt, Germany for 11 years. Awesome. And as I understand it, you essentially transferred or managed to kind of pull off a move to Germany through some of like PwC's mobility offerings, but that only happened after you had left and were already working somewhere else. How did that all happen? Yeah, it was kind of interesting how I've dipped in and out. So I started my career in Boston with PwC in the audit practice, focusing on tech companies. Did that for three years but had traveled through Europe a little bit and always wanted to live out here for a little while. And I was actually contacted by a recruiter and he said, hey, you know, we have this job opportunity in Germany. I didn't know any German at the time. I didn't know anything about the company. It was for a joint German and U.S. listed company. And so they needed a native English speaker to come over and do their SEC reporting. So I decided to actually leave PwC to move to Germany. At the time, it wasn't so easy to go on the continent when you were kind of an associate, senior associate. Maybe that's changed. But I just decided, you know, now's the time to do it. I didn't want to wait. So I left and went into industry here in Frankfurt. But right before I moved, one of the quality review partners that I worked with in Boston put me in touch with a Frankfurt partner and said, if you ever need anything, feel free to reach out to him. And so I actually did like a year after I moved here and ended up coming back to his team in Frankfurt, which worked out perfectly because he just so happened to be the head of the capital markets and accounting advisory group. And there's actually a specialist team within that group in Frankfurt. And there were also some people in Amsterdam. And it was other local American hires like myself or then also a lot of people that would come on to comment from the U.S. for a couple of years. And that specialist team that sat within capital markets and accounting advisory was focused on helping to take European companies public in the U.S. or do accounting conversions when there were acquisitions happening between the U.S. and Europe. So it was kind of a perfect blend of the skills I already had and the ones that I wanted to develop working with international companies. But then I actually did make a mobility case with PWC and I ended up in Dubai for two years. So I actually went on to comment from the Frankfurt firm to Dubai. Still in the capital markets and accounting advisory group. But that was a little bit of a broader remit. I wasn't so focused on U.S. work. I actually did a U.S. IPO of an oil and gas company while I was there, but I kind of did capital markets transactions all around the Middle East. So it was really interesting. That is that is so cool. And I love hearing of people who kind of like make those opportunities work for them. Like I remember when I was doing my internship recruitment and stuff, PWC marketed that kind of mobility very, very heavily. And at the beginning, I was I was kind of like a little bit unsure whether or not it was really like as good as they said. And then I actually started having some friends working there. And a lot of them ended up in secondments and like really, really cool places. So I think that that's such a cool benefit that like you really got to make the most out of, first of all. But if you do kind of seize those opportunities, that's cool. So culturally, what was like what would you say was like the biggest difference between working like in a in a U.S. office versus working in a in an office in Europe? I have to say I was a little bit shielded from that because I still was mostly working with Americans when I was at PWC, even in Frankfurt. In general, the culture is a bit different, obviously, in terms of just, you know, I'm sure you've heard that they, you know, work to live instead of live to work, that kind of mentality. You know, the vacation days are different. Even now, I still find it hard, you know, trying to close projects and start on things in August, like nobody's around, people are just constantly on vacation. But that doesn't mean that they don't work hard. I think the people there are very smart. And especially when you're in these types of roles that you're dealing with urgent transactions, you know, I was still sometimes working till late in the night getting IPOs out the door, because a lot of times you're dealing with, you know, especially when you're doing cross-border work, you're dealing with the printers in the US and the lawyers in the US. So you're kind of juggling multiple time zones there. So there's just a little bit of a cultural difference in terms of the way that people want to work. Again, I was also shielded a little bit from the language because if somebody in Europe is wanting to go into the US, their documents have to be in English, but there was still some kind of ingesting what they are currently doing and reading through those documents that sometimes they were in German. So my German's definitely improved. And at the time as well, any of the internal meetings that were happening, you know, I was a manager at the time in Frankfurt. And so we had kind of the manager partner meeting and all of that was happening in German. So I was able to follow along and then could speak up in English when I needed to. I think that may have changed a little bit, because since I've left, they focus on getting more and more international people in to kind of solve the staffing shortages that they're having. But that was, I think, the biggest thing was just kind of the native chit-chat kind of internal stuff that was happening around the office. In Germany, it was really interesting, actually, because the way that people even take lunch is different, I found. In the US, you know, you would go down the street, pick up a salad and just eat at your desk and not really have any interactions with your coworkers. But in Germany, everybody leaves and goes to lunch together. And there's usually like a cafeteria style at the bottom of the building and people just sit at a big table and just actually chat and take up their full hour for lunch. And so that was also kind of helping me to learn German, just figuring out how to chat with people there. Nice. Yeah, that's that's cool to hear. Like, I mean, that's a lot of what I think, you know, the kind of industry needs to in general, like in North America is, you know, you can only do so much. And if you're showing up and you're already just so burnt out, then like, what, like, what's the point? Like, instead, taking some time off, actually enjoying your time, having some rest, like built in during the day, I think, could kind of pay off in terms of just like the additional productivity and like feeling a little bit less burnt out. And then you might still get the same amount of stuff done, right? Like, yeah, I find that for myself, personally, like now that I'm going to be kind of working for myself, I increasingly see the benefits of like, okay, like, take some time off to like, go do some exercise or go outside, go for a walk at the very least. Because I'm like, I feel like that's like a 30 minute investment in time that like, just, I'm, you know, a little bit more productive for the rest of the day. So it's as if it never happened. Right. And I do feel like there's a lot of things like that, that are kind of ingrained in the culture there, which is nice. So yeah, another thing that I noticed that I found really interesting, and this may be a way that they manage burnout as well, in terms of setting better boundaries around, you know, all the digital devices that you're using is most people here have a separate phone for work, and then a separate phone for personal, and they'll actually just like shut their work phone off when they leave the office. And so they don't even look at their emails or anything. Now, right now, I only have one because I work for myself, and it kind of gets all merged. But I thought that that was a really interesting way of kind of boundaries. Nice. Awesome. And so talking a little bit more about what you do specifically as a practitioner, I think is interesting, because you're the you're the only kind of like sole practitioner, or even person who's gone out and like, started their own firm doing this. So you're specializing in kind of cross border work. So what does that look like a lot of the times like who usually is your client? So I'm working with European companies that either have done a large fundraise with US private equity or venture capital, or they're getting acquired by a US company, or they're looking to go public in the US. And in all of those cases, there's typically an accounting conversion that they need to do either from local European gap, whatever country they're in to US gap, or to IFRS to US gap. So I come in and help them through that conversion process. And then if there's also an IPO in their future, I can help with the IPO readiness and execution from an accounting, you know, SEC reporting perspective, having done that with PwC. So I'm kind of reaching out to people both in Europe in those types of roles, and also in the US for like the acquirer in the US that's acquiring a European company, but I'll typically still be working kind of shoulder to shoulder with their European counterparts, all of my clients and the teams that I'm working with in various countries around Europe. Interesting. Is that like really, really research heavy? Yeah, definitely is. It's funny, because I think I spend more of my time in like Word, for example, than in Excel, like I'm not really into the numbers as much as the policies and like, I'm feeling what they're actually doing. And I've broken it down into a very piecemeal process where sometimes I would have to like really dig into the details and research whatever country they're in, like what accounting standards are they on right now? And what policies are they, you know, practically doing in house. Sometimes I'll actually give that as homework to the team to document it for me so that I can reduce my fees. And they're a little bit more involved in the process, which I find helps. But regardless, I mean, where they're bringing me in is on the US GAAP expertise side of things to really write up what their US GAAP policies should be and kind of walk them through the differences and explain to them how to quantify them. So that's a lot of research. I mean, just being a, you know, one woman show, I am trying to do things that are scalable for me. So I'm trying to focus mostly in the tech manufacturing space, SaaS companies, I'm working with a chip manufacturer right now, because their financial statements look kind of similar. So that makes the research a bit easier for me. And I still subscribe to this very expensive tool that I was using when I was at PwC that really helps me to do detailed searches on SEC disclosures to figure out what are the different disclosures that companies are doing, kind of set up a peer group for them, even if they're not public to say like, hey, these are what your peers are doing. This is how they disclose their policies so that I can really dig into the details that way and give them some good research. That's cool. Like the having access to like the same tool that you're familiar with in terms of resources. I find that really interesting, because I find the big four, they tend to like develop and maintain a lot of their own resources. So like, I did a lot of like international tax work when I was at Deloitte, and they had this thing, I think it was called DITS. And it was like, it was incredible. This was like, just such an insanely good resource. And again, I think leaving and doing international tax on your own is something that would be pretty daunting as well. But like, yeah, they have all these like incredible tools. So it's cool to know that there is actually something for the work that you're doing that is actually like transferable out of the firm itself. It's not necessarily just a firm asset. And it's it's open to the public, which is great. Yeah, definitely. It would be the most expensive thing in my tech stack, but it's totally worth it. Yeah, yeah. And I mean, at the end of the day, like if you're if you're a knowledge worker, and that's what's really helping you, like, develop your knowledge, that's a that's a good investment. But it's funny, because so many of the people I have on here, right, they're like, Oh, like what, what changed your business? And they'll, they'll be talking about, like, you know, this payments platform, or, you know, this firm management software. And it's really interesting to see that, like, there are actually like, practitioners where you really are not fitting into like any of the mold of like, what they're necessarily like developing all of these kind of new SaaS tools and infrastructure for. It's a lot more around, like, you know, what, what you can learn and serving you with the knowledge that you need to be able to serve these clients, which is cool. Yeah. So what what is it that made you decide to take the leap to work for yourself? Well, I think for me, kind of being in the cross border space with was as much kind of my technical upbringing as just my personal way of living. I've been living in Germany for 11 years, basically, and have been focused in cross border accounting this whole time. I actually left PwC in 2019. And I went to work in private equity for three years. And I really enjoyed that. I think having that industry insight really helps me a lot with what I'm doing now. And we were very acquisitive around Europe. So I have exposure to like 10 different European statutory gaps as well. But ultimately, I wanted to go back into accounting advisory. And I wanted to be able to have clients both in the US and in Europe. And I know that as much as some firms do that cross border work, it's not really possible to go back and forth kind of at a whim. And I was actually interviewing with a couple of firms in the US and I had three job offers to move back to Boston. And when I told them that I wanted to still keep my residency in Germany and kind of go back and forth, most of them couldn't really accommodate that because it's still there's still a legal aspect, right? Then you have to have an entity out here to employ me. But I had one company that was willing to work with me on a contract basis. And so that's kind of what allowed me to take the jump at first, because I knew that I had a little bit of a steady income stream from that. And then I obviously did a lot of work to build up my network. You know, I thought at first that I was gonna have to wait until I was a partner and had all of these connections already kind of in my virtual Rolodex before I could go off and do something on my own. And I'm really glad I didn't wait, because it's really just a matter of putting in the time and effort. And so at first, my business model was to basically white label myself, but I was working through other accounting advisory firms in the US and the UK, that occasionally had clients that were doing cross border work, but they didn't have full time expertise in house. Which again, was great to get me started and kind of get my own, you know, processes set up a little bit, but I still wasn't ultimately controlling things. And I felt like my brand wasn't there. So last spring, I kind of cut that off and really pivoted hard to just bring in my own clients. So that I can, you know, set my own scope, my own way of doing things, make things scalable for what works for me. So that's kind of where I am in the process right now about a year into really heavily bringing in my own clients. I find that really interesting, your framing of like white labeling yourself, I think that that's that's super interesting. And also, I mean, is a great way to like, bridge that gap between being full time employed, and then trying to kind of do your own, go out on your own, like, I think that that's a really good way. Someone else had told me about that where they were, I think it was maybe Yuri, the fund CPA, who was doing that he was like, contracting to be be able to kind of like fund his life while he was kind of like getting up and running. And I find that's a really, really good way. And like, such a good opportunity for people that you're able to even do that, I think is tremendous. But now talking about kind of getting your own clients and whatnot, like, these are not like, you know, mom and pop, restaurants, who are your clients like this, you know, your clients have to be pretty sizable businesses for the most part. And so how are you kind of like networking and building relationships with this client base? I'm really just trying to be where they are. So I'm in a lot of different CFO communities in both the USA and in Europe, where I'm just kind of had my ear to the ground on what types of questions they have. And then of course, if they have questions around these types of things, I kind of give my opinion, I've directed them to some blogs, but then they've reached out and kind of asked further questions. And I've done work that way. My first client that I actually got on my own, when I pivoted, came through a Slack group that I was in. And they said, Hey, we have to go through a gap conversion. Our auditor recommended this firm to us, but the quote was ridiculous. Does anybody else have referrals? And so I chatted with them and kind of broke down the process to say, okay, these are the steps you have to do. This is probably what you can do in house. This is what you would need me for. And we kind of approached it more incrementally. So I did like the first phase of the work for them. And then they decided, okay, we can probably manage to actually convert the TVs on our own once you've told us what the differences are. And we can hold the pen on the financial statements. And I just was layered in as an advisor with them. And they ended up saving 50% of the cost for what that big firm was going to charge them. So stuff like that really helps. But again, I've actually polled people in my LinkedIn audience. When you have to go through an accounting conversion, how are you finding an advisor? And it was over 50% of them said that they just asked their auditors for a referral. But the funny thing is when I talked to people, most of them aren't like raving about their auditors. And they typically, their auditors are just going to refer them to a similar type of firm, similar way of working. And so there's got to be a better way of like finding advisors to work with. And so that's what I'm really doing to just kind of spend a lot of time educating, doing things like this, getting the word out on being very transparent about the process and like, hey, you don't need somebody to do the full A to Z. If you don't want if you don't have the capacity, sure, I'll take it and I'll do it all for you. But I want to involve you in the process, you know, leverage the teams that they're involved. And then there's better knowledge transfer on the back end, too. I think that that was something that I found to be missing, you know, reflecting back on my time on both sides of the table. You know, I've been the advisor, I've been the client. So yeah, yeah, I love that kind of 360 view that you've had. I always think of that as being really valuable to like, I don't have any kind of like immediate plans of it, but it's always something I've considered. Sorry. Where I'm like, if I do end up ever back in like, tax or general, like Kaz, you know, client delivery, like, I've worked at tons of companies now that have been clients of these firms and have a background in a big firm. Sorry, I think that that's like a really, really good combination. Yeah, yeah, definitely. Interesting. And so what was working with private equity like as well? Because a lot of people are like, very concerned now. And I mean, this is a sample of one, but a lot of people are very concerned about private equities kind of involvement in the accounting industry. But I'm curious to know, you know, directly at the source, what was it like working for that company? Yeah, so I guess just to preface that also, the private equity firm that I was working for, there were a Toronto based company, but they had just started to buy up assets in Germany. And so they brought me in as their first European finance hire to build up the European team from scratch, put in the processes procedures, we ended up with five funds, I think in Europe in total. But it was a real estate asset management company. And so they weren't actually buying operational companies, they were buying like incorporated entities that held real estate, it was mostly grocery stores. So the model was slightly different. But I think similar concepts in terms of just working alongside the investment team. I really enjoyed it, I learned a ton. I think real estate is definitely sorry, not real estate, private equity is definitely its own beast when it comes to how they work and kind of the speed and the I don't know, precision, maybe that they want things done with learned a ton from the investment team about, you know, Excel shortcuts, and all of that. And it was great that I was also able to be involved in all those types of acquisitions. But I definitely understand, I guess, just the generalization that happens with private equity around, you know, they just come in and try to turn things around quickly, and then kind of push things out the door on the other end. Are the firm that I worked in really prided themselves on not doing that, which I found really interesting, that they actually, in addition to just bringing in, you know, partner capital, we're investing their own money in these assets, and really doing a lot of work to turn them around and modernize them. And, you know, then being able to sell them for much higher multiples, which is still, you know, still the private equity way. But I think there, it was like less about taking the shortcuts and more about making those real investments. So I do see that there is the potential for that kind of across the board in terms of also, you know, private equity, they might be buying up accounting firms. Interesting. Yeah, I'm always curious to find, like, five years in the future, like, who's the exit liquidity for, you know, private equity doing a deal with like, Baker Tilley? Is that I mean, I feel like that almost has to be an IPO or something like that scale. But I'm very, very curious to see like how some of these early deals like we're starting to be at a point where like, some of them have happened like two, three years ago, like some of the kind of prominent deals. And so I'm very curious to see like, how that's going to go on exit. And again, yeah, like, who's going to be the exit liquidity on the other side of that? It's interesting, because another kind of stream that I'm hearing about a lot is that there's a tendency towards more and more people working fractionally, like basically what I'm doing, and that that's going to become, you know, the working model in 10 years that everybody's just going to come in and work on projects on like a contract basis. And then that basically means these types of firms either aren't going to exist, or they're just going to be kind of like a shell that's employing some contractors kind of like what I was doing. So those are two very different ways that things could develop because if they're going to IPO or get bought by a bigger company, then you're consolidating that more and more as opposed to being more segregated. Yeah, it is. It is interesting. Like what's happening with the firms here is very contrary to that narrative. And I've been I've been listening to a lot of things that are saying that to where like, the the vision of work in the future is yeah, like, little contractors all over the place. And people have their like, you know, their a team, where it's like, Oh, yeah, you know, I, I partner up with Katrina and these four other people. And like, we do this, and we get it done. And we're so good at this. But like, we're not necessarily like a company. We just all team up on these little things. And then I also happen to work on this other type of deal. And that's with another team. And then yeah, in in the accounting industry, it's the exact opposite going on where yeah, it's ever increasingly large fish swallowing up, you know, medium and small firms. So yeah, I'm gonna be I'm gonna be very curious to see how it goes. Like, I'm a little bit with you where I don't like I don't necessarily think that it's like a purely bad thing. Like I do think it's great to have like more attention from people externally on the market. I think that's how a lot of improvements happen. I think there's going to be great tech investments and improvements, but at the end of the day, it just needs to not suck to be a CPA working somewhere, right? Yeah. I think what kind of enables that more contractor mentality as well is that being on LinkedIn and doing thought leadership and all of this stuff, it allows you as an individual to have a voice and a brand. Even when I'm trying to scrape my competitor's LinkedIn posts and see who's liking and commenting on them when a big advisory firm publishes a nice PDF guide on gap differences, I look in to see who's engaging, and it's mostly just people at the firm resharing. It really is, from an industry perspective, engaging. There's also not a lot of independent posting from the people within the firm. It's just the face of the company itself. I think that's also an interesting angle that I'm trying to play at. Yeah. I think a lot of the individuals within a firm, and I think that that's a huge missed opportunity, but you get siloed and it's like, let's repost firm assets or let's post our actual thoughtful pieces on this internal firm forum. I really applaud places that are encouraging people to be their own thought leaders. Then the fact that they're at said firm drives business, right? That's obviously a bit of a business risk where you're putting a lot of the value in the individual who's working at your firm rather than just in the firm's brand name and all that. I see some people do that. Brandon Hall, I speak with a lot and I've followed how his firm is going. I think they've done a tremendous job at that, where there's several people at Hall CPA that I see who are pretty big content creators now on LinkedIn. I'm sure that drives a ton of business. I think a small-minded firm leader might say, oh, that's a problem because you're very clearly trying to do your own thing. But someone who's a little bit more growth-minded can actually see how that's beneficial to the firm and is going to be a lot more enriching to the employee, right? Yeah. I think having more and more people out there sharing thoughtful content like that is very valuable. That's something that I struggle with, even though I'm just one person, because what I'm trying to do is basically disrupt the accounting advisory model in this very specific niche. The way that I have to publish content and to educate people, I'm not saying that I'm bad mouthing the bigger firms. I'm just being a little bit more open and saying, okay, do you really need a team of 10 people to come in, take the work, do it in a black box and drop it on your desk, are you really learning that way? I need to be very careful because I'm still close with people in a lot of the bigger firms. That made me a little bit nervous, how vocal do I want to be about that? But I've realized lately, niching even more into the scale-up space, that we're really not competing as much as I initially thought because those scale-up companies can't afford to work with the big firms. It's just a slightly different market, a different business model. I think that there's actually opportunities more to refer work back and forth to each other. Yeah, I think that in general, the world of accounting needs to move a little bit away from the scarcity mindset and a little bit more towards the abundance mindset where it's like, there's plenty to go around. Especially now with the shortage of talent, it's like, actually, there's more than enough to go around because there's a lack of people to do the things. No, I really agree with you and I resonate with what you're saying about the positioning being difficult. Again, I maintained a lot of Big 4 relationships. The partner I worked with at Deloitte, just an awesome, awesome, awesome guy. I have a lot of respect for him. We've had conversations about Big 4 transparency and he's like, what are you trying to do here? Are we fighting? And I was like, no, no, no, this is fine. This is just something that I think needs to happen and I have personally struggled with in my career. I think this would have helped me actually stay. This is not meant to be a conflict. And he's like, okay, cool. He's like, some people are a little worried about it, but that's fine. Anyways, yeah, it's really hard to position things when you're trying to drive the idea that things need to change. It's very hard to do so without going like, and the old thing is bad. And that's often not what you mean at all. It's just that, hey, here's something that I think could be beneficial. Just you talking about that Big 4 transparency. I've actually looked at it myself because I left PwC when I was a manager. But now that I'm working for myself, obviously a different track for me to have gone was to stay at a bigger firm and try to make a partner. And so it's, I felt like even when I was at PwC, I didn't have a ton of transparency for how much the partners make. And the model is obviously different between the US and Europe, but it's just helpful to say like, okay, this is what I could have been making over there. This is what I'm doing over here. Like right now it's obviously less than a Big 4 partner, full disclosure, but I also have a little bit better work-life balance. So for me, it works out. Yeah. Yeah. And, and I mean, this is meant to be informative, right? Like that doesn't need to be like a pace that you're racing against. Right. Yeah. And so there's all these trade offs. And I think increasingly people are like, I'd much rather make $200,000 or like three or $400,000 a year and like see my kids versus make $900,000 a year and have to work insane hours. Right. So I think increasingly there is that trade off. And I've been trying to reflect that on the site itself. Like I've been adding fields of like, how many hours are you working on average? And like, what's your job satisfaction like and things like that? Because initially I built this kind of like, just like, what are you making? And then I started as I started kind of having more and more conversations in the industry, I was like, Hmm, that's really, really not the whole story. And as soon as you pass a certain threshold, and that's different for everyone, like for someone, their threshold might be like, I'm not gonna be happy until I'm making a million dollars a year. But I think increasingly people's thresholds look a little bit lower than that. And it becomes a lot more about like, what kind of trade offs are you making in terms of lifestyle and stuff. So I'm happy to see that you've kind of made the jump and that you're happy with it. And, and, you know, you're really getting to achieve your goal of living that kind of cross border life yourself. So yeah, congratulations on all your success so far. Thanks. Yeah, my pleasure. So yeah, thank you very much for doing the pod. There was one last thing I wanted to mention as well as I'm going to be linking you have a free notion guide. So when you talk about creating better content, this is exactly that. So free notion guide to help understand cross border accounting and reporting. So I'm going to link that in the podcast show notes for everyone to go check out if you have any interest in cross border, or might have some clients who need some help on that front. I think that that's an excellent place to start. And yeah, once again, thank you so much for joining me on the pod. Katrina. Thanks for having me.