More than Historians
Anchin’s Fashion Group Encourages Its Clients to Look to the FutureAnchin in the NewsOctober 1, 2018
Almost by definition, most accounting firms are historians, simply reporting the results of a client’s recent past. But that’s not even half the job, according to Marc Federbush, leader of the Fashion Group at New York City-based accounting and advisory firm Anchin.
Instead, Federbush and his 26-member team push their clients to look ahead, often providing research on trends or even suggesting acquisitions. That focus on the future, backed by the knowledge, insight, and experience of a group of specialists in the apparel industry, helps distinguish Anchin from other service firms, Federbush says.
“We know the fashion industry, we know the issues companies face—many of our clients have faced the same issues before,” he notes. “We understand the challenges operationally and bring best practices to the table.”
For 95 years, Anchin has worked with fashion companies and established a dedicated group to the industry more than 25 years ago. Unlike the Big 4 accounting firms, it works exclusively with privately-owned or closely-held fashion companies, including manufacturers, wholesalers, importers, designers, and retailers at all points in their life cycles.
“Our specialty is true middle market. These businesses have challenges and opportunities unique to their marketplace. As a smaller firm, we have a quicker response,” Federbush observes. “However, as a member of the global association BKR International, we have access to expertise in more than 70 countries regarding tax havens, setting up international companies and more. We can then handle any situation the larger firms can, but with a personal touch.
That has included providing business planning and analysis, advising individuals and businesses on Federal and State tax matters, mergers and acquisitions, sales of companies, and estate planning. Anchin’s extensive knowledge helps their clients track trends and anticipate potential ramifications before they materialize.
“We’re very proactive with our clients. We go to them before they come to us and talk about what’s happening in the industry, such as the impact of the new tax act or tariffs on the fashion industry, or whether they should consider a research and development study for tax credits,” Federbush says.
More often associated with pharmaceuticals, research and development, in fact, is somewhat unsung in the apparel industry. Anchin offers a unique in-house R&D tax credit group for fashion and other industries, which helps clients assess credits throughout all business phases, including new market entries and product development.
Other specialized groups help clients evaluate relocations, succession planning (especially important for privately-held firms, which frequently are pass-through entities), wealth preservation, and estate planning. Once companies grow to a certain level, they become potential acquisition candidates—Anchin can help them sell, and then structure the transaction to minimize tax liabilities.
“We like to help our clients make the money at the company level, then keep it on the individual level,” Federbush says.
On the other hand, Anchin can also help the companies grow by suggesting acquisitions or new product lines. “We help them manage the company better, to look at and understand the numbers so they can make better business decisions. We like to be part of the management team, and help them improve operationally,” he explains. “And because we’ve helped them become more profitable, they may be able to command a larger multiple in a sale, if that is their exit strategy.”
While the bulk of the group’s clients range from $20 million to $1 billion in sales, the group works with a number of startups—as long as they have ambitions to grow significantly.
“If they want to graduate from the minor leagues to the major leagues, we can help them to navigate the transition,” Federbush says.
A major benefit to Anchin’s clients is the tenure and quality of its workforce. The firm appears regularly on top employer lists, including a decade-long run on the list of “Best Places to Work in New York State.”
“Because our employees are happy, we tend to have low turnover. And that helps us with our clients. They don’t have to see different people year after year,” Federbush notes. “A consistent staff makes the clients’ lives much easier—and we have clients who’ve remained with us well beyond the industry average.”
That stability is critical at a time when the Fashion Group’s clients are in the midst of a transformative time in their businesss.
“Some of the biggest challenges facing the fashion industry are the impact of e-commerce and the continuing consolidation of retailers,” he observes. “Each group of consumers, whether they’re the Gen Xers, the millennials, whomever, is buying differently.”
While some shoppers still like to touch and try on apparel before purchase, others are becoming more comfortable online. And the pure-play internet retailer has one set of challenges compared to retailers who get their merchandise from wholesalers, who are the bulk of Anchin’s fashion client base.
“Wholesalers will have a tougher time as more retailers continue to consolidate or close,” he says. “If a wholesaler is depending on a large retailer for a significant portion of the volume, and it either files Chapter 11 or is acquired, that’s a challenge for the wholesalers selling to them.”
Shoppers are also being careful with their dollars as discretionary income isn’t rising.
“People don’t change their wardrobe as frequently as they did in the past,” he notes. “Young adults with children will focus on their kids’ clothes and use accessories to update their own wardrobes. That has become a challenge, even though the unemployment rate is low. They like the experience of going into the stores, but they’re spending less on clothing. They’re not making multiple purchases on finer clothing—they can’t afford it.”
And Federbush considers it part of the job to bring ideas to clients, challenging them to look for new ways to grow, whether that’s buying another brand or launching a new brand.
“We challenge them to discover what their customers are looking for, to make sure they are providing something different from their competitors,” he says. “Should a specialist in outerwear find a new product category that complements the business, such as swimwear? We have that dialogue.
“At the end of the day, even though we’re an accounting firm, we like to be viewed as part of the management team, helping our clients add value to their business,” Federbush continues. “We’re passionate about what we do, and that’s how we’ve earned our reputation.”