“We need to get our first audit completed this year—who should we use as an auditor?”
Key Tips from Guild Members
Quick thoughts on mid-tier firms: If you are primarily choosing mid-tier because of cost and will eventually move to a Big 4, it’s good to know that most of the Big 4 are willing to "lose" money on you in the first few years (banking on your eventual IPO) which makes them very competitive in price.
Consider engaging Big 4 earlier: +1 to that. I'd at least ask for a quote from a few of the Big 4 - starting off with them is way easier than converting later (at least my experience with the Portland, Oregon KPMG team). We used them from Day 1 at Tripwire and it made filing our S-1 so much easier.
Ask for a 3-year quote: Two experienced CFOs noted that it’s key to ask for a 3-year quote from all of the firms you're considering. What can sometimes occur when agreements are shorter-term is that you get someone who buys into your business in Year 1 and then significantly increases your audit fee in Year 2 and beyond. While the Big 4 is helpful, they are definitely not cheap compared to the others. They may give you a discount for 2 years, but then they start hiking up rates.
Big 4 will future proof you more: There is a benefit to Big 4 because their standards are a little higher and will prepare you for higher standards over time.
The Partner matters: I will repeat... the Partner matters a lot.
Play offense, not defense: Be clear on what you want your Revenue Recognition policy to be and ask the auditors about it in advance so that you understand their stance and their approach.
Feedback on Specific Firms
1. Withum (+3)
- Our team has been happy with them thus far. E&Y told us they are a good feeder into E&Y down the road, if and when the company needs a more sophisticated auditing firm.
- I would recommend Chris DeMayo and his team at Withum.
- They are a good and easy mid-size firm. Be mindful [for BDO, Grant, etc.] that they might be mid-tier, but they audit like Tier 1 which can be super painful for a first time audit. The benefit of a global brand is that they can also do the intl work which makes international audits more seamless. We have 4 different auditors which is brutal, and now, we are going through this process of consolidation.
2. Grant Thornton (+2)
- I have used Grant Thornton in the past and found them to be very knowledgeable, helpful and well priced.
- My previous company was SaaS in the Bay area and GT did a great job
3. Armanino (+1)
- I’ve used them at two of my prior companies, and they’ve been great. Straightforward, predictable, feels like a partnership. I recommend RFP’ing with as many as you can - (1) we have found in our RFP’s that each have a different audit approach, and some want to do a lot more sample testing than others (which is time consuming on my team to pull data); (2) the audit partner can make a huge difference. We have a good experience with MA, albeit we used them more for tax services than for audit services.
4. Cohn Reznick (+1)
- We used Cohn Reznick for two audits prior to switching to EY and were generally pleased
5. Deloitte (+1)
- We engaged them for our first audit (no prior reviews), and they were pretty good at accommodating us on price and timing.
6. Crowe (+1)
- We used them at Grubhub and went public with them.
- A solid large regional player that has done quality work for us.