DESTINATION ONWARD. aspire achieve advance STRATEGIC PLAN

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1 DESTINATION ONWARD. aspire achieve advance STRATEGIC PLAN

2 TABLE OF CONTENTS Vision and Mission 2 Culture and Values 4 DESTINATION ONWARD. aspire achieve advance Five Year Goals 6 Client Service Excellence 8 Employer of Choice 8 Partnership of Choice 8 Dominance in Focus Areas Service Lines and Niches 9 Revenue and Profitability 10 Capital 13 Clients 14 People 16 Business Environment 18 Governance 19 Service Lines 20 Niches 22 Infrastructure 24 Technology 24 Marketing 24 Finance 24 Human Capital 24 Legal 25 Risk 25 Environmental Sustainability 26 Philanthropy 26 Summary 28

3 VISION MNP will be Canada s pre-eminent mid market accounting, tax, consulting and financial advisory firm. MISSION Our success will come from focused, strategic growth with a team that shares our values, providing thought leading solutions and an exceptional client service experience. THE NEXT FIVE YEARS IS THE CONTINUATION OF OUR JOURNEY. 2 3

4 The common wisdom in the professional services industry is that firms value: CULTURE AND VALUES More than 25 years ago, our vision was of mid market pre-eminence in the Prairie provinces, and we embarked on a journey. Ten years into that journey, we re-set our vision to include B.C. Twenty years in, we re-set to include Ontario and Quebec. Today, our vision is of Canada. Throughout this time, we have held true to our values and worked hard to preserve and protect our culture because at MNP, we know that our culture sets us apart and is the foundation of our success. People Clients Professions Communities Of course others do; of course we do. Those values in and of themselves do not set us apart. What sets us apart is how we, as the whole MNP team, express our values. We exemplify integrity in all we do We are one firm / one pot / one team We are entrepreneurial Profit optimization We run our business like a business Balanced lifestyle Fun is important We insist on quality client service We perform to high quality standards We operate on guidelines We conduct ourselves with humility and respect We value our professions and our communities We value diversity It is the responsibility of every partner and every team member to live our values every day. 4 5

5 FIVE YEAR GOALS Throughout our history, when we have set goals, we have met them. Our proud tradition is to continually challenge ourselves to grow as a business, as individuals and as leaders. In this next five years, some things many things in fact will not change. The mid market is our focus; we know this space better than any other firm. We operate in a matrix model; we do this better than any other firm. And, we try not to take ourselves too seriously; we think it should be fun. All of these things are real sources of competitive advantage. But nothing stands still, so to deliver our vision we must be alert, agile and responsive. The next five years is the continuation of our journey to mid market pre-eminence. It will be less about adding new things and more about maturing the business and capitalizing on what we have built. Of course there will still be new offices, services and niches to add or evolve as opportunities arise and we respond to market demand. Strategically, though, we need to do different things than we did in the last 5, 10 or 25 years; we need to shift. Far from taking the focus off of growth, we will continue to grow, but we will do so by expanding up into the top half of the mid market, while at the same time maximizing the potential of existing clients and markets. Improving market and client penetration, moving towards optimal leverage and improving utilization and billing practices are priorities for our business in this cycle. We will continue to measure our success in terms of: Reputation for client service excellence; Dominance in focus areas; Recognition as an employer of choice; Recognition as a partnership of choice; Revenue and profitability; and, Capital employed. As much as our goals are about financial success, they are also about the individual successes of our clients and our team members. And, included in our definition of success is making sure we have FUN along the way. WE WILL CONTINUE TO GROW. 6 7

6 CLIENT SERVICE EXCELLENCE Our philosophy has always been to serve clients according to their needs. We will spend time with each client to understand their business, their domestic and international challenges and how they want to work and communicate with us. In a world that continues to change, some things never will. Technical excellence, timely delivery and superior communication will be hallmarks of the exceptional client experience that MNP provides. EMPLOYER OF CHOICE Being an employer of choice to us means being the best place for talented people to realize their technical, professional and life potential. We will measure our success in terms of how our employees rate us and we will respond with integrity to their feedback. PARTNERSHIP OF CHOICE MNP will continue to be the partnership of choice for top professionals who share our vision, values and culture. We will be the preferred associate of other world class service providers with whom we can connect to help better serve our clients international needs. MNP will remain independent, but will be strongly established in a world class network of professional services firms. DOMINANCE IN FOCUS AREAS SERVICE LINES AND NICHES In our service lines and in our niches, we will invest in thought leadership and innovation, setting the standard for high value client solutions. We will publicly share our expertise through various media and events; establishing our leaders as reliable sources of technical and industry knowledge, and contributing to the advancement of our professions. We will measure our success in terms of feedback and referrals from the market and the frequency with which our professional viewpoints and opinions are published or referenced. As we continue to evolve our service offerings in response to client needs and market opportunity, and bring focus to niches, we expect revenue from non-compliance services to grow as a percentage of total revenue. In five years, at least 40% of firm total revenue will derive from services other than traditional compliance. 8 9

7 REVENUE AND PROFITABILITY GROWTH We will be the recognized authority on mid market business in Canada, working for the best clients in every market. From the top to the bottom of the mid market, we will be viewed as the experts and will continually grow our market share. We will drive profitable growth towards a target of $800 $900 million in net revenue by Growth in mature markets will derive primarily from organic and acquisition sources. In B.C., Ontario and the Greater Montreal Area, organic growth will be accelerated and augmented by mergers and acquisitions. The priority for Atlantic Canada and the rest of Quebec is to determine if and when we want to become established in that geography, and if so, to develop a strategy. Organic growth in all markets will be fuelled by delivering on our client service promise. BUSINESS MODELS We will make decisions about how we invest and operate based on business models, which include targets for leverage, utilization, realization, partner and staff mix and cost structure. As we work to optimize on these factors for each piece of the business, we do so understanding that one size does not fit all. A big city business model no more fits a small market office, than a small market office model fits a big city office. Similarly, a national niche model doesn t fit a local niche and a model for specialist tax service delivery does not work for a consumer insolvency practice. Acknowledging and allowing for differences means we can resource each group of professionals according to their needs, not providing more resources than can be profitably employed and not limiting resources where they can be effectively leveraged. GROWTH IN MATURE MARKETS WILL CONTINUE

8 LEVERAGE Leverage drives profitability in professional services and we have many assets that we can and do leverage, including people, knowledge, skills, geography and capital. Mature leverage drives optimal benefit from all of these. Over the planning horizon our goal will be to capitalize on what we have built, fine tuning the more mature pieces of the business and maturing the newer pieces so that they approach optimal leverage. As with business models, a one size fits all leverage target does not work for our business. From smaller to larger centres we have, and must sustain, more than one leverage target. A single leverage target, if set too low to capture smaller practices, will not drive maximum profitability across the firm. If the target is set too high, reflecting the potential of certain practices in larger centres, we may find ourselves exiting PROFITABILITY Many things we do impact profitability. Full service penetration of our clients will allow us to better capitalize on our assets and investments, and moving towards our leverage, utilization and average billing rate targets and driving efficiencies across our business will make MNP increasingly profitable. smaller centres. Neither is desirable, hence we will not set a single firm target for partner leverage. Leverage targets will be set based on regional, niche and service line business models. Average Principal Partner leverage, in today s dollars, will grow to around $1.8 million, with individual leverage ranging above and below the average based on regional and service line leverage models. Average Principal Partner leverage will grow primarily as a result of: Progressing towards mature leverage models in newer markets and specialty service areas; and, Increasing average client size by increasing our presence in the upper half of themid market. VALUE OF THE FIRM The value of the partner buyout program reflects the value of the firm. The value of the firm will increase in real terms in proportion to net fee growth. CAPITAL Capital is required in our business to fund investments in working capital and infrastructure, including premises and technology. Capital is funded by the partners and balanced with bank debt. We seek to minimize capital through effective asset management and review our capital requirements annually. Associate Partner capital is, and will remain, a fixed amount; Principal Partner capital will continue to float. We are committed to reducing Principal Partner capital as a percentage of income over the planning horizon

9 CLIENTS Simply stated, we value our clients. They are the reason we are in business. Their success is our success and we will demonstrate our understanding of that basic truth in all aspects of client service. Partnering with our clients in their success goes beyond a service transaction to a service relationship. We will: Commit to spending time with our clients listening to what they need and expect; Train and support our people in delivering meaningful solutions according to those needs and expectations; and, Communicate with each other and with our clients about our shared service objectives. SIMPLY STATED, WE VALUE OUR CLIENTS. Where our clients needs go beyond our borders, we will work with our alliance partners to provide seamless access to international resources

10 Working together in an atmosphere of trust and mutual respect, we will continue to: PEOPLE Our people make us successful by living our values. Our commitment to our people is, and always will be, to create and maintain an environment that allows people to be their best and makes them proud to call MNP home. Invest in professional development for our team, and provide opportunities for individuals to explore their interests and develop their talents; Invest in developing leaders for today and tomorrow; Communicate expectations and reward performance; Support our people with tools and technologies to enable their work and communication, wherever their clients take them; Support innovation and collaboration; Perpetuate a casual and FUN work environment; Support our peoples contributions to their professions and communities in ways that are meaningful for them; Promote diversity in all firm roles, from entry level to Board and Executive; Celebrate our successes; and, Listen. Our great people, and the strong leaders we grow, will ensure our succession as the leaders of today pass the baton to the next generation

11 BUSINESS ENVIRONMENT 18 In the external environment a number of factors will impact MNP as we execute our strategy. They include: Global, national and regional economies; The accounting and advisory firm competitive environment; Advances in technology and communication; The regulatory environment; Demographics and succession; and, Industry associations and networks. Over time, we know that issues will surface that require a firm level response and may affect: Our clients; Our people; Our service offerings; and Our infrastructure requirements. We will remain alert to changes in the external environment and be nimble in our responses, taking into account both the long- and short-term implications of decisions. GOVERNANCE Our firm s governance has evolved in response to the changing needs of the organization. The evolution of our governance toward the model outlined in the 2010 Governance paper will continue. The basic principles of our governance will persist. These are: Insert Pull We will have a board comprised of partners elected and appointed from Quote the partnership; Here, We will have an executive team; We will manage in a matrix with and Here. strong leadership from service lines, niches and regions; We will maintain a regional governance model, recognizing that it will evolve over time. MNP regions will have, or have the potential to grow to, a minimum volume of $20 million in net fees; and, We will not overburden the organization with bureaucracy. 19

12 Our suite of services will continue to evolve based on client need and market opportunity, but will generally fall within the following categories: SERVICE LINES Being a client-centered organization means understanding and responding to our clients needs. As industries respond to new opportunities and challenges, what clients need from their professional advisors will change. At the same time, regulators and authorities will respond to market issues in their own way, possibly opening the door to new services or closing the door on things we do today. Accounting and Assurance Domestic and International Tax Enterprise Risk Services Corporate Finance Valuations and Litigation Support Forensic and Fraud Consulting Insolvency Succession Fundamentally, within each service line we will provide services: That are in demand by our clients in our markets; That we are technically competent to provide; That can be delivered profitably and where delivering the service is the highest and best use of our resources in a given market; and, Where we can manage risk

13 Profit opportunity will drive decisions related to the amount of firm resources to allocate to each niche. Our investments will be in the areas of: Our niche strategy is about focus. It is about investing in identifiable client groups where that investment positions us as leaders and where dominance results in practice building and enhanced profitability. We will identify and support niches at three levels: National Regional Local NICHES Developing deep understanding of industry and / or cultural issues; Establishing ourselves as thought leaders through presentation and publication; Targeting clients in the niche supported by focused marketing efforts; Supporting and training professionals having, or wishing to establish, a niche focus; and, Performance measurement and reporting to assist in practice management. Not every MNP professional may be able to focus exclusively, or even partly, on a particular niche. However, we believe that practitioners who are able to focus on a group of clients in an industry or cultural group have the opportunity to: Improve their understanding of key client issues and ability to bring solutions; More effectively penetrate the market; Be more efficient; and, Drive greater profit to the firm. We will therefore strongly encourage and support niching of practices wherever possible

14 INFRASTRUCTURE Our infrastructure departments together create the platform for our success. They must anticipate and respond to business requirements as we grow and ensure the quantum and timing of our investments are optimized. We will support regions, service lines and niches according to their requirements. TECHNOLOGY MARKETING LEGAL The focus of Legal Services is on minimizing legal and reputational risk. We foster a culture where people consider, analyze and understand the risks associated with our business, and then seek to minimize the risks, realizing we cannot achieve our strategic goals and at the same time eliminate all risk. Rather, Legal Services helps to manage the risk as appropriate. The Technology group develops, enables and supports solutions that allow us to deliver client service, collaborate, communicate and operate reliably. We will continually innovate to deliver the strategic needs of service lines, niches and operations at the firm, region and local office levels. And, we will invest at a level appropriate to the growth of our business and changes in the technology environment where these provide opportunities to optimize risk, leverage and efficiency. FINANCE The Marketing group develops and delivers creative programs to support strategic and operational goals, helping translate our objectives into market appropriate media, message and method. We will continue to build and protect our brand in new and existing markets, and create and sustain market advantage in all services and niches. HUMAN CAPITAL RISK To protect our assets we will understand, manage and mitigate risk in every service line, niche and region. Managing risk is the responsibility of every person in the firm and it starts with a rigorous client acceptance and continuance process, assigning the right people and doing great work at every level, from the administrative team to the partner group. 24 The Budget and Finance group delivers transaction processing, reporting and analytics to support all aspects of business management. Understanding what drives profit informs every decision we make about our business. Human Capital provides programs and processes that source, develop, engage and reward our team. Human Capital ensures that we grow, acquire and sustain the people we need to serve our clients at every level in every market, today and in future. At the firm level we will maintain policies and guidelines to protect our people and our tangible and intangible assets, and we will monitor and manage regulatory compliance and independence issues, working with professional advisors and insurance carriers to appropriately address risk from ongoing operations and new strategic directions. 25

15 ENVIRONMENTAL SUSTAINABILITY MNP is committed to sustainable business practices in the ways we operate and the premises we occupy. We look for ways to reduce our environmental footprint through initiatives like paperless, office waste reduction and redirection, telecommuting, hotelling and building energy management. In evaluating new spaces we will give priority to those meeting, at a minimum, LEED Silver standards. PHILANTHROPY THROUGHOUT OUR HISTORY, WE HAVE ALWAYS MET THE GOALS WE SET. We understand the value and importance of philanthropy. We encourage our team members in their individual philanthropic efforts and office level support of local initiatives. At the firm, we will look towards establishing an umbrella for major gifts and to create a legacy of community contribution

16 SUMMARY Our journey to become Canada s pre-eminent mid market accounting, tax, consulting and financial advisory firm is ongoing. We are proud of our history and excited about our future. Today, we are stewards of this firm. It s up to us to preserve our values by living them every day. It s up to us to make wise strategic investments to build the value of the firm. It s up to us to make the journey fun and rewarding for our clients and our team STRATEGIC PLAN Together, as one firm, we will realize our vision. 28

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