An Audit and a Dallas-Based Legend: Headington and MCG’s Story
“Slow and steady wins the race.”
For Keith Bunch, Senior Vice President and Treasurer at Dallas-based Headington Companies, and MCG lead tax partner Chris Johnson, adhering to the moral behind this old adage — reliable and determined beats swift and reckless — has not only helped create a highly productive working relationship, but also a lasting friendship in the process.
The foundation for these meaningful engagements formed from a meeting the company arranged with MCG’s Tom Montgomery and Johnson more than 10 years ago. Headington began as an oil and gas company in 1978 before its founder, Tim Headington, entered another financial stratosphere with a $1.4 billion asset sale of shale oil property in North Dakota and Montana. Bunch, who started at Headington in 1998, helped oversee its diversification into a number of different industries, including luxury real estate. As more specialized accounting demands arose from these diversified assets, Headington’s need for a firm like MCG initiated their first engagement.
“At the time we discovered MCG, we were looking for a company to do accounting for a beverage club in University Park,” Bunch said. “We had no experience whatsoever with that, we didn’t know how it worked. Our attorney at Gardere Wynne Sewell referred us to Tom Montgomery, and they came in and did a great job for us; this was maybe 2005. About a year later, we were looking at changing accounting firms for the bulk of our work, and in the process, we interviewed MCG, even though they were a small firm compared to other firms we were interviewing.
“During that time, Tom brought in Chris with him. Chris was fairly new to the firm, but he left a great impression on us. We ended up going in a different direction … because of our debt covenant at the time, but I met with Chris and Tom later and said, ‘Look, I’m really impressed with you guys. Why don’t I start feeding you some non-corporate work and get you involved there, and try to get you as much tax work as I can.’ ”
Headington’s expanded holdings also included developing, building, owning and operating The Joule and The Lumen hotels in downtown Dallas. While they weren’t at a point where they could turn over the entirety of their accounting work to MCG, those niche assets allowed MCG to steadily prove their worth and build a relationship.
“It hasn’t just been a tax relationship for 10 years, I think they’ve done a very good job of providing valuable service in all areas — wherever we have a need, Chris has found somebody to plug in and help…I know that we’re going to get a better response from MCG than we would from other firms.”
“Of course, Tom wanted the whole thing from the start,” Bunch joked. “Chris stated upfront that he didn’t know anything about oil and gas. I told him, ‘To do this work, you won’t need oil and gas experience because we’re going to give you the hotels and we’re going to give you what we call our family office entities, some personal returns and investment partnerships, and let’s just see where it goes.’ From that point on, pretty much everything I gave Chris was a priority to him.”
Johnson’s extensive experience with R&D credits from a prior position earned him a reputation as one of the preeminent credits experts in Dallas. Leveraging that expertise proved to be a pivotal juncture in solidifying MCG’s standing.
“We had just finished building The Joule and we were looking to maximize what’s called a historic rehab credit,” Bunch said. “Chris built the credit up to around $7 million. We got selected for audit, and Chris basically ran with it. The agent asked for him and his supervisor to come out to The Joule and do a tour. During this tour, Chris is giving them an education on the credit — he’s basically teaching them about it. I’m sitting there in awe at how much he obviously had this under control.
“We get basically a zero-change audit, and that prompted us to continue giving MCG even more work because obviously they had done a terrific job. The better we did, the more work we gave them, to the point where this past year things changed with respect to our debt facility and we finally made a change to use MCG in their first year with our own audit. That would have never happened if Chris had not developed this relationship on the tax side for 10 years and everything we gave him was an A+. It’s funny because Tom wanted the work 10 years ago and I told him, ‘We’re built on relationships. As this relationship grows, you’re going to get more work from us.’ And that’s what happened.”
Alongside their flourishing professional engagement, Bunch and Johnson have struck up a real friendship through quality time spent on MCG client appreciation fishing trips and at annual CPA conferences. “Chris and I have gotten to know each other really well to the point where I trust him implicitly,” Bunch said. “It’s not only professionally, I trust Chris on a personal level — I consider him one of my best friends. It was a situation where we realized we had a lot in common. I think that the way it came about was kind of organic, because it’s not often that you meet one of your best friends when you’re in your thirties.”
Friendship aside, MCG’s ability to command the demanding tax challenges posed by Headington’s complicated structure and billion-dollar balance sheet is what continues to amplify their workload.
“MCG has been able to handle all those issues with relative ease,” Bunch said. “It hasn’t just been a tax relationship for 10 years, I think they’ve done a very good job of providing valuable service in all areas — wherever we have a need, Chris has found somebody to plug in and help…I know that we’re going to get a better response from MCG than we would from other firms.”