Doors Opening for Partners at Accounting Firms
Although the economic slowdown has taken a toll on a number of industries, accounting firms are weathering the storm remarkably well. The AICPA’s 2009 PCPS CPA Firm Top Issues Survey finds that not only are CPA firms thriving, more than half predict growth in the coming months. One of the ways firms are positioning themselves for growth: M&A. Whether it’s geography, practice areas or succession, a growing number of accounting firms are merging.
Executive search firm, A.E. Feldman, is on top of the trend. The firm’s President, Mitch Feldman, says his firm is in a position to assist accounting firm executives of all sizes with their merger goals. Feldman adds that his executive recruiters have the experience, contacts and discretion necessary to help partners find greater stability amid economic uncertainty and better opportunities as industries evolve. Carol Schwam, A.E. Feldman’s CEO, also notes that they are working with all ranges of practices and currently placing groups, or lift-outs as well as solo practitioners. “There are also shifts happening,” she adds. “Firms are also seeking Partners with expertise in different areas of business.”
CPA Firms Growing
The 2009 PCPS CPA Firm Top Issues Survey, a bi-annual study that identifies the most significant challenges facing accountants across the country, shows that that there are bright spots for accounting firms of all sizes – even in these uncertain economic times.
When asked about the economy’s greatest effect on them, a solid proportion of firms with 20 or fewer professionals picked “no impact.” A number of firms, including more than 10% of firms with 10 or fewer professionals, said that additional client services were one result of the economic crisis. Moreover, when projecting expected revenue in the year ending May 2010, roughly 45% to 60% of every firm segment expected some growth. Overall, the study also found, it’s safe to conclude that CPA employment should remain steady going forward.
When planning ways to generate new business in a tough economy, increasing service to existing clients was the top choice of virtually every firm segment. Now, a growing number of firms are using mergers as a means to do just that.
Merger Mania
Parente Randolph and Beard Miller Co. announced plans to merge later this year to create one of the largest accounting firms in the Northeast, with a total $175 million in revenue. The combined firms will include 172 partners and over 1,200 staff in Pennsylvania, New York, New Jersey, Maryland, Delaware and Texas. The firms say their new name will be announced when the merger closes in the fourth quarter.
“Our new firm will have even deeper resources and broader areas of expertise to serve our clients, including more industry-specific expertise, specialized tax consulting and other business advisory resources,” said Beard Miller, Chairman and Chief Executive Lamar Stoltzfus, who will serve as chairman of the new firm.
“While already thriving in our respective markets, by combining our practices, we will be able to offer a broader array of industry expertise to our clients,” added Bob Ciaruffoli, Chairman and CEO of Parente Randolph, will serve as CEO.
Meanwhile, two Louisville accounting firms are merging into what promises to be the city’s largest accounting firm, ranked by number of accountants, according to BizJournals.com. The report states that Principals with Chilton & Medley LLP and Mountjoy & Bressler LLP have signed a memorandum of agreement to merge the two firms. The deal is scheduled to close November 1st. The new firm will be called Mountjoy Chilton Medley LLP.
Accounting and consulting firm Sikich LLP also recently announced it has acquired Levi Littell Herbst & Co., a boutique M&A advisory firm that specializes in transactions under $100 million in value. Managing directors Laurence W. Levi and Richard A. Herbst will join Sikich as partners and bring all of their staff with them. Levi Littell Herbst & Co. will be integrated into Sikich’s existing investment banking group and will operate under the Sikich name, but Levi Littell’s offices will remain in Chicago and New York.
“The talent in our group and our ability to leverage existing resources puts us in an even better position in the middle market to serve our clients,” said Christopher Geier, Partner-in-Charge of the Investment banking practice at Sikich.
Mowery & Schoenfeld, an accounting, tax and consulting firm based in Lincolnshire, Illinois, announced in August it entered into a strategic alliance with the principals and other accountants of Katch, Tyson & Company. The transaction made Mowery & Schoenfeld one of the area’s largest firms focused on serving the business and financial advisory needs of mid-sized businesses.
“We recognize that the next step for our organization was to expand by adding additional accountants of comparable quality that would enable us to expand services to our local, regional, and national clients, as well as provide more career opportunities for our people,” said Managing Partner Ronald Katch. “Mowery & Schoenfeld shares our client philosophy of helping our middle-market clients grow and succeed, and the affiliation will broaden and deepen our existing industry and functional specialization, enabling us to offer more comprehensive business advice tailored to our clients’ needs,” he added.
Accounting firm Plante & Moran announced a merger with Jackson, Rolfes, Spurgeon & Co. in July, extending Michigan-based Plante to the Cincinnati market.
“Cincinnati is an important market for us,” said Plante & Moran’s Managing Partner, Gordon Krater. “It rounds out our footprint in Ohio.” Plante also has offices in Toledo, Columbus and Cleveland, and Krater now plans to double the size of the Cincinnati office in two years.
Two more accounting firms in the Bay Area - Smith, Lange & Phillips LLP and Daoro Zydel & Holland LLP - combined forces in July, according to WebCPA.com. The new firm operates under the name DZH Phillips LLP and includes 10 partners, more than 70 team members, and $12 million in annual revenue.
“This is a positive, exciting step for us,” said Ryan M. Svoboda, Managing Partner of the combined firm. “The goal with our merger was not simply to increase our size, but also to address our clients’ growing needs with a broader scope of services, talent and expertise. Joining forces with DZH will allow us to accomplish this,” he added.
Accounting firm LarsonAllen has also expanded its presence in Arizona by combining with Scottsdale-based Cronstrom, Osuch & Co. “By joining LarsonAllen, we will be able to offer our clients a wider range of services including benefits, information security, and valuation and forensic,” said Cronstrom Osuch Founding Principal, Sandy Cronstrom.
Now, as more CPA firms prepare to navigate through the myriad of changes and processes that accompany the consolidation process, A.E. Feldman, says it is poised to assist management with their firm’s goals.
If you are a partner in an accounting firm, talk with A.E. Feldman’s President, Mitch Feldman about merge opportunities or moving to a better situation today.
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