J.H. Cohn CEO Tom Marino said Wednesday that his firm will remain in the Nexia International accounting firm network after it merges in October with Reznick Group, and will be renamed CohnReznick, with him and Reznick managing principal Ken Baggett leading the combined firm as co-CEOs for the next three years.
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Former New York Yankees manager Joe Torre is also expected to continue as spokesman for the combined firm.
The two firms announced their intention to merge in May, creating the 11th largest accounting firm in the country, with combined revenues of $450 million and 2,000 staff in 25 offices (see J.H. Cohn and Reznick Group to Merge).
The decision to remain in the Nexia network represents a blow to IGAF Polaris—recently renamed PrimeGlobal—the firm association where Reznick has belonged until now.
“I think they were one of the founding members of Polaris,” Marino said in a phone interview Wednesday. “It was a tough decision for them, but we had put together a lot of evidence comparing the two organizations, and the results were quite compelling. There’s a difference in the size of the firms in Nexia versus IGAF. IGAF might have had more firms, but Nexia may have more substantial-size firms. That’s not to say that IGAF didn’t have some pretty good firms in it. I know some of the American firms. They’re very good. We’re friends with a lot of those firms. But one of the things we also looked at was the amount of business transacted between J.H. Cohn and Nexia, and then Reznick and IGAF, and it’s not close. We do a lot more with Nexia.”
Marino acknowledged that’s due in part to the nature of J.H. Cohn’s practice. “Reznick is much more real estate centric and therefore doesn’t deal as much internationally as a J.H. Cohn would," he said. "But whether it’s inbound or outbound, we do a lot more with Nexia than Reznick does with IGAF. So it made the decision quite easy with the quality of firms that were in Nexia, with the amount of business we do with Nexia, and the comfort level. Candidly it had nothing to do really with whether one was a network or one was an association. That came up in the discussion at one point, but it wasn’t a big point. The evidence was overwhelmingly compelling to go with Nexia, even though IGAF is a good organization. It’s very tough on Reznick, being a family member, where not only is he with some quality firms, but you develop a collegiality, a comradeship, and really a friendship, and it’s tough to leave that. But business is business.”
The rest of the interview with Marino follows as a Q&A:
How has the transition been going so far with the merger?
Unbelievably good. It will become effective October 1, but we’ve been working on integration for the past four or five months already, well before the deal was consummated. We’re picking up leads and we’re closing business already, really without any disagreements, remarkably so. Ken Baggett and I are shocked. There hasn’t been any disagreement on any matter at this point in time. You would think that two firms of this size trying to negotiate a deal would come to loggerheads at some point in time and then try to resolve it, but we never have gotten to that point. We sat down and worked out what we think is fair to both firms, and they’ve been a pleasure to work with, and hopefully they think the same thing.
Has there been a decision yet what the name of the combined firm will be and who is going to be the chief executive or managing principal or partner?
The name of the firm is going to be—surprisingly, you would never have guessed it—CohnReznick, joined with a capital R in there. And we’re going to have a fancy new logo to go along with it too. Ken Baggett and I for the first three years are going to be co-CEOs. Then both will step down. Neither can run again. Then there will be one CEO voted on by the partners of what in three years will be one firm. For right now, Ken and I get along well enough that we don’t think sharing the job is a problem at all, and it will give partners the chance to know the partners in each other’s firm, and then we will go solo after three years.
What’s the response been so far with integrating the two firms? Do the different partners and staff seem to be meshing?
We spent a lot of time before we got to an agreement on culture and making sure we did mesh, and we do, and now we’ve broken down into industry groups, and they’ve been working in teams: our real estate people with their real estate people, their manufacturing people with ours, and different leadership depending on who has the wealth and knowledge there. But it’s gone extremely, extremely well, and again the key partners are getting along very well. Our consulting groups are going to combine and go to market day one, right out of the box, as a national practice. There have been no hiccups with respect to the retirements or compensation, so again as surprising as it may be that things could be going that smoothly, they’re going that smoothly.
That’s great. And Joe Torre is still going to be spokesman over there?
Joe has resonated with our firm, and there’s no reason to think he won’t with the combined firm. He still evokes what emotions we want to get out of the clients: the trust, the management skills, the reliability, the success. He sort of transcends [being just] a Yankee. There’s the teamwork and the strategy. Joe has been part of us for a number of years, and we see him as part of the new firm for a number of years, as long as he wants to do it, and so far, so good.
Any final thoughts about the merger or Nexia?
We’re extremely pleased the way it’s going. We’re extremely pleased that Reznick, without really an argument, saw their way clear that Nexia is the right answer. So now we’re on to grow both, both CohnReznick and Nexia. It’s real simple. We’re going to grow both, not to be bigger, but to be better.