BDO USA LLP has tapped into Alaska, Minnesota and the Northeast for its latest additions.
The Chicago-based firm picked up Anchorage-based Mikunda, Cottrell & Co., which comes with 100 employees and six partners, as well as entering the Minneapolis market by adding Moquist Thorvilson Kaufmann LLC, bringing on 60 staff members and six partners.
BDO also bulked up its Northeast presence with the addition of members of the banking practice of Top 100 Firm ParenteBeard, bringing in 12 partners and roughly 97 employees. The staff will be located throughout BDO’s Pennsylvania, Delaware, New York and New Jersey offices.
The mergers will be effective on July 1.
[IMGCAP(1)]M&A has been a major focus of managing partner Wayne Berson: In the fall of 2013, coinciding with his taking the helm, the firm made two major acquisitions: Top 100 Firm Argy, Wiltse & Robinson (see “BDO Brings Argy On Board”) and Philadelphia-based Asher (see “BDO Adds Major Philly Firm, Asher”).
Those acquisitions, as well as those made today and the firm’s own organic growth, should boost its revenue by around $200 million, according to Berson: ”When I took over last November, we were doing around $600 million, and now we’re going to be pushing $800 million. We’re still growing organically -- it’s still there, just not as strong. We’re still going to focus on acquisitions, given the current consolidation going on in the industry.”
[IMGCAP(2)]The No. 1 firm in terms of people in Alaska, Mikunda Cottrell has strong practice areas in small closely held businesses, large commercial and state enterprises, nonprofits, and government.
“The merger increases our bench strength in all of that, while opening up new opportunities in financial institutions and energy,” according to firm president Jim Hasle, who will become a partner at BDO. He also stressed the resources and opportunities it will bring to expand the firm in consulting. “We’re thinking that we’re going to be able to utilize this footprint to offer more resources to Alaska and to provide more value to the market place.”
For BDO, “This is thinking outside the box -- not many people go to Alaska,” Berson said. “And we get a practice that is No. 1, has delivered consistent growth but still has the potential to grow more, and we see potential to develop the client base in energy and government contracting -- those are two very strong industries for BDO.”
The two firms began discussions approximately nine months ago.
“We had had several nationals firms inquire about us over the years, and we were looking at what we might be doing with our firm in the future, and we knew BDO, so we reached out to them as well,” Hasle said. “Originally we were looking at just the alliance, and then the discussion expanded to include being part of BDO.”
Though Berson and Hasle actually worked together at Grant Thornton in the 1980s, “It wasn’t until we met with them that we connected the pieces that Wayne was their CEO and I was our CEO,” Hasle said.
The Minneapolis market
The merger with MTK sprang, in part from another long-time affiliation -- the firm has been part of the BDO Alliance since 1996, according to Berson, so it was a natural candidate when BDO began looking to expand in the Twin Cities.
“We are always looking at growth markets,” he explained -- areas that are strong in terms of the business environment, staffing, employment rates, the activity of others firms, and so on -- “and Minneapolis kept coming up. We have a small tech practice there, but for all intents and purposes, we didn’t have a presence.”
[IMGCAP(3)] “We’ve been a part of the BDO Alliance for 15 years,” said MP Kevin Moquist, who will become a partner at BDO. “A key thing is that we feel like we know BDO and its partners really well. We’ve worked with them on engagements and our employees go to a lot of their training programs. A lot of it is feeling like we know them -- and they have a lot of resources to help us grow our firm.”
Moquist noted that BDO has industry groups in a lot of areas that MTK operates in, giving it the opportunity to boost its practice in areas like private equity, real estate, manufacturing, software and health care. “We’ve also got a small SEC practice, and they’ve got a strong one.”
BDO had reached out to MTK about a potential merger as early as two years ago, “but we didn’t feel we were quite ready,” Moquist said. “We also had some discussions last summer, as well. Then, this spring, they regenerated the discussion, and it made a lot of sense for us from the timing perspective.”
Major addition in major markets
Adding the new banking practice staff will significantly boost one of BDO’s major practices in one of its major markets.
“The new banking resources we’re going to get will bring a strong client base of East Coast institutions from upstate New York down to Maryland. We’re considerably enhancing that financial institutions practice,” Berson said. “This transaction effectively doubles our financial institutions practice.”
Though not a merger, the addition also has roots in long-time firm relationships, as one of ParenteBeard’s predecessor firms was a member of the BDO Alliance. “We’re familiar with many of them,” Berson said. “The former Beard Miller was one of our alliance practices, so we know them very well.”
In discussing the firm’s future moves, Berson made a special point of highlighting the BDO staff in finance, HR, IT, communications and administration in general who work to bring acquired firms on board.
“I can’t say enough about our integration team -- they’re they unsung heroes,” he said. ”I’m very happy with the way our integration team has handled things, and this has led to us looking for more opportunities.”
“We’ve developed a sort of checklist procedure, and this is a core ability for us, so that new firms brought on can start working with BDO right away, and we can help them communicate with their existing clients,” he explained. “I don’t think the integration team has reached saturation point. We have discussions going on with numerous firms across the country, so it’s probably just a matter of time.”