Baker Tilly Virchow Krause LLP, a Top 100 Firm, is combining with RGL Forensics, a global financial investigations firm, to take advantage of the growing demand for forensic accounting services.
The combined firm plans to create a global forensic accounting practice specializing in insurance, legal and corporate clients. The field of forensic accounting has been growing around the world, with the market estimated to be just under $5 billion in the U.S.
“As a firm our strategy is moving increasingly toward advisory-based services,” said Baker Tilly managing partner of consulting Ethan Bach. “RGL Forensics’ capabilities are really advisory-based services, leveraging accounting-based skillsets. At the highest levels, from a strategic standpoint it made a lot of sense. When we pull it into our consulting and advisory practice, the forensic accounting market is something that’s highly attractive to us. It’s something like a $5 billion industry in the U.S. and equally large globally, so forensic accounting services are definitely an area of strategic importance to us in our consulting practice.”
The merger is expected to close in the fourth quarter of the year. RGL will continue to operate under its current brand as the firms work out an integration strategy. During their merger talks, the two firms realized they fit together well.
“RGL, having carved a very unique niche in the forensic accounting space, also happened to align with an industry area that’s very important to us,” said Bach. “Advisory capabilities in the forensic space, combined with the insurance industry, made it a great fit for our strategy, which drew us deeper into the conversations and continued interest in merging with them.”
Financial terms of the deal were not disclosed. Baker Tilly earned approximately $600 million for the fiscal year ending June 1, while RGL is projected to earn around $40 million in revenue this year.
Baker Tilly Virchow Krause, based in Chicago, ranked 14th on Accounting Today’s 2018 list of the Top 100 Firms and is a member of the Baker Tilly International network.
RGL, based in Englewood, Colorado, has around 160 employees globally and is one of the largest companies specializing in forensic accounting around the world.
Approximately 22 RGL partners will be coming on board with Baker Tilly, which has approximately 2,700 professionals. The Baker Tilly International network boasts 33,600 professionals, with combined worldwide revenue of independent member firms of $3.4 billion.
RGL specializes in the quantification of economic damages and financial analysis of insurance claims and legal disputes. It has accounting, valuation and technology professionals who provide forensic accounting, fraud investigation and expert witness services.
“We are proud of our lasting relationships with our clients around the world and our reputation for providing financial clarity to our clients,” RGL CEO Angela MacPhee said in a statement. “Combining our team with Baker Tilly gives us a wider platform and more delivery channels to better serve our clients. Baker Tilly’s entrepreneurial culture and well-earned reputation as a great place to work provides our team with even more opportunities.”
Baker Tilly has been doing some forensic accounting work previously, but the addition of RGL will vastly expand its array of services and talent.
“In a couple of advisory areas of our practice, we have a forensic litigation and valuation group that does a lot of forensic investigation work,” said Bach. “We also applied forensic accounting capabilities to a lot of the litigation support work that we do for expert report development, etc. We also do response for natural disasters and things like that where we’re applying forensic accounting capabilities, and some of our risk internal audit and advisory service offerings were about applying forensic accounting skillsets. But clearly RGL’s capabilities are going to be a huge addition to our capabilities just in terms of providing that much more skills and also expansion of our service offerings.”
He believes the combination will also allow Baker Tilly to expand services in specific industries like insurance claims analysis. “We want to continue to expand and grow that portion because it’s a segment they already have strong market share and strong market position in,” said Bach. “They feel like our platform is going to help them even further expand that insurance segment. They have a complex litigation support business that will align with our forensic litigation valuation business. In the law firm space, it’s going to help with expansion of the business there. The other part that’s interesting about their business is with the thousands of cases that they work on every year, they have a unique industry perspective on certain things like cyber incidents and product recalls. That will give us a unique position of insight in industries like food and beverage, high tech and many other industries. We feel like the insights that they are gathering on the basis of the insurance companies that they’re serving are going to allow us to further forge into the industries that we’ve got strategies built around, like manufacturing, distribution, financial institutions and health care.”
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