BDO continues to do M&A deals despite pandemic

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The COVID-19 pandemic isn’t stopping BDO USA from pursuing a constant series of M&A deals in recent years, although the latest one had to be mostly negotiated at a safe distance.

Last week, the Chicago-based firm announced it had acquired Piercy Bowler Taylor & Kern, CPAs, a firm based in Las Vegas, expanding BDO’s footprint in Nevada and Utah (see story). BDO USA CEO Wayne Berson saw the deal with PBTK as just the latest challenge to overcome. “We once did two deals in the same day, and someone commented, ‘How can you do two deals in the same day?’ So I said we now need to do three on the same day, just to show them we could,” he told Accounting Today.

“You’ve always got to step up your game,’ said PBTK president Thomas Donohue. "Now we’re doing one in the middle of a pandemic. That’s equally as impressive.”

The two leaders did meet in person before the novel coronavirus started spreading and making travel difficult. But they later had to work out the details over the phone and in Zoom and Microsoft Teams videoconferences. “We did initially visit the offices, and we knew about PBTK as a very successful firm that we wanted to have come into BDO to help us expand in the Nevada market, but also as it got further down the road, we needed to deal with telephone and video conferences and so on,” said Berson. “The good thing is, by the time the pandemic hit, we were pretty far into the discussions. Maybe if it wasn’t for the pandemic, we might have announced it a month or two sooner.”

“I think it put us back a month, but the negotiations went from being in person to being calls and Teams meetings and Zoom meetings quite a bit,” said Donohue. “That’s really the only effect of the disruption of the pandemic was everything had to switch from being in person to video calls.”

By the time the deal was finalized, both firms were well accustomed to telecommuting.

“When you look at the ability to work remotely, both firms were able to take advantage of that,” said Berson. “People have said how were you able to continue the business? I said as long as the clients are able to give us the work, we’re able to do it. In the case of PBTK, it’s been almost seamless. What it shows is our investment over the last few years in terms of technology has paid off. We’ll certainly continue down that road and keep investing in technology because today pretty much everyone is a technology firm.”

PBTK was ready to use that technology with its clients. “That’s one of the things that really drew us to BDO was the fact that BDO’s culture and leadership has embraced the new wave of technology, the fourth industrial revolution that’s going on in our profession,” said Donohue. “BDO is staying on the forefront of that wave, and making the necessary adjustments. Frankly, us smaller independent firms don’t have the gunpowder to make those adjustments, so leveraging the investments that BDO has made in technology was one of the primary things that drew us to them, and obviously, the culture fit. It was immediately apparent from our first meetings with leadership that PBTK’s culture and BDO’s culture overlap almost seamlessly. They’re both very familial type cultures.”

PBTK specializes in gaming and government clients. “Ever since we started PBTK 30-plus years ago, we’ve had a practice concentration in both gaming and serving government entities, local governments primarily, and I would always see BDO when we’d be competing for work,” said Donohue. “And I started thinking, why keep fighting against them when we can just join them? So combining the two firms, especially in Southern Nevada, positions us as, if not the predominant firm, one of the predominant firms in Las Vegas in terms of serving the gaming industry. We already had a significant practice concentration in the government sector, so this will deepen our bench to give us more resources and to service those clients and to actually expand our reach geographically to other governments like California and throughout the region. The more we thought about it, it just made perfect sense to do this combination.”

Berson sees the deal, like the many other M&A transactions he’s negotiated while running the firm, as a matter of 1+1=3. “This is another example of that. We’re both serving similar industries and the same in the markets,” he said. “We were not large enough in Nevada. We had a very good practice in Salt Lake City, but PBTK really helps us in the long term. We’re able to expand together. It is really about doing this together. That is the goal: for both of us to benefit and for clients to benefit.”

Once the pandemic subsides, BDO will be able to fly in people from other offices around the country to help PBTK with its clients when needed, or just provide the help remotely. “We’re looking forward to how PBTK is going to help BDO enhance their service capabilities to their clients in Nevada, and the PBTK clients in Nevada will benefit as a result of having more firepower in Nevada as well,” said Berson.

PBTK has also been building up its practice in Reno, a city that is emerging as more of a technology hub in addition to its long history in the gambling industry. “We also have an emerging practice in Reno, Nevada, the biggest little city in the world,” said Donohue. “It’s becoming Silicon Valley East there. There are a lot of businesses moving out of California into Northern Nevada and Salt Lake. Industries that we specialize in, like high tech, life sciences, a lot of startup companies that need that gunpowder, and professional services firms. This immediately puts us in a position to help those clients in Northern Nevada as well as Southern Nevada. I think it’s a huge growth opportunity for our people as well as our clients to offer that.”

Meanwhile, both firms have been weathering the pandemic and are now set to grow together. “It definitely has not been easy, but I would credit my IT team for making it as seamless as possible,” said Berson. “They’ve done a phenomenal job in making sure that all of our people have access to computers, internet access, printers and extra monitors. We were able to, within days, ship out additional monitors and Wi-Fi, so people who didn’t have it could get onto the internet. For us it was important that we got connected to our people. We have had multiple town halls, discussions, WebxExs and the like. I’ve done them firm-wide and the regional leaders have done them as well with their regions. You have to stay in touch with everyone.”

BDO shut down its offices as the pandemic began spreading. “One of the things we stressed about this was the safety of our people and clients,” said Berson. “Once we had dealt with the safety aspects, and we knew everyone was safe and home, we closed our offices very quickly.”

BDO also reached out to its clients to make sure it could stay in touch with them and help them weather the economic downturn. “Many of the clients were very concerned about what they were going to do in their own business,” said Berson. “We’ve been able to keep in touch with them to help them through what has been probably the worst time in all of our lives, to have to go through all of this. I think the fact that BDO is a large firm, with a lot of resources around the globe, has helped. We were able to talk to some of our member firms in different parts of the world as to what was going on there, and what they were doing, and getting feedback from them. We were getting referrals to do work because we had invested so much over the years to be able to provide these services.”

He is eager for the pandemic to subside so he can start meeting with clients and colleagues in person again. “We’re really chomping at the bit to get out into the marketplace, to be able to get out and meet with people and press the flesh,” said Berson. “This is what we want. We are so excited about PBTK coming into BDO.”

Donohue has been hearing good feedback since the deal was announced. “In terms of the market’s reaction, it’s been as positive as you could ever imagine,” he said. “I’ve been getting calls from people I haven’t talked to in 15 years calling me and congratulating me about it. Everybody thinks it’s such a great move. Everybody’s been very complimentary of BDO as well, saying you couldn’t have picked a better partner for this combination, so I’m thrilled and beyond excited for the next chapter with BDO.”

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