BDO USA Merges in Cross, Fernandez & Riley
BDO USA has expanded to Central Florida with the addition of 95 professionals and staff from Cross, Fernandez & Riley LLP.
[IMGCAP(1)]The addition of CFR brings nine partners to BDO. The deal is expected to close on Aug. 1, 2015.
Founded in 1963, Cross, Fernandez & Riley has offices in Orlando, Tampa, Winter Haven and Lakeland. Cross, Fernandez & Riley had previously served as BDO’s Orlando office from 1970 to 2000, and the practice has been a member of the firm’s BDO Alliance in the intervening years. BDO will maintain all of Cross, Fernandez & Riley’s office locations.
“Fifteen years ago BDO was consolidating offices and it was during that process that we transitioned some of our smaller offices to our alliance program,” BDO USA CEO Wayne Berson told Accounting Today. “Our Orlando practice became Cross, Fernandez & Riley. They had been a member of our alliance program for the last 15 years. We stayed in close touch with them and we certainly were impressed with their growth.”
CFR managing partner Jim Cross recalls that many of his firm’s partners used to work at BDO. “BDO decided to exit the market back in 2000, and sold the firm to the local partners there,” he said. “It went from a one-office firm to four offices now and about 95 people, so we’ve had some significant growth over the years, and BDO approached us. We’ve been approached by other firms too, but BDO just seemed to be a good fit for us because it’s our roots.”
[IMGCAP(2)]Combined with BDO's existing presence in Miami and West Palm Beach, the addition of CFR will bring BDO's total staff in Florida to more than 200.
Berson noted that BDO has been going through a period of rapid expansion in recent years, and it began looking again to move back into the Central Florida market.
“Central Florida is a growing market that we’ve targeted,” he said. “Given CFR’s success and our history with them, they were our preferred target for re-entering the market. This is a firm we’ve had a lot of ties with. We know the people well. Many of them were former BDO partners and staff.”
Berson became CEO of BDO USA in November 2012 and has rapidly grown the firm, with CFR being the 13th M&A deal since he began running the firm. BDO USA has added 1,925 staff through 13 transactions around the country. Combined with organic growth, the firm’s total staff has nearly doubled, increasing by approximately 98 percent to 5,478 as of Aug. 1, 2015.
The firm recently topped $1 billion in annual revenue, and CFR will add about $12 million to that. The two firms had been in talks for about a year.
“As we started doing more deals they reached out and wanted to start some dialogue regarding potentially coming back into BDO,” said Berson. “As a firm we are always looking to add bulk and resources in three priority areas. One would be greater critical mass in an existing major market. Another is expanded geographic coverage in a new strategic market, and also adding additional resources in existing industry and service strengths. In CFR we feel we’ve added well-respected and professional resources in a new strategic market. CFR’s client base aligns very well with our industry strengths. When you look at Central Florida as a whole, our offices are pretty much on the East Coast. Now we’re getting to go down on the Gulf Coast as well with the Tampa office, an area that has seen considerable growth over the last few years and has been a target for us.”
BDO will be able to expand its footprint in Florida as a result of the deal. “We were in West Palm Beach, Fort Lauderdale and Miami,” said Berson. “Now we’re moving both inland and onto the other coast as well. So we’re getting more play inside of the Florida, a market where we’ve seen a lot of growth and opportunity. We’ve been looking for something in this area, and Orlando and Tampa are two areas that we were not in. That comes with the same firm so it’s really good.”
Cross pointed out that the Central Florida market has exploded in the past five to 10 years, and that attracted BDO to re-enter the market. “There are a lot of new businesses in town,” he said. “A lot of entrepreneurial businesses and technology businesses have come to town and I think it’s just a much more vibrant market now, as evidenced by our growth, from 20 people up to 95 people. We’ve been able to take advantage of that market, and we believe that with BDO’s resources and them behind us, we can take this thing a lot higher. We’ll have access to some potential prospects that we didn’t have access to before because we weren’t part of a national firm.”
Melanie Fernandez and Jennifer Spooner, who each have more than 20 years of accounting experience, will lead BDO’s new Central Florida practice. Fernandez will serve as the assurance managing partner and Spooner will serve as the tax managing partner.
CFR specializes in several industries, including technology, not-for-profits, real estate, manufacturing and distribution, and agriculture. “BDO has those same industry niches that we’ll be able to fold right into and maybe get into some additional ones that we’re not into now,” said Cross.
Among the areas where Cross hopes to expand are banking and insurance. “We just think with BDO behind us we can really go upstream in terms of client base, and we can serve our clients more effectively with the resources BDO is going to put on the table,” he said. “Our people will get some great training and opportunities to really grow as professionals. From our standpoint all three of the constituencies—the people, the clients and the partners—are coming out well on this transaction.”
Berson expects to do further M&A deals in the near future. “We continue to have discussions with numerous firms around the country, and there’s a lot of interest in joining BDO,” he said. “While there’s nothing to announce at this time, I’d be surprised if we don’t have more to announce in the future.”