Burr Pilger Mayer and Windes & McClaughry have canceled their plans for a merger, saying Friday they could not come to an agreement on the terms.
The union, which would have created one of the largest CPA and business advisory firms in California, with roughly $100 million in annual revenue, 73 shareholders, 550 employees, and 11 offices throughout Northern and Southern California, was originally announced in September, with an effective date of January 1 (see
“We believed that combining both firms was the proper strategic direction, but, unfortunately, we could not come to agreement on all of the key issues,” said Windes managing partner John Di Carlo in a statement. “We have the utmost respect for BPM and their professionals and have developed great relationships with them over the past six months. We wish them continued success.”
BPM managing partner Steve Mayer admitted he was disappointed with the outcome. “We are disappointed that we are not able to combine these two firms,” he said. “Both organizations worked diligently toward the merger. We just came a little short of the goal line. We wish the Windes team the best and expect to continue to work together on client opportunities.”
Koltin Consulting Group CEO Allan D. Koltin, who advised both firms on the proposed merger, commented, “Sometimes the best mergers are the ones that don’t happen. In the end, both firms have really successful firms and sometimes that becomes the biggest challenge to making deals of this size work. One thing is for sure, however: these firms gained a deep respect for each other and have already worked on a handful of joint projects and clients together.”
Di Carlo explained in an interview that the two firms never officially completed the merger. He and Mayer had met around September of 2010, and the merger talks began to get serious around last April. Even though they announced the merger last September, they were never able to finalize it. He declined to describe the specific areas of disagreement, however.
"We just did not come together so we never officially merged," he said. "Our target date was January 1, but we missed the target date so nothing happened. We never legally got together."
Di Carlo acknowledged that the two firms might continue to work on some engagements together, although no formal structure has been determined.
“Since we announced the merger, we’ve had a couple of engagements where we’ve had clients in one firm need services provided by the other firm, so the client is engaged for those services,” he said. “We think there’s going to be some other situations like that which might arise, so we might continue to have some of those cross-referrals.”
Di Carlo still hopes to do a merger to expand Windes's presence in California. “We’re going to continue to look,” he said. “Part of our strategy in Southern California is to look for merger opportunities in our marketplace, and we’ll continue to do that. We would have done that with or without this merger. That part of our strategy has not changed.”
At the very least, he can chalk it up to experience. “You learn all kinds of things,” said Di Carlo. “If anything, it was a great learning experience for everybody. You learn a lot about your own firm and what goals and aspirations you have. So you walk away with all of that in your back pocket and say, ‘Now that I know all this, what can we do better the next time?’ So while it’s quite time consuming, it’s a good learning opportunity.”
