by Bill Carlino
Chicago - Can a former Big Four consulting executive lead a resurgence at the helm of an accounting firm consolidator?
Three-year-old Centerprise Advisors hopes that former KPMG Consulting head James B. McGuire can spark growth in a segment that has remained in a holding pattern over the past few years, appointing him president and chief executive of the concern, based here.
“I think what we can do is redefine the business model,” said McGuire. “[Centerprise] came into this with five different firms and five different operating philosophies - we need to integrate that into one umbrella. Beyond that, we have a lot of potential opportunity for improvement, either by acquisitions or redirecting our people into the growth areas.”
McGuire succeeds Rick Stein, who served as interim chief executive of the concern after Centerprise founder Bob Basten stepped down last year after being diagnosed with Lou Gehrig’s Disease.
Centerprise, which ranked No. 15 on Accounting Today’s 2003 Top 100 Firms list with annual revenues of $168 million, was formed in 2000 after the merger of Houston-based Mann Frankfort Stein & Lipp and four large regional firms. The massive consolidation was aided by a $250 million infusion of capital from private investors.
The roster of Centerprise firms includes MFS&L; Follmer Rudzewicz; Scillia Dowling & Natarelli; Grace & Co.; and Urbach Kahn & Werlin. Following the mergers, the firms adopted the suffix “Advisors” to their respective brand names. At the same time, it also acquired a technology consulting firm and a pair of insurance services.
Currently, Centerprise operates 22 offices with roughly 1,100 professionals.
Basten, who has since founded the Playing to Win for Life Foundation for ALS Research, remains as Centerprise chairman.
In a statement, Basten said, “Jim brings a track record for delivering results in our complex business environment and articulates well the Centerprise vision for reaching the next level.”
“It’s a brilliant move,” said noted industry consultant Jay Nisberg, of McGuire’s appointment. “Centerprise historically has been sort of the quiet giant in the movement of accounting firm amalgamation. His appointment lends a certain element of stature and experience. It’s Centerprise’s statement - saying that they are ready to flex their muscles.”
After flourishing in the tech-fueled M&A era, roll-up firms such as American Express Tax & Business Services and Century Business Services have basically been stagnant in recent years with respect to acquisitions - a climate partially attributable to harsh market conditions and a complex business model that no one, to date, has been able to execute on a consistent basis.
Centerprise’s most recent acquisition was in June 2002, when it purchased I.M.A. of Louisiana, a provider of third-party administration services for employee benefit plans.
“Getting someone from KPMG gives them more of a national dimension than they’ve had in the past,” said Nisberg. “The question is, how aggressive do they want to become?”
McGuire said that the company will focus internally before aggressively pursuing any acquisition activity.
“We will capitalize on the talents of the people here and the synergy of the business units,” said McGuire. “First, we define our model, and then we can selectively pursue acquisitions and see where our white space is. We need to make sure the marketplace understands what that process is all about.”
Prior to coming aboard at Centerprise, McGuire, who spent 29 years at KPMG, served as executive vice president of BearingPoint - the new nomenclature of what was formerly KPMG Consulting - and before that served as chief executive and vice chairman of both the U.S. and global consulting business at KPMG. McGuire was part of an executive cadre that helped the firm’s consulting business go from $700 million a year to $2.5 billion.
KPMG Consulting split off from its audit parent several years ago and became a publicly traded entity in February 2001.
“At KPMG Consulting, we scripted chapter one and eventually chapter two,” McGuire said. “Here, they’ve scripted chapter one. I’ve come in time for chapter two.”
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