by Seth Fineberg
High Point and Asheville, N.C. — Following several months of delays, the merger of mega-regional firms Dixon Odom and Crisp Hughes Evans is finally complete, and plans are in place to both expand regionally and grow niche services.
Last November, two of the largest firms in the Southeast agreed to join forces as of Jan. 1, 2004, creating the largest regional CPA firm in the area.
The consolidated entity — now renamed Dixon Hughes — has revenues of roughly $95 million, a staff of more than 725 and a presence in some 24 cities.
Dixon Hughes’ plans for growth are now underway, despite what was admittedly a some- what premature announcement of the firms’ merger plans.
“The January date was a bit too aggressive, and there were some things that we couldn’t get done, said Eddie Sams, co-managing partner at Dixon Hughes. “But with the state [North Carolina], we had to give them a time frame and we couldn’t revise statutory documents, so we had to pick a date and March 1 worked out. There’s still a lot to be looked at in terms of our combined profit centers and things, but we really haven’t missed a beat and have been working on joint deals since January.”
Sams stressed that, since March, the firm has been involved in two of the largest engagements in either firm’s history. He declined to offer specific details, but said that they are deals “where size really mattered.”
With both client bases and resources combined, the firm now has industry concentrations in health care, auto dealerships, financial institutions, insurance, manufacturing, distribution, real estate, construction, governments and nonprofits.
In addition, both firms’ registration applications were approved by the Public Company Accounting Oversight Board to prepare and issue audit reports for publicly held companies.
Sams and co-managing partner Ken Hughes are particularly eyeing growth in health care, where Crisp Hughes Evans was already strong, and auto dealerships, one of Dixon Odom’s fastest growing niche services. Sams also sees opportunities to grow the firm’s financial institutions services.
“Dealerships are already strong, but it’s a big market out there and I know there is more we can do there, as well as in health care,” Sams said. “Our financial institutions work is also growing, particularly with commercial banks. We are dominant in North Carolina in the middle market; now we are wondering, can we take it to other states?”
Dixon Hughes has significant plans to expand throughout the Southeast over the next five years, but Sams said that Atlanta and Charlotte, N.C., are high on the list of markets. He declined to reveal other areas of expansion, but said that the firm is already staffing up in those areas.
“We’ve always tried to get the business before the staff, but you can argue the other way,” Sams said. “We are certainly investing in people, and realize that Atlanta and Charlotte have tremendous potential.”
Brooks Gallagher, a partner with Greenville, S.C.-based organizational consultancy Behavior Resources, worked closely on the Dixon Hughes marriage and continues to aid the newly formed firm. He agrees that, all things considered, the merger was “better than expected” because the two former competitors did not wait until the union was complete to start making changes and dealing with their issues.
“From the time they agreed to merge until it was all signed, people were working hard on addressing integration issues, and were pretty proactive looking at organization redesign to maximize efficiency,” Gallagher said. “Where you do have regional or service overlap, the challenge of moving from competitor to collaborator is an adjustment, but these two are dealing well.”
Gallagher also said that there was not a lot of overlap in services or job duties, and in some cases, rather than losing staff, there was some redefinition of work duties. Dixon Hughes is still working through some technical issues and Sams and Hughes are traveling extensively to all of the various offices taking group and individual meetings to ensure the staff is on board with the merge.
In practice management consultant Jay Nisberg’s view, “There is an ‘accent shift’ happening. Now it’s about developing specialties and niches. Consolidations of this sort will have to occur to secure the longevity of firms too large or too small to continue on their own.”
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