With four of the nationâs top regÂional firms announcing mergers last month, profession-watchers say that the latest flurry of unions between larger CPA practices sets the stage for more enterprise-level firm marriages over the next several months.
Just a month after Boston-based Caturano and Co. was purchased by RSM McGladrey, Minneapolis-based LarsonAllen revealed that it was merging with LeMaster Daniels of Spokane, Wash., while two of the New York areaâs top regionals, Eisner and Amper Politziner & Mattia, announced their combination in mid-August.
âA lot of these mergers are between firms that have deep histories together, like belonging to the same associations, and common alliances,â explained Allan Koltin, chief executive officer of Chicago consultancy PDI Global Inc., and one of the top brokers of CPA firm mergers. Koltin likened the recent accounting consolidation to what happened in the legal profession when many of the countryâs largest law firms unveiled mergers in recent years. âI think thereâs going to be more [of them].â
âTop 100 firms have an insatiable appetite for merging in firms,â added Marc Rosenberg, principal of Rosenberg & Associates in Wilmette, Ill. âThey know from experience of merging in many other firms that mergers work and are profitable â if you do them right. And because these firms have done so many mergers, they know how to do them right. They know how to manage a CPA firm and make good money at it.â
Larson and LeMaster
The merger between LarsonAllen and LeMaster Daniels will become effective NovÂember 1.
LarsonAllen chief executive Gordy Viere said that the union with LeMaster Daniels provides an avenue to extend the firmâs industry specialization to the Pacific Northwest. âWeâve long known and respected our counterparts at LeMaster Daniels, and we share common business and cultural practices,â he said. âLike us, they have both a metropolitan and a rural presence and deliver a mix of talent, warmth and familiarity. Itâs a perfect match that will help us serve this part of the country with depth.â
LarsonAllen has approximately 1,500 people and $230 million in annual revenues. The firm ranked No. 18 on Accounting Todayâs 2010 list of the Top 100 Firms.
The union with LeMaster Daniels marks LarsonAllenâs sixth merger since May 2009.
Meanwhile, LeMaster Daniels has 12 offices, 26 owners and nearly 300 employees with annual revenues of approximately $40 million. LeMaster Daniels ranked No. 75 on the Top 100 Firms list, with $41.73 million in annual revenues.
âWe had actively been looking for Northwest firms to fold into the LeMaster Daniels brand as part of our overall growth strategy,â said LeMaster Daniels chief executive Scott Dietzen. âAn upward combination wasnât initially on our minds, but LarsonAllenâs success in developing strong industry specialization was very attractive. Bringing that niche focus to our firm will benefit our clients and employees immensely, and thatâs something that we would never say ânoâ to. We pursued this emphatically for all the opportunities it presents.â
Both firms serve a wide range of businesses, from large corporations to small and midsized privately held companies and community-based nonprofits.
LarsonAllen provides services to clients in health care, nonprofit, government, banking, manufacturing, construction, real estate, dealerships, agriculture and other sectors.
âThis is an interesting one because up until today no âmega-regionalâ has come to the Northwest, essentially allowing Moss Adams to be the only âbigâ regional in the area,â said Koltin. â[LarsonAllen] does an excellent job on the merger integration side, so I think it will have some effect on the market, especially in specialized niches. Having said that, in addition to Moss Adams, Seattle has some strong local firms like Peterson Sullivan and Clark Nuber. So it will be interesting to watch how it unfolds.â
The combination of New York-based Eisner and Amper of Edison, N.J., creates an entity with 1,200 employees, including 170 partners, and more than $250 million in revenue. Going forward, the firm will be known as EisnerAmper.
Eisner ranked No. 24 on the 2010 list of Top 100 Firms, with $133.25 million in revenue; Amper earned the No. 26 spot, generating nearly $120 million in annual revenues.
The heads of the two firms, Eisner managing partner Charles Weinstein and Amper managing partner and CEO Howard Cohen, began talking about a merger last September. âAs members of Baker Tilly and competing in the New York market, weâve known each other for a long time,â said Weinstein, who is now the CEO of the combined firm. âAfter some casual conversations, we decided to put together a breakfast meeting to see if there really were going to be some opportunities for us to combine.â
The first meeting took place on Sept. 2, 2009, which coincidentally turned out to be the birthday of Amper Politziner founders Phil Politziner and Monroe Amper. âThereâs a lot of karma in that,â Weinstein said.
Shortly after Amper merged in 2008 with Goldenberg Rosenthal, Amper had created a strategic plan for the next two to three years. âOur main focus was getting larger in New York City,â said Cohen, who is now chairman of the combined firm. Meanwhile, New York-based Eisner wanted to expand to Philadelphia, where Amper has a large presence.
Cohen and Weinstein see the combined firm as becoming a dominant and pre-eminent firm in the Northeast. Both firms have mostly grown organically over the years, in part by hiring from the Big Four and other national firms. But Eisner has not merged with another firm in over 20 years, according to Cohen, and Amper has only done two mergers in the last 45 years.
Prior to the mid-August merger announcement, the two firms worked quietly on merging their practices for three months. They formed an integration oversight committee, as well as integration teams in areas such as audit, tax, consulting, litigation, finance, human resources and marketing. They had their first partner vote in May and the final partner vote in the second week of August. The merger was structured as a combination of equals.
âI watched how they dealt with issues such as firm name, chairman vs. CEO, etc., and on every issue, leadership checked their egos at the door,â said Koltin, who consulted with both firms on the merger. âSometimes with very successful firms, they get blinded by their press clippings and have a âDonât screw up a good thingâ mentality. In this case, leadership challenged the troops to put personal agendas and fears aside and see if something truly incredible could be created. This is the biggest merger of two U.S.-based accounting firms in the 21st century, and I think it will be a trend that we will see continue for the next couple of years.â
In the future, the two leaders plan to expand the firm as far north as Boston and as far south as Washington, D.C., but they said that they do not plan to make it a national firm with offices around the country. However, they do see themselves doing more business servicing mid-market international companies, and Eisner already has an office in the Cayman Islands that is mainly used for financial services and insurance industry clients.
The firm expects to retain all of its current employees, and has been recruiting on college campuses for entry-level hires as well. It has also been reaching out through social networking sites, such as Facebook, Twitter and LinkedIn, as well as YouTube, to market its services.
âItâs rare that two firms of this size can come together and have so much in common,â said Koltin, who has consulted with both firms. âFor Amper, growing New York City was a major strategic initiative, and by combining with Eisner they achieve that goal the day after. For Eisner, they pick up some exceptional niches from Amper and will also be able to take some of their niches into the New Jersey and Philadelphia markets.â AT
Bill Carlino and Michael Cohn contribued to this story.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access