By Bill Carlino
Southfield, Mich. — After establishing a long-awaited market presence in Chicago via its recent merger with the Windy City firm of Gleeson, Sklar, Sawyers & Cumpata, super-regional powerhouse Plante & Moran is exploring additional M&A opportunities to build out its stronghold in the Great Lakes area.
“We want to be the great firm in the Great Lakes,” said Plante & Moran managing partner Bill Hermann. “A lot of firms are trying to replicate what we’re doing in terms of geography.”
Plante, which at presstime was poised to finalize a merger with AFME — a Nashville, Tenn.-based firm with a primary niche in manufacturing operations — is looking at markets such as Cincinnati for potential candidates in search of suitors.
Hermann explained that with Plante’s current Ohio-based offices in Columbus, Dublin and Lancaster, opening its doors in the Cincinnati area would complete its network of Ohio offices.
In June, P&M signed a letter of intent to merge with AFME, which specializes in management, quality standards and turnaround strategies for plants and manufacturing operations.
“We had done some project work with them before,” explained Hermann. “As you work together, you see a lot of similarities and we thought there would be a nice synergy.”
The AFME merger comes on the heels of Plante’s recent marriage with Gleeson, which became official May 1. The high-profile Chicago firm, which generated roughly $17 million in 2003 revenue, added seven partners, eight directors and three offices — in Chicago, Elgin and Aurora — to the union.
Prior to the Gleeson merger, Plante & Moran ranked No. 15 in Accounting Today’s 2004 Top 100 Firms survey, with $174 million in revenue and about 160 partners.
Hermann, who joined the firm in 1971 as a proofreader, explained that Plante’s new Illinois locations would provide clients with an expanded portfolio of services, including bankruptcy, strategic business planning and turnaround services. The merger would also help Plante build out such practices as automotive dealerships, not-for-profits and health care.
Shortly after Plante’s merger with Gleeson Skar, another Midwestern power, Virchow Krause, stormed into the Chicago market, acquiring KGN Financial, a 12-partner firm with revenues of roughly $11 million.
Piling into Chi-Town
As a result, many of Chicago’s larger firms have been swallowed up, and many of the larger private companies and even smaller Securities and Exchange Commission issuers have looked beyond the Big Four firms for service providers.
“Chicago has always been a hotbed of interest [for mergers],” explained Daniel Fensin, managing partner for Blackman Kallick Bartlestein, the largest independent firm remaining in Chicago. “Listen, there are a lot of great competitor firms here, such as BDO and Grant Thornton. But we think that the mergers have kind of staked to a good position as the ‘large local firm.’ As a result of everything that’s happened, we’ve gotten a lot of opportunities for business.”
Plante & Moran also recently opened an office in Shanghai, China, and wrapped up its engagement as the lead auditor in the Enron bankruptcy investigation, where it examined the murky and infamous special purpose entities employed by the now-bankrupt energy firm.
“If you take a look at where we are right now, we’re the only major firm in the Great Lakes region,” Hermann said. “We want to incrementally expand our geographic boundaries. Quite frankly, our client reach is getting broader and is evolving beyond accounting.”
