Minneapolis

National CPA and business advisory firm RSM McGladrey has signed a letter of intent to acquire Caturano & Co., the top regional firm in New England.

The deal would enable Bloomington, Minn.-based RSM McGladrey to expand its Boston-area operations with a combined 500 employees and 216 CPAs. The deal is subject to approval by the board of H&R Block, RSM McGladrey's parent company.

Terms were not disclosed. The union will merge two Top 100 firms, as RSM and its sister firm, McGladrey & Pullen, ranked No. 5 on Accounting Today's Top 100 Firms list with revenues of $1.46 billion, while Caturano was No. 42, with $61.8 million.

With the deal, Caturano chief executive Richard Caturano, who will become managing partner of the Boston office, expects to attract more venture capital and private equity clients, as well as higher education clients. The two firms reportedly began discussing a merger last fall when Caturano met Block chairman Richard Breeden. He later met RSM president C.E. Andrews.

RSM and McGladrey & Pullen operate in an alternative practice structure, with M&P offering audit and attest services, while RSM provides tax, consulting and other services. The two firms nearly parted ways last year, but ultimately renewed an agreement last year to continue the arrangement.

"This deal makes a big statement about how RSM McGladrey and H&R Block are transforming the firm," said PDI Global Inc. CEO Allan D. Koltin, who consults on mergers. "You get the impression that last year's arbitration fight between McGladrey & Pullen and RSM McGladrey/H&R Block is a thing of the past and it's full steam ahead. Caturano is not only a major player in New England, but they also have an outstanding reputation within the profession throughout the country. If there ever was any question about RSM and H&R Block not being committed to the accounting profession, this should erase any doubts."

"It is interesting to note that this is the second public company to enter the Boston market in less than two years (cbiz previously acquired Tofias in 2008)," Koltin added. "And I think we will be seeing one or two mega-regional [firms] also entering the Boston market within the next year."

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