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Mergers and Acquisitions Fever Takes Hold of Regional Accounting Firms

There have been a string of notable merger and acquisition deals involving a number of regional accounting firms since 2009. You know what they say, if you can’t grow organically fast enough, find yourself a merger or an acquisition candidate.  In a chronological order sort of, here are some of the M&A deals within the public accounting industry that have caught my eye:

Year 2009:

Baker Tilly Virchow Krause, LLP (Chicago, IL) acquires Beers + Cutler (Vienna, VA): prior to the tie up, Baker Tilly Virchow Krause, LLP was ranked the 17th accounting firm  with $215M in annual revenues whereas Beers + Cutler was ranked 42nd  with annual turnover of $60M. As of 2010, the combined firms  are ranked 13th with annual revenues of $250M. This acquisition enables Baker Tilly Virchow Krause, LLP, a public accounting firm that primarily did business in the Midwest, to expand its geographical footprint to the Northeast via the Mid-Atlantic region where Beers + Cutler had a strong presence.

Parente Randolph, LLC (Philadelphia, PA) joins forces with Beard Miller, LLP (Reading, PA) in a merger of equals  to form ParenteBeard, LLC: prior to the tie up, Parente Randolph, LLC was ranked the 36th accounting firm with revenues of $74M per annum while Beard Miller, LLP was ranked 35th with an annual turnover of $60M. As of 2010, the combined firms are ranked 20th with an annual turnover of $172M. The purpose of this merger was twofold: to create the de facto single largest accounting firm in The Keystone State (Pennsylvania) and to create an accounting firm big enough to challenge the dominance of the Reznick Group (Bethesda, MD) in the Mid-Atlantic region.

Year 2010:

Eisner, LLP, (New York City, NY) and Amper, Politziner & Mattia, LLP (Edison, NJ) merge to form EisnerAmper, LLP: prior to the tie up, Eisner, LLP was ranked the 24th accounting firm with yearly revenues $133M whereas Amper, Politziner & Mattia, LLP was ranked 26th with $120M in annual revenues. As of 2010, the combined firms are ranked 14th with an annual turnover of $250M. The New York metro area is simply one of the most lucrative as well as most competitive markets for a multitude of industries and public accounting is certainly not one of the exceptions. The architects of this merger understood that it was better for both firms to pool their resources together and bring them under a single roof so they can remain competitive and increase their market share in what is believed to be one if not the most ruthless geographical market of the world.

Mazars (Paris, France) acquires Weiser, LLP (New York City, NY): prior to the tie up Mazars was ranked the 5th accounting firm in Europe in terms of revenues with $1B whereas Weiser, LLP  was ranked 21st in the U.S. with annual revenues of $135M. The combined firms are now generating about $1.2B a year. In my opinion, this is probably one of the most intriguing mergers to have taken place in the public accounting industry in recent memory. Mazars, “a truly integrated partnership”, has about 13,000 professionals working in offices located in more than sixty countries. While most international accounting firms constitute a network or alliance of independent firms from different regions or countries of the world, Mazars isn’t. When you deal with Mazars, whether you are in London or in Los Angeles, you are dealing with the same business entity. Mazars has been in the U.S. for a long time, however prior to its acquisition of Weiser, LLP, it relied on partnerships or alliances with other US member firms of the Praxity Network of independent accounting firms of which Mazars is a member in order to service European companies with subsidiaries in the U.S.  It is through those bilateral alliances that Mazars and Weiser, LLP developed an affinity for each other. In my opinion, Mazars is going for gold in the U.S. I wouldn’t be actually surprised if  Mazars  gobbled up another large U.S. member firm of the Praxity Network such as: Plante & Moran, PLLC, Moss Adams, LLP, and BKD, LLP.

Larson Allen, LLP (Minneapolis, MN) acquires Lemaster Daniels (Spokane, WA): prior to this deal, Larson Allen, LLP was the 18th accounting firm with annual revenues of $230M while Lemaster Daniels was 75th with a yearly turnover of $40M. As a result of this acquisition, Larson Allen, LLP is projected to rank between 12th an 14th with anticipated annual revenues in the neighborhood of $280M-$300M. By acquiring Lemaster Daniels, Larson Allen, LLP secured a strategic gateway to the pacific coast via the Northwest of the country.

So far in 2011:

Dixon Hughes, PLLC (Highpoint, NC) acquires Goodman & Company (Norfolk, VA): prior to this transaction, Dixon Hughes, PLLC was ranked 19th with annual revenues of $200M while Goodman & Company was ranked 30th with an annual turnover of $88M. The newly formed entity will be known as Dixon Hughes Goodman, LLP and is projected to rank somewhere between 10th and 13th with annual revenues ranging anywhere between $280M-$300M. While Dixon Hughes, PLLC was referred to as the super regional from the Southeast, Dixon Hughes Goodman, LLP can already be labeled as the fortress from the East. Indeed, the newly created firm will reaffirm its unchallenged dominance in the Southeast while expanding its geographical footprint to the Northeast via the Mid-Atlantic region.

What are your thoughts on any or all of the aforementioned M&A transactions?

Ranking data obtained from the 2010 edition of Accounting Today Top 100 Firms

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