CPA Firms Catch the Urge to Merge
New economic and regulatory landscapes may be reshaping public practice.
by Rick Telberg/At Large
The largest regional firm in the Southeast was created when Dixon Odom PLLC and Crisp Hughes Evans LLP, both headquartered in North Carolina, merged recently to form Dixon Hughes PLLC. With revenues of nearly $95 million and a staff of more than 725 in 24 cities in eight states, Dixon Hughes is the fifth-largest firm overall in the Southeast, trailing only the Big Four in size.
The Dixon Hughes deal is just one example of the merger trend sweeping CPA firms these days. A combination of new regulatory challenges, independence issues, new opportunities for mid-tier firms to pick up business from the Big Four, and an aging generation of CPA partners appear to be just a few of the factors driving an urge to merge unseen since the consolidators were scouring the market in the late 1990's.
Accounting Today magazine has termed the Dixon Hughes deal as marking the rise of a new level of accounting firm, the "super-regional."
Eddie Sams, former executive member of Dixon Odom, and Ken Hughes, former managing partner of Crisp Hughes Evans, share leadership of the new firm as co-managing members. The firm is maintaining lead offices in North Carolina: Asheville and High Point. Dixon Hughes will be a member of Moores Rowland International.
But there are plenty of other examples besides Dixon Hughes which illustrate that firms are seeking to bulk up.
In Santa Cruz, Calif., Hutchinson and Bloodgood LLP and Codiga & Elward Inc., have merged, forming Hutchinson and Bloodgood LLP, which will rank as Santa Cruz County's largest CPA firm, with 14 CPAs and a total staff of 28 personnel. Hutchinson will remain a part of the PKF network.
Not too far away, Vavrinek, Trine, Day & Co. has acquired Pearson, Prete & Co. of Palo Alto, Calif., to become one of the top five locally-based firms in Silicon Valley. The biggest in the Valley remains San Jose-based Frank, Rimerman & Co. with $25.6 million in revenue last year. But this is Vavrinek Trine's fourth major acquisition in the last decade, each representing a move to fill a niche or expand geographically.
In San Antonio, Texas, Gibbons, Vogel & Co. has merged into The Hanke Group, adding eight people, bringing the firm to 65, and making Hanke the fourth-largest local firm in town. The deal also gives Hanke clients in nonprofits and credit unions.
Southfield, Michigan-based Plante & Moran PLLC, has acquired Chicago's Gleeson Sklar Sawyers & Cumpata in a deal creating, by some measures the 10th largest U.S. public accounting firm. Gleeson brings $17 million a year in fees and 124 people, to make Plante & Moran a $191-million firm with a staff of 1,300.
"Our merger is an entree into one of the nation's largest markets," Bill Hermann, Plante & Moran managing partner, said in a statement.
I'm sure you'll be hearing a lot more of that from other CPA firms.
