The Sarbanes-Oxley Act (SOX) has surely increased the workload of the accounting industry overall. The regulation leading from the Act is fueling a merger of accounting firms, the San Francisco Business Times reports.
Two of the accounting firms merging are the San Francisco firm Shea Labagh Dobberstein and San Mateo firm Elwood Espina Ferrell. The San Francisco Business Times reports that the new firm will take on the San Francisco firm’s name. This merger enhances the firm’s audit and tax practices, as well as adding three partners and 20 staff members for a total of 10 partners and 85 staff professionals.
“The merger greatly enhances our service offering and expands our already substantial Bay Area footprint,” said James Dobberstein, managing editor of the San Francisco firm. The smaller firm was established in 1979, while Shea Labagh Dobberstein was founded in 1944, according to the San Francisco Business Times.
AccountingWEB reports that firms must maintain their business focus and allow local and regional accounting firms to expand their practices and increase revenues. Doug Gaston told the Albany Business Review, “It was a mutual agreement to merge. We’re looking for people to help us grow and add more services and depth to our company, but the main thing this does is add some real quality people to our organization.” Many firms find themselves in the same situation.
“Local and regional firms are getting more opportunities than they probably ever could have dreamed of. Big Four resources are stretched to the max, so smaller clients are either leaving the Big Four on their own or the Big Four are resigning engagement, because they don’t have the resources to serve them without charging higher prices. For the local firms picking this up, it’s right in their strike zone. We’re seeing it from coast to coast,” Jonathan Hamilton told AccountingWEB. Hamilton is the editor of the accounting newsletter Public Accounting Report.
A merger can be a delicate matter. The acquiring firm may be concerned with practice services of their soon-to-be acquired firm to other firms due to a lack of quality control, for example. The consequences of their fast and loose quality might be affecting their business, may be causing the soon-to-be acquired firm to lay off staff. The acquiring firm may point business at their soon-to-be acquired that may raise professional liability issues, the Trusted Professional reports. This publication is the monthly newspaper of the New York State Society of Certified Public Accountants (NYSSCPA).
A written agreement is recommended by the Trusted Professional to help overcome these and other merger issues. Attorneys and risk advisors from all firms involved should review any merger or dissolution agreements. Insurers can also provide risk management guidance for these business transactions.