A subsidiary of H&R Block has approached the two largest accounting firms in St. Louis in an effort to capture a share of the market, industry sources say.
According to the St. Louis Business Journal, RSM McGladrey, a finance and business consulting firm based in Minneapolis with a new office in St. Louis, attempted to discuss mergers late last year. The two companies reportedly approached were Rubin, Brown, Gornstein & Co. (RBG) and Brown Smith Wallace. Officials from those companies wouldn't comment. RSM McGladrey officials say they are not looking for a local merger partner now.
"Our venture in St. Louis is to build our business," said David Parkinson, managing director-in-charge of RSM McGladrey for southern Illinois and eastern Missouri. "We have quite a number of clients in that market, and offices and professionals surrounding the market." St. Louis is one of the top 25 markets in the U.S.
Accounting Today ranks RSM McGladrey as the country's sixth-largest accounting firm with about $595 million in revenue. It has 100 offices nationwide and 4,400 employees.
RSM McGladrey has attracted some top talent in St. Louis, including Fontaine Chapman from the St. Louis office of Jefferson Wells International and Jeff McFarland, formerly of PricewaterhouseCoopers.
Jeffrey Smith, managing partner of Brown Smith Wallace, told the Business Journal that the best way to penetrate the St. Louis market is by acquiring a firm in that city. "If you can't pick off a bigger player, the (consolidation) model doesn't really work."
This is not the first time H&R Block has attempted to expand into the St. Louis market. The firm unsuccessfully tried to woo a few accounting firms in 1998, after H&R Block formed its HRB Business Services Inc.
In 1999 and 2000, the company acquired firms in Arizona, California, Maryland, Massachusetts, New York and Wisconsin, and Kansas City firm Donnelly Meiners Jordan Kline. In south Florida, it merged operations with a 19-member professional services firm, which gave the RSM McGladrey offices in West Palm Beach, Fort Lauderdale, Miami and Naples.