7 Firms Combine to Form 13th Largest CPA Firm
The principals of seven highly successful professional services firms have merged their ownership stakes to form Centerprise Advisors, Inc., the 13th largest professional services firm in the country and one of the largest full-service firms focusing on the middle market.
The founding companies include five professional services firms: Follmer, Rudzewicz & Co. of Southfield Mich.; Grace & Co. of St. Louis; Mann Frankfort Stein & Lipp of Houston; Simione Scillia Larrow & Dowling of New Haven, Conn.; and Urbach Kahn & Werlin of Albany, N.Y. The other two founding firms add rapidly-growing business services capabilities: Brunswick Integrated Computer Solutions with principal offices in Akron, Ohio, and Dallas, to be renamed Centerprise Information Solutions, provides information technology consulting, software-based solutions, training and support; and Insurance Design Administrators of Oakland, N.J. provides health care benefit design and administration services.
The deal, valued in excess of $250 million, was led by Midwest-based investment banking firm Brown, Gibbons, Lang & Company.
The combination of all seven firms gives existing and potential clients access to a far greater range of expertise than any of the entities could offer by themselves. In addition to accounting and consulting services, various founding firms have special expertise in ISO 9000 consulting, M&A transaction services, strategic planning, litigation services, construction industry services, international consulting, government and educational strategies, and health care claims management.
"Centerprise is structured to build equity for its member firms, with stock ownership and other incentives to motivate the sharing of client relationships and expertise throughout the company," said Scott Lang, managing director of Brown, Gibbons, Lang & Company, the investment banking firm that arranged the merger and financing. "Any local firm looking to cash out could have gotten more money from other large firms in this consolidating market. These people are builders, not sellers."
The principals continue to own a 75% stake in Centerprise subsequent to the consolidation, Lang added. He pointed to studies showing that accounting firms are widely regarded as the most trusted advisor, creating an opportunity for the professional services firms to leverage its existing relationships to deliver Centerprise's diversified menu of services and products.
"Clients will continue to receive personalized local services from the same people they have worked with for many years," said Richard H. Stein, member of the management committee of Mann Frankfort Stein & Lipp, who has been named vice chairman of Centerprise Advisors. "Now we can draw upon a much broader and deeper pool of knowledge and experience to meet their increasingly complex business needs."
The founding Centerprise companies are well-established firms averaging 25 years in business, with pro forma combined revenues in excess of $140 million and operating income in excess of $27 million in 2000. Unlike firms that consolidate as a survival strategy, the Centerprise companies have been highly successful in recent years, with a combined compound annual growth rate of 21.2 percent from 1996 to 1999.
Each founding firm is the first or second largest regional player in its market. Moreover, three of the five firms that are professional services firms were ranked among the Top 100 Accounting Firms by Accounting Today in 1999. Because the firms are highly regarded in the markets where they do business, each professional services firm will continue to operate under its existing name. Centerprise Information Solutions is a nationally recognized leader in the information technology service sector. Insurance Design Administrators is ranked among the top 15 third-party administrators in the country.
Source: PR Newswire