Accounting Firms Grow By Needs, Regions & Mergers

The Big Four maintain a business focus that includes their more profitable clients and roles, allowing local and regional accounting firms to take on new clients and reap the revenue rewards. The St. Louis Business Journal reports that local and regional accounting firms in many states are also growing through mergers.


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Doug Gaston, partner in charge of regional accounting firm BKD’s Kansas City office, 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.”

BKP LLP merged with Mock & Dakan PC of Overland Park (Kansas) earlier this month and Gaston’s comments may be universal among other accounting firms seeking growth and regional presence. The firm Mock & Dakan PC will take on the name of BKP LLP,according to the Albany Business Review.

The synergies found in the merging of their companies are reinforced by Stephen Mock of the former firm Mock & Dakan. He told Albany Business Review, “We’re excited about the opportunities with the merger which allows us to continue providing outstanding service to our clients and offering more service than we have in the past. We think it’s a huge positive to our clients, and that is the primary driving force behind this decision. It will help us take care of our clients for the next couple decades.”

With pressure from the Sarbanes-Oxley Act of 2002 (SOX), accounting firms are prohibited from performing the accounting and consulting functions necessary under its regulatory umbrella, according to the St. Louis Business Journal, increasingly complex and in-depth accounting requirements are being performed by more resources.

“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,” said Jonathan Hamilton, editor of the accounting newsletter Public Accounting Report, speaking to the St. Louis Business Journal.

Rea & Associates Inc., based in New Philadelphia, Ohio, announced their merger with Lynch, Anselmo, Ott, Bryan + Co. of Lake County this month. The acquired Lynch Anselmo will become the 11th office of Rea & Associates Inc. The merge increased the staff of the regional accounting firm to 225, according to the Crain’s Cleveland Business.

Global Alliance and Moore Stephen North America announced their merger in November 2005, creating Moore Stephens North America (MSNA). MSNA will comprise 35 firms, with combined North American revenues exceeding $600 million, according to their prepared statement. The firm MSNA will still be part of Moore Stephens International Limited.

In early 2005, Chicago-based Friduss, Lukee, Schiff & Co. (FLS) and the Maryland-based Reznick Group announced their merging under the name of the Reznick Group in a prepared statement. This national accounting, tax and business advisory firm now has six offices, with approximately 900 employees and revenues of $115 million.

Reznick Group Managing Principal Kenneth E. Baggett said in the company's prepared statement, "Our strategic plan calls for significant national growth, leveraging the firm's unique resources of our clients, and recruiting and retaining the best talent in the industry. This unsurpassed combination of extraordinary talent is a significant event for our expansion into the Midwest and nationally. FLS and Reznick Group are incredibly strong partners and together we will continue to deliver quality solutions and outstanding service to our clients."

Baggett continued in their prepared statement, "For many years, Reznick Group has served clients in 50 states, including the Midwest. Having an office and professionals physically located in Chicago will allow us to better serve our Midwest client base and expand our reach in that area."

Business mergers are not the only way for accounting firms to grow. BDO Siedman LLP wanted to connect its corporate offices to its national network of independent alliance accounting firms. SearchCRM.com reports they selected an open-source software application from SugarCRM, based in Cupertino, Calif. BDO is starting a small pilot project, in-house, to ensure compatibility and then will extend the implementation to its 35 domestic offices and their network of independent CPAs and consulting firms that access the system. This may add some 9,000 users alliance partners to their central office.

Valerie Kozikowski told SearchCRM.com, “The new link and application from SugarCRM will be our mechanism to create a communication platform. In no way is it intended to be a full CRM system for alliance members to track customers. We are not handing them a full CRM solution and saying use that for your internal CRM purposes.”

Kozikowski continued in SearchCRM.com, “We were looking for something with a very clean and simple user interface we could tailor without making a lot of changes. Because some of our needs are unique in that we’re connecting people who can be customers or referral sources, we needed a lot of flexibility. That was our No. 1 selection criteria.”


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