Why the Spike in Non-Traditional Firm Mergers?

There has long been three avenues of growth in the accounting profession: organic, adding a previously unoffered client service or merging with another firm. That trend is now changing.

With the advent of profession-altering technology trends such as blockchain, AI and automation promising to revamp the accounting process as we have known it, there will be significant changes afoot – whether the profession is ready or not.

For one, within five-to-seven years, the audit process will likely be automated, sending the folks who normally perform that Type A work, looking for something else to do.

As a result, the past few years have seen a number of firms adopting a fourth option toward achieving their respective growth targets – merging in “non-traditional” businesses.

In lieu of conventional unions, more practices are targeting entities such as HR consulting firms, IT/cyber security concerns, or other growth generating specialty companies such as financial planning, engineering, marketing and payroll.

For example, Top 100 firm Eide Bailly recently acquired Spring2 Technologies, a Utah-based IT consultant specializing in NetSuite, while Nashville, Tenn.-based LBMC added W Squared, an outsourcing company offering finance, payroll and procurement services to its widening portfolio. And more recently, another Top 100 firm, Cherry Bekaert, carved out the cyber-security practice of a New England firm and folded it under its Assurance and Advisory Services umbrella.

Earlier this year super-regional New Jersey firm Withum acquire digital services provider Portal Solutions, while Chicago-area firm Sikich LLP – one of the early practitioners of non-traditional mergers - purchased Evolution Retirement Services a Milwaukee-based provider of employee benefits.

Finding the Right Fit