15th January 2014
Mergers and acquisitions between CPA firms in the US will continue apace this year, driven by small and mid-sized players, according to a new book. Succession planning, cross-selling opportunities and market share expansion will be the key drivers behind the trend, say the authors of the new American Institute of CPAs-published book on acquisition strategies.
CPA Firm Mergers & Acquisitions: How to Buy a Firm, How to Sell a Firm, and How to Make the Best Deal, by Joel L. Sinkin and Terrence E. Putney, argues that the ‘merger wave’ among firms is expected to be maintained this year, particularly among smaller regional firms.
They also say an often overlooked factor driving merges is the search for talent. Unemployment remains low in the accounting profession, leaving many smaller firms in an increasingly competitive market for the next generation of leaders. As recruiting battles heat up, buying or selling a firm makes sense as a growth strategy or exit plan.
“Smart firms plan ahead,” Mr Sinkin said. “We still see too many firms not preparing for transition, and those that wait too long may have problems finding the right fit.”
But there are a number of other reasons for this expected growth in consolidations, and it is not just in the US where we are likely to see activity.
In November, BDO predicted an acceleration in mergers and acquisitions in the sector globally over the next half-decade. Pressure on fees, regulatory changes and big investment costs will drive the trend, the firm said.
“Within the next five years, we anticipate that the global consolidation of our profession will gather pace, leaving only two or three substantial mid-tier networks globally," BDO chief executive Martin van Roekel told Reuters.
Those comments came as BDO reported a ten per cent growth in revenues for the 2013 financial year, a period that covered its own merger with PKF. Simon Michaels, managing partner at the firm, noted that this “proactive and strategic merger” gave it “first mover advantage in the mid-tier consolidation”.