New York Metro CPA Firms Set a Busy Pace in M&A

We’re only a handful of weeks into the New Year, but merger and acquisition activity among the New York Metro CPA firms is surging.

In case you hadn’t heard, five of the most significant deals so far this year involve firms heavily represented in media, entertainment, music and the arts industries. This is a strong indicator of the specialization trend noted below. They include:

• Schulman Wolfson & Abruzzo and Shapiro Lobel have merged. Both firms have strong niches in the industry.
• Prager & Fenton, LLP, a well-known and long established firm in the business management and entertainment world and Metis Group, LLC have merged. (They will now operate under the name Prager Metis International, LLC.)
• Scott Guber and his SFG Management, which is a force in the business management area, has joined forces with Charles A. Barragato & Co., LLP.
• Rosenberg, Neuwirth & Kuchner, whose name you’ll see often in Broadway show Playbills, is joining Marks Paneth & Shron.
• Tanton and Company is merging in Robert Grubman, CPA, who has some high profile clients in arts and music.

Obviously, these didn’t happen overnight and are the result of months of discussions. But the four main reasons behind this surge of activity will continue to drive deals throughout 2013 and beyond:

1. Growth
2. Succession
3. Specialization
4. Profitability

And it’s not all about retirement either. As an example, Scott Guber is in his 40’s and has built a thriving business management firm. According to Scott, “I am excited about joining Charles Barragato because its service platform and talented professionals will enable me to serve my clients with expanded resources and will enable me to enhance the value to my clients and further grow the practice.”

Scott had the foresight to realize that, while he was doing very well, he could do even better with the right merger partner. And, in Chuck Barragato’s words, “Scott and his SFG Business Management practice have been known to me for a long time. He deploys a hands-on approach to client service, treats his clients like family, and serves a market niche that we have looked to serve over the years.”

New York’s M&A trend will continue unabated for the next five to ten years or more, as the baby boomers retire. Some meetings I have had over the past few weeks further illuminate this trend.
For instance:

• I was speaking with a two-partner firm grossing $2.7 million with a strong international tax practice. One partner is in his mid-60’s and the other is in his mid-50’s. The older partner wants to slow down, so they are seeking a merge-in of a younger sole practitioner or bringing in a junior partner. If they can’t accomplish that over the next two years, then they will need to merge up.
• Another firm with a very profitable niche in the not-for-profit industry has a lease that expires in three years. If none of their existing managers are capable of an eventual buyout, they too will need to merge.

What does this mean for you? Even if you have a successful firm with a defined succession plan, be sure you have a Plan B (and maybe even a Plan C), because nothing ever stays the same. And if you have succession or growth issues, start planning and taking action as soon as possible.

If you’d like to discuss this or any other issues related to your practice or career, please don’t hesitate to contact me: My direct line is (212) 490-9700. Or email me rfligel@rf-resources.com. Absolute confidentiality always assured. - Robert Fligel, CPA

PS. See RF Resources, LLC featured in Crain’s NY article on CPA mergers, "From Minnows to Marlins"