BKD CPAs & Advisors and Dixon Hughes Goodman, two Prime 20 Corporations, are merging to kind a $1.four billion agency that may vault them into the Prime 10 within the U.S., with additional plans for a nationwide development technique.
The 2 companies introduced their plans to hitch forces Thursday. BKD, previously often called Baird, Kurtz & Dobson, is predicated in Springfield, Missouri, and ranked No. 14 on Accounting At this time’s 2021 record of the Prime 100 Corporations. It not too long ago reported $758.12 million in annual income for the fiscal yr ending Might 30, 2021. The agency has roughly 3,300 workers, together with 296 companions, and 41 workplaces within the U.S.
DHG, primarily based in Charlotte, North Carolina, ranked No. 17 on Accounting At this time’s 2021 record of the Prime 100 Corporations. It not too long ago reported $504 million in annual income for the fiscal yr ending Might 31. DHG has roughly 2,100 workers in 13 states, together with 207 companions, and 27 workplaces within the U.S. The mixed agency can have greater than 5,400 staff members throughout 68 workplaces in 27 states, plus the UK and the Cayman Islands.
The 2 companies plan to rename the mixed agency, however the brand new title gained’t be introduced till a future date. The deal is predicted to shut within the second quarter of the yr. Monetary phrases weren’t disclosed.
The companies see the mix as a solution to develop their advisory companies and trade focus, and supply higher profession alternatives to employees whereas establishing a stronger nationwide presence and a path to world growth. They’ll arrange 10 nationwide trade practices.
BKD CEO Tom Watson will turn into the CEO of the brand new group, whereas DHG CEO Matt Snow would be the chair. The 2 had been in talks for a number of years, however the discussions heated up about 10 months in the past.
“It was most likely the fruits of years of dialogue concerning the evolution of the trade and our consumer base and the way these had been altering,” Watson informed Accounting At this time. “About 10 months in the past, Matt and I began evaluating notes about every agency’s long-term strategic targets, and each of these included changing into a very nationwide agency, primarily as a result of we’re seeing our purchasers ask us for that. They’re consolidating, they’re getting larger, they’re in additional areas than ever. So they might ask, ‘Can you develop with us and proceed to serve our wants?’ As we checked out what it could take for each of us to have the ability to try this, we rapidly discovered that this was the proper time for us to return collectively and advance the ball on a whole lot of our strategic targets.
“As well as, we get a whole lot of questions from our professionals about desirous to proceed to develop their profession,” he continued. “As we checked out it, we thought not solely would this be good for our purchasers, however we felt like it could be actually good for our individuals. We’ll have extra industries for them to concentrate on. We’ll have extra workplaces the place they’ll have enhanced profession mobility alternatives. We expect it’s going to create a whole lot of alternatives for enhanced studying {and professional} improvement for them as properly.”
The atrium at Dixon Hughes Goodman’s headquarters in Charlotte, N.C.
Courtesy of Dixon Hughes Goodman
The merger can even allow each companies to develop their footprint nationally and maybe internationally.
“The geographic element of this was vital for each companies, and it’s a part of our development technique for each our agency and for BKD,” stated Snow. “We need to be nationwide, which implies coast to coast, and we additionally need to have the flexibility to doubtlessly go world too. That’s additionally part of increasing in that manner as properly. For those who take a look at our footprint, we’re very complementary. We now have 68 markets between the 2 of us with our new agency, and solely three are overlapping. That actually provides each companies and a mixed agency a extremely robust attain all through the nation. That was considered one of our targets as part of this. As Tom stated, our purchasers are asking us, ‘Are you the place we want you to be?’ This enables us to reply that query very positively and affirmatively.”
The merger can even enable each companies so as to add new companies and trade specializations.
“For every agency, there are particular industries we each are very robust in,” stated Watson. “For instance, in monetary companies, insurance coverage and well being care, we each have an actual deep experience. However as we in contrast notes during the last 10 months, there clearly had been areas the place perhaps BKD had a specialty that DHG did not have and the place we had a specialty that BKD didn’t have. We’ll be capable to take among the actual well-known individuals in these industries and get them working within the new geographies that we’ll have. The opposite factor this may do is for each of us to develop and attain our nationwide agency targets individually. It was going to be form of a slower and costly course of to make that occur, and now that we’re capable of accomplish that with this transaction, we’re going to have the ability to make investments that capital we’d have in any other case deployed into new companies and new merchandise and options for our purchasers. So we predict it’s going to actually assist us make really significant investments in new areas like ESG and different evolving objects as we transfer ahead to essentially maintain our purchasers’ wants in these newer areas as properly.”
Each companies have been capable of retain lots of their workers regardless of the so-called Nice Resignation, however the mixture will bolster their ranks.
“What each companies share is a extremely robust individuals technique, and we see this as a strategic benefit, particularly coming collectively as a mixed high 10 agency,” stated Snow. “Each of us have been including a whole lot of staff members this yr. We’re more than happy with the place we see retention charges going at our companies, and we see a chance for us to essentially be a vacation spot employer, if you’ll, as a mixed agency.”
The companies are doubtless so as to add extra workplaces as they take a look at longer-term development plans.
“We’re capable of accomplish a whole lot of areas on what our short-term aim is, whereas if we glance long run, there clearly are markets the place we have to develop, high-potential enterprise areas the place we don’t have workplaces,” stated Watson. “We’re not going to get into naming particular markets proper now, however there are locations the place our purchasers are that we must be each in a home and worldwide perspective, so we’re going to proceed to judge that as we transfer ahead.”
The mixture additionally guarantees to supply extra profession mobility for workers.
“We see this as a web plus for our individuals as a result of we’re going to have extra profession choices, extra profession mobility by way of areas and much more service choices that our agency can have that our individuals can have an opportunity to work on,” stated Snow. “Past that, we each have a extremely deep tradition of actually being a really people-first surroundings. Like each agency, we got here by the time interval of the pandemic with increased turnover than we’d anticipated, however we’ve seen that actually taper off and we attribute that to essentially taking good care of our individuals, and that won’t cease, and if something, it’s going to even strengthen that as part of this merger.”
The 2 companies are usually not seeking to compete immediately towards the Large 4 audit companies, however see it as a solution to go upstream in tax, consulting and personal firm audits.
“Whenever you take a look at our technique, we’ll definitely choose up extra public firm audits, however this isn’t actually focused at that,” stated Snow. “We actually see a whole lot of alternatives within the consulting and the tax house, in addition to actually serving that center cap to Fortune 1000-size purchasers in consulting and tax. We do not see ourselves as going after very massive Large 4-type audits. It’s simply probably not a part of this technique, however we do see ourselves going upstream and actually serving a broad vary of purchasers in consulting and tax.”