September 15, 2019

Accounting Firm Merger Hypotheticals: Reznick Group and J.H. Cohn

As readers of this website well know, occasionally we like to report on merger rumors that are floating around the accounting world. Most recently we reported that Eide Bailly and Wipfli were going to make a very handsome couple as EB Wipfli only to have the deal fall apart a little over a month later. We also managed to scoop the CliftonLarsonAllen merger before it was a "story" only to find out a month later that it was, in fact, a "story."

Today, we'll share with you the unfounded rumor of Reznick Group and J.H Cohn working on a merger. We were tipped by a reliable source, so it made sense to snoop around a bit. Unfortunately, Reznick Managing Principal and CEO Kenneth Baggett has not responded to an email requesting an interview and a message left for J.H. Cohn CEO Tom Marino was not immediately returned. We'll update you if we hear back from either of these gentlemen, but for now let's try to imagine what a combined Reznick/Cohn firm would look like:

  • First things first. What's the name? – Cohn Group? RezCohn? JHC Reznick? Julius Reznick? Reznick Julius? RJ Cohn? There seems to be decent options but personally, I would like anything that includes Julius.
  • Money. Obviously. – Per Accounting Today's most recent ranking, 17th-ranked Cohn and 21st-ranked Reznick would have ~$421 million in revenues combined. That falls short of newly merged CliftonLarsonAllen who claims revenues between $550 million and $560 million and Crowe Horwath who, at last report, had $481 million in revenues for its most recent fiscal year. That would put the combined JH Cohn/Reznick Group somewhere around 11th in size largest firm in the country. 
  • The People – The firm that should be known as Julius [insert whatever form of Reznick you like] would have approximately 250 partners, over 1,200 professionals, and nearly 2,000 total employees. 
  • The Work – Both firms derive more than half of their revenues from audit, and JHC has a mysterious 17% from "other," but is likely some kind of combination of "other" services listed on their website that include consulting, business investigative services, private equity services, and GR&C. 
  • Locations – JHC has 11 offices while Reznick has 10, doubling up only in Los Angeles, which is strange since these are commonly thought of as east coast firms. Cohn's strength in the Tri-state area is a huge boost for Reznick, while JHC would benefit from RG's DC metro presence as well as expose them to the Chicago, Atlanta, Charlotte and Austin markets. Each firm would benefit from expanded exposure in California. They each have an international location – JHC in Georgetown, Grand Cayman and Reznick in Nungambakkam, Chennai.
  • Culture – Here are some quotes people wrote about Reznick Group in this year's Vault Accounting 50: "Strong reputation working with tax credit programs"; “Somewhat prestigious, but smaller with less specialized knowledge"; “Strong specialty practice in low income housing"; "Too concentrated in real estate/affordable housing?" As for J.H. Cohn, Vault has less to say but one insider makes it sound like it is all business, “I have worked at companies before where political views were openly expressed, [but] this does not happen at J.H. Cohn [because] the focus is more on work and less on personal matters.” 

Overall, it would make for a east coast powerhouse that would get the attention of firms like EisnerAmper and Marcum who are currently larger than both firms individually. So, I guess it would make sense unless there's a big cultural clash or other major issue that we aren't yet familiar with.

If you're familiar with the situation at either firm, send us an email and we'll keep you informed if we learn more.

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

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