UPDATE — A couple of reports out of the Milwaukee press have confirmed our tips from yesterday. We've also received the text of two emails, one from Ms. McMasters and one from CLA's other CEO, Gordy Viere that communicate the decision to the firm's employees. They appear on the following pages.
A couple of tips came in earlier today that CliftonLarsonAllen's co-CEO Krista McMasters is retiring. If she were to step down then it stands to reason that Gordy Viere, the CEO of CLA Holdings would be the head of the firm. We're still trying to confirm that this is in fact the case but if true, that would mean all of the CEOs (managing partners, or whatever else they might be called) of the 25 largest firms would be led by men.
Last month we broke the news of LarsonAllen and Clifton Gunderson feeling each other out about a possible merger. At the time, Clifton Gunderson CEO Krista McMasters told Going Concern that the two firms were simply in “exploratory discussions” and it wasn’t a story. Sorta like when two celebrities are seen vacationing on a yacht together. Everyone just assumes they’re banging, will eventually be a couple and the new celeb couple name game begins instantly. However, it turns out that they are “just friends” who are “enjoying time together.” For this particular round, our sources told us that LA and CG were “50/50,” that LarsonAllen had approved the merger and that the new merged firm would be known as CliftonLarsonAllen. Again, at the time of our discussion, Ms. McMasters denied that anything had been decided.
Well, today, it appears that the “exploring” went pretty well and the name game was right on the money:
Clifton Gunderson and LarsonAllen have confirmed they plan to merge in the New Year into a combined firm known as CliftonLarsonAllen. The two firms said Tuesday they would combine, effective January 2, to create one of the top 10 accounting firms in the U.S., with combined revenues of between $550 million and $560 million.
Not to nitpick but by Accounting Today’s count, the combined revenues would be closer to $470 million. I haven’t punched a 10-key in a number of years but that’s the number I got. I guess sometimes you just gotta take their word, amiright? ANYWAY, since these two firms were simply in “exploratory discussions” it’s pretty impressive that they were able to slap this deal together so quickly isn’t it?
The two firms began discussions in the spring and made rapid progress. “As often happens in our profession, firms get together to talk about what it might look like if they ever were to come together and how they might help each other,” said LarsonAllen CEO Gordy Viere.
Gosh, I must have a warped idea of what “exploratory” means. And by “spring” I assume that’s the period between late March and late June? And by rapid progress, does that mean, in three months they were still in “exploratory discussions” and nowhere near a deal, only to fall into each other’s arms less than a month later? I need help with this.
It’s been quite awhile since we heard a good merger rumor and this past week we finally heard one that doesn’t involve Moss Adams or Grant Thornton.
Rumor has it Larson Allen and Clifton Gunderson are merging. Vote approved by Larsen Allen, vote pending by CG.
We checked with another source, someone familiar with dealings within the accounting industry, who confirmed that the two firms are talking. According to this person, the combination would make sense as both LA and CG are “sleepy” firms that don’t perform public company audits and have been making small acquisitions here and there. Also it would strengthen CG in areas like Virginia/Maryland where they are rumored to be lowballing engagements and Larson in places like Illinois, Indiana, and Wisconsin where CG has a big presence. This person also said that the deal was “probably 50/50 right now” with the rumored name of the new firm being “CliftonLarsonAllen”.
Clifton Gunderson CEO Krista McMasters told Going Concern that this is “not a story” right now because the firms are simply in “exploratory discussions” and there has not been a vote by the CG partners. Ms. McMasters also denied that there had been any decision on the name of the combined firm, reiterating that they are simply feeling each other out.
Even though it doesn’t sound like things are hot and heavy yet, we rammed a few details together from Accounting Today’s most recent Top 100 Firms list to see what the CliftonLarsonAllen firm would look like:
• A combined $470 million in revenues. That would be good enough to be the 10th largest firm in the U.S.
• 60 offices (probably some consolidation) in 24 states and The District of Columbia.
• Over 300 partners and 3,000 total employees.
A spokesman at LarsonAllen declined to comment but was trying to get someone in the know to call us back. So far, we haven’t heard anything. If you’re in the loop and have more details to share, email us.