Back in August, we learned that 1040 factory H&R Block was putting RSM McGladrey (aka McGladrey) out to pasture. By all accounts, H&RB was pretty excited to get rid of RSM (aka McGladrey), as the business was a bit of a drag on the rest of the company.
Crain’s reports that the deal finally closed today and at least one McGladrey (aka McGladrey) partner is equally excited to have their old RSM (aka McGladrey) back:
The move means the reunited McGladery, which has 6,500 employees—600 of them in New York—should be better positioned to compete against such industry-leading firms as PriceWaterhouseCoopers and Deloitte. “We are a great alternative to the Big Four,” said Tom Ferreira, who heads McGladrey’s Northeast practice. […] “We’re happy to be independent again, all together under one roof,” he said.
Your loss, H&RB (not aka McGladrey).
In the best example that we’ve seen of accounting firm make-up sex, today the RSM McGladrey and McGladrey & Pullen announced that they will now be branded under one name…McGladrey. Since the deciders on the name checked imagination at the door, the firms make it up to all of us with the best possible solution – building a giant putting green cake.
One of the duffers sponsored by McGladrey, Chris DiMarco, will attempt to chip in on the green later today and with any luck you’ll be able to watch it above as it happens.
As exciting as that is, it isn’t entirely clear whether or not this also serves as a tasty distraction from the layoffs and restructuring that is going on McGladrey. Kick that around if you like but also consider the fact that Natalie Gulbis doesn’t seem to be jumping out of this thing at any point in time, and that is a travesty that cannot go unnoticed.
UPDATE: We’ve been assured that the cake’s tastiness or lack thereof will be communicated to us later today. Whether or not there will be pre-cake jays, gallons of Vitamin D milk to wash it down or couches to pass out on has not been determined. Discuss and keep us updated. Spare no details – flavor, frosting, texture, etc.
UPDATE 2: Okay you guys – who witnessed this sorry-ass display? Natalie wouldn’t have disappointed the crowd like these losers. And then someone skulls one right into the camera? Video is completely gone right now. Unbelievable. Get back to us on this cake.
UPDATE 3: The report on the cake is in:
1) The cake is, actually, pretty big. And, it’s all cake, except for the part of the logo, which is made of rice krispie treats.
2) As for a slice of that cake…quite good, actually. The cake part is marble, and very soft and tasty. I nabbed what might be a corner piece with the “rough” frosting. It’s a lot of frosting. A lot.
I’d give the cake a solid A-. There will be a lot to save in the next few days!
Two minutes later we got his follow-up:
I had to stop eating it halfway through — I think I’d go into diabetic shock if I ate any more of it. The grade gets downgraded to a B+.
Over the past month, we have heard lots about layoffs at RSM McGladrey/McGladrey & Pullen but we didn’t have much for details.
Frankly, we still don’t know a lot but we’ll go with what we’ve got. So far we know about reductions in the New York, Chicago, Quad Cities, Florida and Seattle offices and everything we’ve been told indicates that they are occurring elsewhere.
First the Emerald City:
I was am ple. There is a new geographic restructuring going on. Instead of multiple “economic units” there will be only three regions. Many HRs and CFOs from different offices are losing their jobs. Consulting people talk about 100 positions that will be eliminated across the country. 10 people were let go from Seattle Economic Unit which includes Seattle, Tacoma, and Olympia offices. We were informed about the reorganization somewhere around 04/12 and laid off at the end of the month. I think everybody received severance.
We’re not that familiar with past cuts in the RSM/M&P world but the big cuts in consulting seem to trail the Big 4’s by a year or two, although if some of these smaller clients are giving into the Big 4 lowballing then perhaps this is the natural progression.
Their Florida Private Club operations group closed the Club IT Consulting Group and layed off the staff. Some of the staff have been part of the firm for more than 20 years and were profitable.
Chicago just layed off the Operations Consulting Staff yesterday, [approximately] 10 people. This group was left to dangle in the wind, sink or swim on their own without marketing or sales assistance or access to the firm’s client-base Naturally it failed.
This firm’s actual layoff numbers are always reported low because they chase people out prior to layoffs in an attempt to camouflage the numbers. Their tactics to accomplish this include poor performance evaluations for staff, unreasonable margin requirements, constant peer pressure meetings regarding performance and head to head comparisons. This creates a dysfunctional relationship between groups and actually motivates groups within their own company to compete with one and other. Only so much people can take and then they leave. Just what the firm wanted.
Considering the economy in Florida, the demise of RSM’s private club operations in that corner of the over-leveraged world wouldn’t come as much of surprise. That being said, you might expect that veterans of the firm would be accommodated somehow with other internal opportunities.
We reached out to both RSM’s corporate spokeswoman and their general counsel, both of whom have not responded to our request for comment. We also contacted an H&R Block spokesman to see if they could elaborate on these layoffs from the parent company level but again, our requests have gone unanswered. H&RB had their own layoffs last month however, there is no indication at this point whether cuts at H&RB would have anything to do with those at RSM/M&P.
We’re still accumulating details on these cuts, so get in touch with us about details on your office or discuss below. And don’t be shy, we know you McGladrey types been hesitant to call on us in the past.
Has the risk of violence become too much?
No, it’s actually quite a bit more boring than that – cost savings. The company states that it will decrease its operating expenses $140-$150 million by 2012. CEO Russ Smyth was quoted in the Kansas City Star that “There aren’t as many people who need their taxes done when there are a lot fewer W-2s going out,” referring to the higher unemployment rate in the company’s customer base.
HRB’s headquarters in Kansas City will cut 165 of the 400 jobs lost.
The timing of this announcement is interesting because we’ve heard a few rumors (but virtually no details) about layoffs at RSM McGladrey, an HRB subsidiary, but they aren’t as forthcoming with the press releases and aren’t returning our calls. If you have any details about layoffs at RSM or its on-again off-again affiliate, McGladrey & Pullen, get in touch with us.
Full HRB press release:
KANSAS CITY, Mo. – H&R Block (NYSE:HRB) today announced a broad strategic realignment of its field and corporate support organization. Overall, the company expects these changes to decrease annual operating expenses by $140 – $150 million per year by the end of fiscal year 2012.
Russ Smyth, president and chief executive officer of H&R Block, said, “We operate in a challenging and competitive environment, and to be successful we must find new ways to provide better value to our clients. This requires that we narrow our focus and invest in a few key initiatives that will have the greatest impact on attracting and retaining clients in our retail and digital channels, while eliminating other activities and their related costs.”
Approximately 400 positions are being eliminated throughout the organization as part of the measure. The company also has closed approximately 400 under-performing tax offices out of its network of 11,000 retail tax locations.
“Changes like these are never easy and we appreciate the hard work and loyalty of the affected associates,” Smyth said.
“However, these steps are necessary to improve our business performance and better serve our clients.”
H&R Block expects to incur a pre-tax charge for severance-related costs of approximately $28 million, most of which will be incurred in the fiscal quarter ending July 31, 2010.
Nat was aware of the problem early on:
Since this was Tweeted Tuesday, RSM McGladrey likely got their enforcers on this ASAP telling LK, “this is not happening” because he started campaigning for NG late on Wednesday.
In spite of these efforts, L to the K still holds a commanding lead. Once these things get rolling they take on a life of their own.
It’s bracket season and while many of you are trying to get out of work to watch hoops, the good folks at Esquire have a much more pressing matter at hand.
The Sexiest Woman Alive Bracket is: “A single-elimination battle royale: sixty-four women, seven rounds, one readers’-choice champion, and not a single Kardashian,” and RSM McGladrey’s own Natalie Gulbis is a number one seed.
Her first round cruise match is against…Lane Kiffin?
Yes, Lane Kiffin. For those of you not pigskin inclined, Lane Kiffin recently left his job as the University of Tennessee football coach for the job at the University of Southern California.
As you might expect, Volunteer fans didn’t take too kindly to a young first-year coach bolting for the sunny confines of L.A. This is not lost on the folks at Esquire and they opted to include the Trojan coach in this year’s bracket.
And as it stands right now, Natalie is trailing Lane in the first round match-up with just under 35k votes to Kiffin’s 46k-ish votes. How does Kiffin, who at first glance does not even qualify for this particular bracket, manage to hold on to what seems to be a insurmountable lead? Is it possible that LK is sexier than Natalie?
Plus, if this lead holds up, isn’t this a public relations disaster for everyone involved? How will RSM explain this to their clients? Will this lead to a desperate move by the firm to drop NG in favor of someone else, say a newly recovered sex addict — who’s a little down on his luck re: sponsors — that will be playing in the Masters?
Vote for the Sexiest Woman Alive! [Esquire]
As you’re all aware, accountants suffer a myriad of stereotypes. The public’s notion that we shred anything and everything with pure, unadulterated joy to cover our asses is due mainly to folks like David Duncan, the Arthur Andersen partner who so famously ordered the shredding at Enron. That sort of thing inspired this spot for Heineken:
So H&R Block, parent of RSM McGladrey, has decided that it will educate some of the fine residents in Spartanburg, South Carolina about the less dubious purposes of shredding financial information.
In order to increase awareness of the importance of being financially secure, H&R Block is hosting a Shred Day at Cleveland Village, 1564 Asheville Hwy in Spartanburg from 10am – 2pm on Saturday, March 20. The public is invited to attend to safely dispose of sensitive paper materials, learn about how to protect their ID, and find answers to any tax related questions.
We think this is fine idea on the part of H&RB although we foresee one problem. Since South Carolina has gone to great lengths to regulate “subversive organizations”, will this little demonstration of document destruction backfire? Will it allow the terrorists in the Palmetto state to destroy any and all evidence that would otherwise declare their intentions to overthrow the government? Is Glenn Beck aware that this being allowed to happen?
H&R Block Hosts Free Shred Day [Spartanburg News]
– Update includes response from RSM McGladrey spokesperson
Well, it’s official. RSM McGladrey and McGladrey & Pullen are back together, having signed a new definitive agreement and putting the brief fallout behind them.
Both RSM President C.E. Andrews and M&P Managing Partner Dave Scudder are putting this whole misunderstanding behind them.
“With the completion of these agreements, our focus is on moving forward and building the success of our respective firms by enhancing client service and accelerating growth,” said C.E. Andrews, president of RSM McGladrey, a wholly-owned subsidiary of H&R Block. “We have a clear opportunity to enhance our competitive position by taking the collaboration between our firms to a new level.”
“We now have the framework to build on our heritage of delivering the highest quality services to all our clients, while providing growth opportunities for our people and ensuring the independence of M&P,” said Dave Scudder, managing partner of McGladrey & Pullen. “We look forward to increased collaboration with RSM McGladrey and the renewed sense of enthusiasm and commitment that both firms have brought to this process.”
In spite of the boilerplate statements, it’s not entirely clear if the new agreement between the two firms puts each of them back in the same position prior to the breakup. An RSM spokesperson did not immediately return our email seeking comment on these details. A RSM spokesperson returned our email and informed us that the new agreement is the same as the old arrangement and it is effective for five years, at that time it will automatically renew for additional five years. H&R Block, RSM McGladrey’s parent company, will be filing an 8-K this week with the SEC that will include the signed agreement.
Additionally, some developments that we ponder for personal amusement: will the recombined forces of the two firms be enough to break the absence from the Fortune 100 List? Will M&P will reap any benefits from the Natalie Gulbis ad campaign bonanza? We’ll stay on these…
At the end of the day, we’re sure everyone at both firms is pleased that the issue is resolved for the rest of busy season. Who knows, maybe it was just a distraction for partners but at least you won’t be getting any more emails about it.
By now you’ve digested the Fortune list to the point of nausea, so we’ll dispense with rehashing the firms that we covered last week.
What we do want to address is the obvious absence of Grant Thornton, BDO, and RSM on this year’s list. Hell, they aren’t on any of the lists going back to 2006. Are these omissions meant to be a thumb in the eye to these storied firms?
Perhaps they blew their lobbying budgets on the BusinessWeek lists? OR maybe — GASP — they just don’t GAF?
We’ll dispel with that for now and assume each of these firms were dying to be on this year’s list. Accordingly, the reason for their exclusion leaves ample room for wild-ass guessing:
• Grant Thornton – We realize Steve Chipman just started his new job and he’s trying to get a blog up and going but for crissakes, how does he explain this to you? Will this regime change make a difference? He didn’t mention it on the call so should we assume this disappointment will continue in perpetuity? Could the Koss fiasco be the reason?
• RSM McGladrey – This one doesn’t make any sense at all. Does anyone at Fortune know that RSM sponsors this woman? Aaaaannddd, we realize it’s too late for this year but RSM is now helping get Yele Haiti’s house in order. Please note both of these for next year.
• BDO – They owe Banco Espirito half a billion dollars and they’ve been planning a 100th birthday extravaganza. Maybe campaigning for the list isn’t at the top of their to do list but still.
If any of you GTBDORSMers have any idea just what the hell is going on (i.e. why this gross oversight has gone on for at least five years), fill us in.
Are you paying attention Fortune? After last week’s controversy around the finances of Yele Haiti, RSM McGladrey has been appointed to administer the donations pledged to Wyclef Jean’s foundation.
Yele Haiti has also retained Grant Thornton, who filed the three years of tax returns for the foundation just last August.
All the hubbub was over the foundation less than timely filing of its tax returns and paying expenses on the behalf WJ’s production company.
Not filing tax returns is one thing but there is some debate over whether the payment of expenses is actually anything to worked up over:
John Colombo, a University of Illinois law professor specializing in tax-exempt organizations, said tax laws permit such fees.
“If you told me the organization raised $1 million and it all went to him, then I would have some issues,” Colombo said. “Paying him an arm’s length salary for services he actually performed just isn’t a problem.”
But Alvin Brown, a tax lawyer who runs the site IRSTaxAttorney.com, said such transactions were “scary” and “could be viewed as fraud.”
“Viewed as fraud” isn’t the same as “is a fraud” but we after the last week, Yele Haiti has heard worse.
Wyclef’s Haiti Charity Gets New Accountants [AP]
We Knew Accounting Firms Were Helping Haiti
RSM McGladrey’s C.E. Andrews was on CNBC today to plug the The McGladrey Classic, the new PGA Tour event that has NOTHING TO DO WITH TIGER WOODS.
C to the E to the A also isn’t too worried whether or not his firm got a deal sponsoring the tournament at the rumored $3 – $3.5 million since the wheels were already in motion before the “Tiger event” (read: everyone on Earth knows that he’ll screw anything). He’s just stoked that the firm has their name on a tournament (although it’s not so obv from his demeanor).
As for PGA commish Tim Finchem, he hasn’t talked to him and he says he won’t until T Dubs is ready. According to the commish, they’ll prepare appropriately at that time which will probably involve having local hookers on site at the events.
Basically the unspoken element here is how grateful the PGA is to have RSM do them a favor in their time of need.
Girl is 27 today so leave her some bday wishes in the comments.
It must be an extra special day since the RSM McGladrey and McGladrey & Pullen kissed and made up last month.
Plus, since the marketing campaign has been such an unmitigated success it might be nice for the reconciled firm to throw a little extra scratch her way. Happy Birthday NG.
Well, sons and daughter of McGladrey, the reconciliation is done. Your feuding parental firms will be engaging in some awkward corporate make-up sex:
An arbitration ruling, which was handed down Nov. 24, favors H&R Block and RSM, enforcing the restrictive labor covenants involving employees of the two firms.
About 650 McGladrey partners began meeting in Orlando, Fla., on Wednesday and voted Thursday to approve the agreement after the M&P board, including managing partner Dave Scudder, had earlier approved the deal.
The whole thing has been pretty ugly as far as we can tell and according to Allan Koltin, CEO of PDI Global, a consultancy firm that advised both firms, M&P didn’t have any choice but to go back:
The enforcement of some of the terms of the original agreement by the arbitrator seems to have forced M&P’s hand. “Once the arbitration ruling came out and McGladrey & Pullen found they were prohibited from providing tax services for a couple of years, that was the end right there,” said Koltin. “There was no way they could be independent as an audit-only firm and compete effectively without also providing tax services.”
The original non-solicitation agreement said that M&P could not provide services such as tax preparation for between 18 and 24 months if it terminated the agreement, effectively limiting the firm to audit services. “Once they saw the writing on the wall, it became obvious that the two sides were going to come together,” said Koltin.
So this appears to be awkward. Did M&P think this through or even read the non-solicitation agreement before they told H&RB/RSM to drop dead? Did they legitimately think they could get by just offering the audit services for two years?
While we were rooting for the firms to make nice, there may be some of you that are less enthusiastic about the House of McGladrey being all under one roof again. We’d like to hear from the troops on the ground about this whole thing. Feel free to get in touch or just put it out there in the comments.
UPDATE: The full press release can be seen here.
Maybe! For those of you looking for any ray of hope of RSM McGladrey and McGladrey & Pullen making nice, consider this your sign.
H&R Block, the parent company of RSM, announced yesterday that they, “[expect] a dispute regarding a subsidiary’s deal with an accounting firm to provide consulting to midsized businesses will be settled soon.”
Block CEO Russ Symth also told us yesterday that while nothing is official he’s pret-tay, pret-tay, prety-tay optimistic that the two firms will be able to kiss and make up:
“We are very optimistic that this is going to be settled within a few weeks,” Block CEO Russ Smyth told investors during a meeting after Block released its second-quarter financial results earlier Tuesday.
He warned, however, that while it appeared the matter would have a good outcome, “We are not across the finish line yet.”
We’ll go on record that we’re rooting for the firms to get back together. Reconciliation makes for a heartwarming story during the holiday season. Especially since we’ve learned that not even an insanely rich celebrity athlete and a Swedish model don’t seem meant to be.
Prior to any official reconciliation between the firms, several questions are worth mentioning: 1) What’s Natalie’s opinion? 2) Is RSM buying M&P a huge rock, a house in Sweden, or performing some other demonstration of materialistic love as part of the reconciliation? 3) How will the make-up sex work? Will M&P even go there? D) See #1.
If you’ve got thoughts on any of these questions or if the RSM/M&P troops have feel like talking about their firms’ chances of making it work, discuss in the comments.
H&R Block Subsidiary Nears Settlement With Auditor [AP via ABC News]
Prior GC Coverage of RSM McGladrey/McGladrey & Pullen Drama:
RSM/McGladrey & Pullen: ‘Breaking Up is Like Pushing Over a Coke Machine’
McGladrey & Pullen Might Want to Think This Whole Divorce Thing Over
H&R Block is Not Letting McGladrey & Pullen Leave Until They Talk About This
McGladrey & Pullen Doesn’t Love H&R Block Anymore
Which is shameful since everyone is aware that it would be the most effective way to recruit people to their firm. Nevertheless, FINS has a nice chat with the firm’s HR chief Kimpa Moss who speaks about the firm’s current-non-Natalie recruiting process, their use of social networking, etc. etc.
According to the interview, RSM just welcomed 400 newbies this fall and is always on the look out for experienced servants of the capital markets.
She did, however, manage to dodge the layoff question:
[FINS Reporter Kyle] Stock: Did RSM downsize during the crisis?
Moss: We really match our client service work force to the demand in the marketplace, but we don’t really comment in specifics on the changes in our work force from year to year
Layoffs are simply none of your beeswax, thankyouverymuch. Accordingly, we invite the members of the RSM/M&P fam to expand on Ms. Moss’ particular account of the layoff situation. Don’t make us prod.
We also found the following exchange especially interesting (our emphasis):
Stock: Did RSM see the global financial crisis as an opportunity to grab market share?
Moss: We track closely with our clients, so as they feel the impact, we feel the impact. But it does open up the question: ‘Are there more sectors we should be focusing on?’ And on the talent side, due to circumstances at other firms, there are a lot of people who we were able to approach. We’ve definitely done a lot of experienced hiring in the past year.
Now maybe we’re taking the above statement wildly out of context but what could Ms. Moss possibly be suggesting? Circumstances like, the banishment of Google Talk, the shameful denial of live streaming music, or bonuses in the form of tighty-whities? If we’re way off base here, feel free to comment with your own interpretation.
Annnnd speaking of undies, we’re more than a little disappointed that FINS passed up on the opportunity to inquire about the potential marketing rivalry that RSM that has on its hands. For now we’ll assume that RSM is counting on PwC’s continued dismissal of advertising genius and the RSM will enjoy it’s success of effective advertising (despite not mentioning it at all).
RSM McGladrey’s Kimpa Moss: A Nonstop Talent Hunt [FINS]
Not for being stellar bean counters though. No, RSM’s gold star is due to some brilliant minds in the marketing department that decided that an ad campaign featuring Natalie Gulbis might be a good idea.
“The power of being understood” rolled out in today’s print version of the Wall St. Journal and will be followed by “a series of online, print and radio executions” according to the firm’s press release.
All we can say is, “What the hell took you so long?” We’ll give RSM credit for coming to their senses.
Natalie is Understood [RSM McGladrey]
Maybe! RSM McGladrey/McGladrey & Pullen announced new directors in their Charlotte office today which is obviously exciting for them. We also think it’s nice that the press release still has both names of the firm together.
That gets us to wondering if M&P is heeding our advice? Regardless of that whole situation, it’s nice to see them come together for the sake of the new directors. Sort of like when bitterly divorced parents show up at their son or daughter’s graduation. Very touching.
Along with these promotions, the national finals for the McGladrey Team Championship start on Sunday at Pinehurst and you-know-who is going to be there.
Obviously we’re very curious as to whether these new directors will be in attendance to get a look at Natalie’s swing. Two McGladrey directors are actually playing in the tournament, so unless NG has a clause in her contract that says she doesn’t have to golf with accountants, there’s an outside shot one of those lucky ducks might end up in her group.
So if you’re in the area, it might be worth checking out since A) Obvious answer; and B) the silent auction has some cool stuff if you’re willing to drop some coin. Oh, and it benefits the Special Olympics, so that’s good too.
This is it! [RSM McGladrey Golf Blog]
At least that’s one expert’s opinion. Allan Koltin, CEO of PDI Global, Inc., based in Chicago, thinks RSM McGladrey and McGladrey & Pullen will eventually be getting back together.
“I think what you’re seeing now is just the flexing of some muscles,” [said Koltin.] “What (RSM’s termination notice) does is reinforce what [RSM Parent, H&R] Block said before, which is that, if need be, they will go to the mat with them on this one.”
That’s a fine assessment but we all know what this is really about. The Gulbis factor. RSM/Block can go on and on about ‘administrative services’ and whatever hell else they think that’s in M&P’s ‘best interest’ but we understand the unmentionable factor here.
Sooner, rather than later, M&P had better come to their senses in this whole mess and realize that being associated with Natalie Gulbis is by far the best thing any accounting firm has been able to pull off since…yeah, pretty much anything.
McGladrey, RSM move to reconciliation [KCBJ (Subscription Required)]
The accounting firm soap opera between McGladrey & Pullen and RSM McGladrey continues as RSM has filed notice terminating the two firms’ agreement and, under no circumstances, will they allow M&P to come crawling back to them without RSM’s involvement.
This was all included in a filing with the SEC, made by H&R Block, who is obviously the pimp in this whole love triangle.
Personally, M&P should probably consider going back to RSM’s sorry ass just to take advantage of the Natalie Gulbis exposure.
Judging by the firm’s response to our earlier mistake, they won’t be listening to us. Poor thing is caught in middle of this whole mess. Natalie, if you ever need to talk, don’t hesitate.
RSM McGladrey wants say in any reconciliation with McGladrey & Pullen [KCBJ]
Accounting firms don’t do much advertising. It’s got something to do with ethics and since the CPA exam is ancient history for some we can’t talk specifics.
Firms do like to sponsor stuff related to golf. Tournaments, players, etc. One recipient of accounting firm cash has been widely followed here but now we recently discovered another firm sponsoree that, we feel, may rouse as loyal of a following as Phil.
This is Natalie Gulbis who is sponsored by RSM McGladrey.
Natalie works with RSM in partnering with the Special Olympics Golf Program and will be a contributor to RSM’s new golf blog.
We’re not really into golf so we can’t really debate who has a better game or who garners better exposure for their sponsor so, after the jump, we’ve presented a more superficial analysis:
We admit that we know nothing about promotion or advertising but if you’ve got opinions on which firm seems to have found the better golfer to sponsor, discuss in the comments.