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The Baker Tilly x Moss Adams fusion was finalized this week, marking the latest chapter of the public accounting arms race.
The result is the sixth-largest public accounting firm in the US, just under half of which is owned by private equity. The rest is owned by 1,000-plus principals.
CEO Jeff Ferro and CEO-elect Eric Miles, who’ll take over in January after Ferro retires, sat down (virtually) with CFO Brew the day after they finalized the deal to discuss next steps.
The two sides first met about a year ago for casual talks, but “the last nine months or so, we’ve been talking about all the great things that could come out of this,” Ferro told us. With the deal officially in the books, the combined firm can now begin executing on all those ideas, he added.
And while Baker Tilly actually acquired Moss Adams, company leadership insisted the transaction more closely resembles a merger. This won’t be an acquisition where one side’s systems and processes dominate the other, according to Miles.
“We’re two large, successful public accounting firms that are coming together and…we’re choosing the best path forward for the combined entity,” he said.
The two also detailed how the combined Baker Tilly helps them meet the evolving needs of its clients, the next steps for integration, and what customers should expect in the future.
This interview has been edited for length and clarity.
What do you see as the key benefits to the two firms combining?
Miles: Moss Adams was focused on the mid market when I started 27 years ago, and those clients that I served 27 years ago were considered mid market. The clients we serve today are mid market, but the needs they have are drastically different. The complexity of the world they’re dealing with, whether that’s the economy, regulatory, their own international needs, [or] technology, are much more sophisticated in the mid market than they used to be, and so for us to have the scale, the depth and breadth of resources designed to meet the needs of the mid market is what we’re trying to do. They’re large enough to have these issues, but they’re too small to be able to solve them on their own, so they need a partner like Baker Tilly to help them solve these.
Ferro: It really comes down to scale; for us to be able to invest in the industries, invest in people, invest in technology, [and] be able to up our game so that we can provide more of those services more efficiently and effectively, and be more relevant to our client base.
With the deal finalized, what are the next steps as far as integration goes?
Miles: We’re on a long journey here—I think it’ll be at least 12 months, if not 18 [to integrate]. We’ve set up an integration management office. We’re putting a lot of resources behind it. Our focus up to yesterday was being prepared with the “must dos” for day one. Then we’ll pivot to more of the infrastructure, getting our systems together, getting our teams to work together. Eventually we’ll move toward service line integration, co-staffing teams, but in the immediate term it is all the blocking and tackling that has to be done behind the scenes to bring the organizations together.
At what point will clients be able to notice on their end?
Ferro: The initial reaction from our clients is, number one, they’re going to go to the partner who services their account and they’re going to say, “My team’s not changing, correct?” And the answer is absolutely no; the same people are going to provide the same services. The next question they ask is, “Are my fees going to go up?” And the [answer] is, no, the fees will continue on the same scale that they were before…Immediately, they’re not going to really see any change. But the real change that they’ll see is when they have a situation or a problem, the amount of resources that partner on that engagement or that client relationship has to draw from within a larger, expanded organization is going to be significant to that client.