Forvis Mazars is one of the many accounting businesses flying high after a recent merger, which brought together the international professional services outfit Mazars with Forvis, one of the nation’s largest accounting firms. The combined $5 billion professional services network now ranks within the Top 10 firms in accounting globally.
If you ask local Forvis Mazars leaders where the advantages lie, they turn to an example of a recent client asking about the aviation sector. Before, they would’ve had to hand that query off to a third party. Now, they’ve got someone across their massive footprint — spanning more than 70 offices in the U.S. — with an expertise there.
Accounting firms are finding many reasons to pair up today. And, increasingly, they’re doing so — and soaring up rankings of the country’s largest firms in the process. It’s an unprecedented level of consolidation in the sector, industry experts say. Some are on board for it; others aren’t.
The creation of Forvis Mazars came after two years of conversations that picked up speed last summer, said Ryan Reiff, managing partner for the New York metro area at the new firm. As both firms were expanding on the consulting side and seeing demand for more global solutions, the firms saw the benefits in bridging their resources with one entity.
“Forvis Mazars now has a larger industry presence in some additional industries we can bring into the New Jersey market — a very heavy focus in hospitals and health care, higher education and dealerships,” Reiff said. “We’re looking forward to continuing to grow those areas in New Jersey.”
That knowledge-exchange goes both ways, according to the New Jersey-based Paula Ferreira, assistant managing partner at Forvis Mazars.
“In New Jersey, we’ve had a strong food & beverage and manufacturing focus that we can take and expand out West, where we didn’t always have those boots on the ground,” Ferreira said.
In accounting, firms are competing for a shrinking pool of hires that stems from a decline of more than 33% in CPA exam test-takers over the past decade, according to the American Institute of Certified Public Accountants. Given that, Ferreira and Reiff said it’s more important than ever to offer a wide range of specialties that accountants can enter into at a firm.
Between that and having more locations worldwide that employees have the opportunity to transfer to, Reiff said they’re a more attractive landing spot for hires under their new arrangement.
“We’re already seeing, since we announced over the past six months, we’re becoming a destination employer across the firm, and definitely here in the New York and New Jersey market,” Reiff said. “We’ve added to the interest in our new model some additional college campus recruiters here.”
Just as firms are fast unifying under traditional partnership models in accounting, they’re also being quickly brought into the orbit of private equity investors. At least five firms ranked within the 30 largest accounting firms in the U.S. have been part of private equity deals since 2021, including EisnerAmper and Citrin Cooperman.
Diane Wasser, partner-in-charge of New Jersey and managing partner of regions at Eisner Advisory Group, said EisnerAmper actually was the first firm of its size to take advantage of private equity interest in the sector when it was involved in a transaction back in summer 2021.
Wasser expressed that the end game for accounting firms taking that route is not just growth, but increased access to capital for technology and, as the Forvis Mazars leaders attested to, the acquisition of talent that’s very much in-demand in accounting.
The feedback on the client side to accounting firms involving themselves in the flurry of investor expenditures and merger activity has been positive, Wasser said.
“I think they’re embracing it, because there’s so many more services that their legacy firms can now provide,” she said. “That’s one of the biggest things we hear from clients of firms that joined us. They’re thrilled to have us as a one-stop shop.”
Wasser added that one of the ways this trend has morphed over the past year is that accounting firms are also testing out different ownership structures, including employee stock ownership plans, or ESOPs.
Late last year, one of the country’s 10 largest firms, BDO USA, announced it was transitioning to that model. In an ESOP, a trust is created in which employees receive ownership in the company over time.
It’s one of the many signs pointing to the crossroads that Aiysha “A.J.” Johnson thinks the sector she helps represent as CEO of the New Jersey Society of CPAs is at. Amid the industry’s consolidation, she believes the sector is experiencing some of its most rapid change ever.
How it’ll shake out when, in the next five or so years, private equity firms expect they’ll start seeing a return on their investment … She’s not certain.
But she does believe one thing isn’t changing: Independent firms still offer niche expertise that their clients value.
Joseph Damiano, CEO and managing partner at Sax LLP, said his firm has made a decision to remain “fiercely independent.”
“That’s a road we’re going to continue down,” he said. “But this is on my radar every day. Things have shifted dramatically, even just over the past 6 to 12 months.”
Sax isn’t what Damiano would call a small firm. Since he joined the firm in 2015, it’s gone from a $24 million business to one north of $100 million, placing it within the 70 largest accounting firms in the country. It’s made acquisitions of other firms themselves over those years.
But Damiano adds that larger, sometimes private equity-backed firms can (and regularly will) outbid them on business deals. The only answer for an independent firm, he said, is to sell the dream of a more community-driven touch.
“It can be a hindrance for us, in that it’s making deals a whole lot harder to get to,” he said. “But (this trend) has also created some opportunities for firms like ours.”
Even with everything pointing toward more consolidation in the sector in coming years, Damiano argues that independent firms will still compete from a talent perspective. And he has the new hires to prove it.
“Last year, we hired seven lateral partners to solidify succession planning and talent for the firm,” he said. “In fact, we just accepted another individual’s offer, and, as I’m sitting here today, I’m working on another three offers from partners who are trying to come out of these private equity-owned firms.”