Top 10 Firm CliftonLarsonAllen LLP announced that it will be bringing on the staff and partners of Connecticut-based Top 100 Firm Blum, Shapiro & Co. PC, effective Jan. 1, 2021.
Terms of the deal were not disclosed, but Blumshapiro’s more than 500 personnel will be joining CLA, and its 78 partners will be taking the equivalent title at CLA, as principals. CLA ranked No. 8 on Accounting Today’s 2020 list of the Top 100 Firms, with $1.2 billion in revenue and more than 7,000 people; Blumshapiro ranked No. 56, with $90 million in revenue.
“The Northeast has always been a focal point for CLA, and we have always felt we needed to be much stronger there than we are, and Blum fit that strategy very well,” CLA CEO Denny Schleper told Accounting Today. “We have also been looking to further develop our private equity industry, and Blum brings some of that talent, along with sitting in a marketplace where there’s a lot of private equity activity, and private equity funds and those types of clients, so that will help us continue to build that industry segment for CLA.”
“At Blum, we help clients create what’s next by providing a platform to imagine the possibilities,” said the firm’s CEO, Joseph Kask, who will oversee all of Blumshapiro’s current offices and work closely with CLA’s chief practice officer for the Northeast, James Watson, to develop the region, in a statement. “In CLA, we’ve found a team who shared our vision for the future and embraced our values through a common culture. Together we will create opportunities for our clients, people, and communities.”
Allan Koltin, CEO of Koltin Consulting Group, advised both firms on the combination.
A national strategy
CLA has been expanding across the country through acquisitions for several years, with a particular focus on larger firms with more than $15 million in revenue, according to Schleper.
The firm divides the country into five regions, all of which it’s interested in developing its presence in, but it got off to a particularly fast start on the West Coast.
“We knew we had to develop the West Coast, and a lot of great opportunities came to us there, and so the West Coast was developed over a short period of time,” he explained. “It took just four to five years to get to $100 million in revenue.”
“We always looked to other regions, but had a difficult time finding the right groups to join us – it could have been for culture reasons, or sometimes it could have been for economic reasons,” he continued. “We had many discussions in the past, and Blum’s discussion just escalated to where we are now.”
As with everything else, COVID-19 has had an impact on firm M&A.
“The pandemic made it more difficult — you’re not able to break bread or shake hands. A lot of putting these deals together is culture- and relationship-related, and the virtual format makes that more difficult,” Schleper said. “The advantage with Blum and others in 2020 was that we had established a relationship with those firms prior to the pandemic, and a lot of the cultural due diligence had been completed.”
But its impact may be felt even more in the future: “Going forward in 2021, it’s probably going to be more difficult to complete acquisitions depending on how the pandemic evolves and when it ends, because we’ll need to build those relationships, and without having them built already, it’ll be difficult to assess that cultural fit,” he added.
Having secured a strong based in the Northeast with the Blumshapiro acquisition, Schleper expects the firm’s M&A strategy to focus more on other regions of the country.
“We’re interested in any quality firm that fits that size criteria — $15 million-plus in any region — but we’re very confident that we have the right revenue base in the Northeast with Blum, so our concentration may evolve to the Sunbelt,” which covers much of the Southeast and parts of Texas, he said. “We see the Sunbelt as having tremendous population growth and migration growth, so we’ll have a lot of concentration there.”
CLA completed a number of other mergers in 2020, with a heavy focus on the West Coast. Earlier in December, it merged in
