Two of the largest accounting firms in the country – BKD and Dixon Hughes Goodman (DHG) –have announced a merger that will reshape the profession and create a new top-10, billion-dollar firm poised for global growth.
BKD and DHG, 2021 INSIDE Public Accounting (IPA) Best of the Best Firms, describe the deal as a merger of equals, with a combined revenue of $1.4 billion. BKD CEO Tom Watson will serve as the CEO of the new organization and Matt Snow, DHG’s CEO, will serve as chair of the super-regional firm, which will adopt a new name to be announced later.
Tom Watson
The move is expected to give the larger firm an influential national presence and the resources to grow internationally, beyond their locations in the Cayman Islands and London. When the deal is complete in the second quarter, the firm should rank at about the eighth largest in the U.S.
Springfield, Mo.-based BKD, ranked No. 14 on the 2021 IPA 100 list, operates 41 offices clustered around the center of the country but extending to New York, Texas and Arizona. Its FY21 net revenue is $758.1 million. DHG, based in Charlotte, N.C., is ranked No. 17. Its FY21 net revenue is $504 million, and the firm runs 27 offices, mainly in the Carolinas, Tennessee and Virginia. Both firms were among the IPA Best of the Best firms in 2021.
The geographic reach of both firms overlap, as do industry specialties such as health care, financial services and private equity, the CEOs say. Each firm is strong individually in other industry sectors, says Snow in a statement. “As one organization, we will be able to bring our capabilities to a broader range of clients, providing more innovative, client-centric services to the market.” Clients can benefit from more onsite, personalized attention as well.
The merger is also expected to build expertise and resources for larger private and Fortune 1000 advisory clients. Watson says, “Together, as one organization, we will deepen our bench strength even further, allowing us to continue to serve our existing client base while also providing the resources necessary to serve an ever-increasing upstream client base.”
Matt Snow
Both firms have been growing. IPA’s most recent data shows DHG’s organic net revenue grew by 6.0% from FY20 to FY21; BKD grew by 8.6% over the same period.
The two firms have also been active on the M&A front. DHG added to its high-net-worth family services practice in September by merging in Burkhart & Co. of Knoxville, Tenn. In late 2019, it added the 50-person team at RyanSharkey of Vienna, Va.
BKD has been even more aggressive. In the last year alone, BKD acquired accounting firm Schmidt Westergard of Mesa, Ariz., Indianapolis-based Hamernik, a business management consultancy, and Chicago-based Strategic Sourcing Results, a supply chain consulting firm specializing in the health care industry. A number of changes took place on one day, June 1, when Watson took over for longtime CEO Ted Dickman and half the governing board was replaced with a new generation of leaders. BKD has also launched cybersecurity and ESG consulting services and new technology tools for clients.
This mega-merger is just the latest in a line of significant transactions among the IPA 400 that have unfolded in the early weeks of 2022, including deals involving Sikich, Withum, Marcum, Doeren Mayhew and CBIZ.
The merged firm will employ more than 5,400 people, and the CEOs foresee a number of new promotion opportunities for staff. Both firms are members of Praxity, an alliance of independent accounting firms.
