Succession concerns and growth goals drive accounting firm mergers

FILE PHOTO/CHRISTOPHER HOLLAND Michael Rowley (left), founder, and Randall C. Raifsnider, partner, at Herbein + Co. Inc. in Wyomissing, which recently acquired a Philadelphia-area accounting firm.

For the second time in a little over a year, Wyomissing-based Herbein Co. Inc. last week acquired an accounting firm.

It announced the acquisition of Philadelphia-area Certified Public Accounting firm Gable Peritz Mishkin along with its two offices, five partners and 24 total employees. In December 2016, Herbein acquired Michael L. Cross & Co., a Pottstown-area CPA firm.

It’s not the only area firm – and not the only accounting firm – in the region to place itself in a period of growth and expansion through acquisition.

Last week, Stoudt Associates LLC of Allentown, acquired another accounting firm, John J. Defassio Certified Public Accountant, which is in Chapman near Bath.

While firms may have varying reasons for acquiring smaller firms, from expansion to efficiency, the firms being acquired often have a common goal – succession planning.

Michael Stoudt Jr., founder of Stoudt Associates in Allentown, said that’s what drove Defassio to put up his firm for sale.

“He was concerned about who would service his clients when he would be ready for retirement,” Stoudt said.

Not that that time is anytime soon, Stoudt emphasized.


Michael Rowley, Herbein’s chief operating officer, who works in business valuations for mergers and acquisitions, said succession planning is one of the top reasons smaller firms – especially accounting firms – are citing for seeking out partnerships with or acquisition by other firms.

“Some have been very successful and have great clients in place, but they perhaps have not been as successful at building up that level of management that can lead the company into the future,” Rowley said.

In some cases, finding another firm to add that level and keep a company’s culture and services going for clients is the best way for a small firm to go, Rowley said.


Michael Cross, who spoke to Lehigh Valley Business at the time of his firm’s acquisition by Herbein, echoed that sentiment.

“This transaction assures continued quality services for all our clients into the foreseeable future,” Cross said.

The desire for partnership and acquisition make it a good time for firms looking to grow to make strategic deals to aid that growth, Rowley said.

And while Rowley said that while there have been talks, there are likely no new acquisitions planned for Herbein until at least the fall. However, look for more strategic growth through acquisition for his firm at some point in the future, he said.


Rowley said Herbein is growing both its geographical footprint and its service offerings through acquisition.

For example, by acquiring GPM, which has offices in Spring House in southern Montgomery County and in Mount Vernon, N.J., it introduces Herbein into the Philadelphia and South Jersey markets.

The newly acquired firm also has services, ranging from tax preparation to business valuation, which complement and enhance the services Herbein offers.


Michael Stoudt Jr., founder of Stoudt Associates in Allentown, said his desire to expand was purely based on efficiency.

“No matter how many tax returns you have, the software and the research costs the same,” Stoudt said.

He is not actively looking to acquire more firms, but has his eyes open.

“I have a relationship with a broker that lets me know when a business becomes available,” Stoudt said.


Stoudt said one thing that kept him from acting more quickly on acquiring another firm was talk in Washington, D.C. over tax reform.

“There was talk of change to turn a tax return into almost the size of a post card,” he said. “Why would I buy a tax firm if you don’t need help with taxes?”

Fortunately for Stoudt, however, the new tax plan looks a little more complicated than predicted, and tax preparers still are needed.

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