Baker Tilly and Moss Adams have begun the process of accounting firm matrimony, as the two entities are reportedly in talks to form a combined firm with more than $3 billion in annual revenue.
A finalized deal would most likely be announced sometime between June 1 and July 1, a source told CPA Practice Advisor this week, although some employees of both firms said on online forums that it may happen sooner. A source who works at Moss Adams told CPA Practice Advisor on Friday that the firm will be holding a town hall meeting on April 21 when the potential merger is expected to be discussed.
The Baker Tilly/Moss Adams megadeal, first reported by the Wall Street Journal and the Financial Times on April 9, would be the largest in public accounting M&A since last July when top 15 firm CBIZ announced plans to acquire fellow top 15 firm Marcum. That deal became official in November and is expected to make CBIZ a top seven or eight accounting firm by revenue with a combined total of $2.8 billion.
If/when it does happen, the merger of Baker Tilly and Moss Adams, both top 15 firms in the U.S. by revenue, would vault the combined entity over CBIZ and possibly even current sixth-largest firm BDO USA into the sixth spot in the top 10. According to INSIDE Public Accounting, Chicago-based Baker Tilly had revenue of nearly $1.8 billion, and Seattle-based Moss Adams brought in $1.26 billion in revenue during their most recent fiscal years.
The interesting thing about this deal is that Baker Tilly is backed by funding from outside investors. The firm sold a stake to private equity firms Hellman & Friedman and Valeas Capital Partners last year. As the Wall Street Journal noted, Baker Tilly is the second-largest accounting firm to sell a stake to private equity investors, behind Grant Thornton.
When Baker Tilly announced its partnership with the two private equity firms in February 2024, the firm said the investment provides it with access to additional capital and capabilities to “accelerate growth through investments in talent, technology and further strategic acquisitions directed at providing best-in-class client services.”
Since receiving that infusion of private equity, Baker Tilly has made at least a half a dozen acquisitions of smaller firms, including top 100 California-based CPA firm Seiler last May and top 200 Georgia-based accounting firm Hancock Askew this past February. The potential merger with Moss Adams would likely be the largest M&A deal in Baker Tilly’s history.
The Wall Street Journal wrote that the potential deal would give Baker Tilly a greater presence on the West Coast and Moss Adams more international operations. Baker Tilly is part of the Baker Tilly International global network of accounting firms, which has nearly 700 offices in 143 territories around the world. The network pulled in global revenue of $5.62 billion for the financial year ending Dec. 31, 2024.
The combined firm would be led by senior leadership from both Baker Tilly and Moss Adams, the Wall Street Journal reported.
In a firmwide email on April 9, which was posted on Reddit and confirmed by other users, Moss Adams CEO Eric Miles said “the level of change, merger, PE and other discussions happening throughout the industry” has elevated rumors and speculation. He said the Wall Street Journal‘s article about the merger with Baker Tilly “is a result of these mounting rumors and speculation”—but Miles didn’t deny that the merger was happening.
The email said:
Team – As I shared in the January All Hands Town Hall, our profession is changing, with an unprecedented level of consolidation and structural changes that impact how firms are organized and capitalized. With this level of change, merger, PE and other discussions happening throughout the industry, there is an elevated level of rumor and speculation. This afternoon’s article in the Wall Street Journal is a result of these mounting rumors and speculation.
The Executive Committee and firm leadership are continuing to engage in discussions about what best allows us to meet our long-term strategic objectives to ensure a successful future for our firm. As always, our firm’s leaders are committed to transparent communication. If there are any material updates related to changes impacting the firm, we will share them as soon as we are able.
I recognize this can be a distraction during a very busy time for many of you, and during an essential time in serving our clients’ needs. I encourage you to focus on our clients at this time, and not these external distractions.
Thank you for your hard work and your contributions to our clients’ success.
Eric
It’ll be interesting to see, if the deal does go through, what the name of the combined entity will be. Will it be kept under the Baker Tilly brand? Will the name combine the brand names of both firms (Baker Tilly Moss Adams or BTMA)? Or will a new name emerge like when accounting firms BKD and Dixon Hughes Goodman merged in 2022 to form top 10 firm Forvis, a combination of the words forward and vision?
Whichever name is chosen, Allan Koltin, CEO of Koltin Consulting Group, one of the leading accounting firm match-makers in the profession who has advised both Baker Tilly and Moss Adams on strategy and previous M&A deals, said in an emailed statement to CPA Practice Advisor that “both firms will bring over their unique areas of industry specialization and service line expertise, which should provide robust organic growth opportunities to the combined firm.”
“Just when we thought nothing could get any bigger in CPA firm M&A than Forvis (formerly BKD and Dixon Hughes Goodman), and CBIZ (formerly CBIZ and Marcum), here comes Baker Tilly and Moss Adams (potentially) combining to create the sixth-largest CPA firm in the country (only behind the Big Four and RSM). After the combination, Baker Tilly will become the largest (non-Big Four) CPA firm in the Western region and Moss Adams will become part of a top 10 global network,” he added. “As a 44-year veteran and advisor to the accounting profession, I dare say there has been more change and transformation in the accounting profession in the past four years than the 40 prior years combined!”
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