This year’s list of largest accounting firms in Arkansas reflects a nationwide trend: “merger mania,” as Accounting Today termed it.
Three major mergers involving Arkansas companies over the past year have shuffled the list considerably.
The action started in September 2017 when JPMS Cox of Little Rock and Oklahoma-based HoganTaylor announced they were merging effective Jan. 1, 2018, and would operate under the HoganTaylor name.
That meant that this year HoganTaylor — now with 56 CPAs in Arkansas, reflecting the combined in-state operations of the two firms — stands at No. 3 on the list. In 2017, JPMS Cox was at No. 4 and HoganTaylor was at No. 8.
In May, Thomas & Thomas of Little Rock and Beall Barclay & Co. of Fort Smith announced they were merging practices. The name of their new firm, announced Oct. 1: Landmark PLC Certified Public Accountants, with offices in Fort Smith, Little Rock, Rogers and Russellville.
Landmark debuted on this year’s list in second place, behind BKD, a regional CPA and advisory firm. But that meant that Beall Barclay, tied with JPMS Cox at No. 4 on last year’s list, and Thomas & Thomas, No. 7 last year, disappeared from the 2018 list.
And then in June, Rasco Winter Abston Moore & Associates and L. Cotton Thomas & Co., both of Little Rock, announced they would combine operations and operate as Rasco Winter Thomas Group. Rasco Winter Thomas Group ranks No. 11 on this year’s list. Rasco Winter Abston Moore & Associates had been at No. 15 on the 2017 list, while L. Cotton Thomas & Co. had not appeared on the list.
The nationwide merger phenomenon was driven by a number of factors, according to Accounting Today, a trade magazine for the public accounting sector. Among those factors: bigger firms acquiring smaller companies “to expand geographically, acquire new clients and add more talent.”
Gary Cooper, a HoganTaylor partner who works in its Little Rock office, said the merger trend is a phenomenon going back several years. Independent firms, like JPMS Cox before its merger with HoganTaylor, are looking for economies of scale, he said.
“In our case, JPMS Cox, we liked HoganTaylor because of their internal infrastructure,” Cooper said. “They had a lot of things that we just didn’t have.”
“They had a deep HR department,” he said. “Their accounting team was deep. They had the scalability to take somebody like us and just merge us in with really little disruption to what they were already doing.”
JPMS Cox had reached the size, Cooper said, that it was going to need to add some of that infrastructure to continue to be effective.
From a nationwide standpoint, he said, “people are merging together to attract and retain talent” and also to add a variety of skill sets to their companies.
Kevin Norton, partner with the Rasco Winter Thomas Group, agreed that staffing was a top consideration for accounting firms considering mergers. “The No. 1 issue that faces our industry right now is staffing,” he said. “I think that’s a huge challenge across the board.”
Having a bigger staff means that a firm can better absorb the loss of a worker while it searches for an employee who’s a good fit.
In addition, Norton said, “I think at least for us, as we looked at our clients and the level of complexity that we’re dealing with … I think having more people and more expertise is never a bad thing.” In terms of complexity, he cited specifically last year’s big tax law overhaul.
The scope of the work has also changed, Cooper said. “Years ago, when I started with Ernst & Young in Little Rock, we didn’t do any international work. Well, now, out of Little Rock, we do a lot of international work. And so having more resources from other people, from other partners in Tulsa and Oklahoma City, that allows us to tap into those resources a little bit.”
He speaks to accounting students and “globalization, it’s been nothing to them. They don’t care. It’s always been part of who they are. That’s something we’ve had to learn.”
And Cooper, echoing Norton, said the increasing complexity of the work accountants must do was a factor. “Every time they pass a new tax law, it’s the size of ‘War and Peace.’”
