PhillyDeals: Philly's ParenteBeard in merger talks with Chicago firm

Posted: June 21, 2014

ParenteBeard, a Philadelphia-based accounting firm that employs nearly 1,000 CPAs and staff at offices across Pennsylvania and in the New York area, Baltimore, and Dallas, has been in merger talks with Baker, Tilly, Virchow, Krause L.L.P., a Chicago firm that employs 1,500, both firms confirmed Thursday after I called to ask about staff memos detailing the discussions.

The proposal would result in ParenteBeard's being merged into the larger firm, under the Chicago firm's name and leadership.

"We are currently involved in ongoing discussions with Baker Tilly, and we look forward to providing more detailed information as we advance the discussion and planning process. But we are not in a position to share additional information at this time," ParenteBeard chairman and CEO Robert Ciaruffoli said in an e-mail reply.

Ciaruffoli is the intense Wilkes-Barre native who moved to Center City to lead ParenteBeard's expansion in recent years through a series of mergers, sometimes followed by layoffs and partner departures. Small accounting firms have been consolidating into larger firms as the cost of accounting technology and regulatory compliance squeezes practitioners.

"We are involved in ongoing discussions," David Pendery, spokesman for Baker Tilly, confirmed Thursday.

Both firms are affiliated with Baker Tilly International, a London-based network of more than 100 accounting firms worldwide that competes with the U.S. "Big Four" and other multinational networks. Jake Luskin, the Philadelphia-based North America regional director for Baker Tilly International, declined comment beyond what the firms said.

ParenteBeard was the 24th largest U.S. accounting firm, with revenue of $158 million for fiscal 2014, according to the industry periodical Accounting Today. Parente was one of three firms among the top 25 that reported a drop in business from 2013, when it ranked 21st.

Baker Tilly was ranked 17th for 2014, with billings of $301 million.

A memo sent to ParenteBeard staff assured members that there was "minimal overlap" between Baker Tilly's Midwestern office network and ParenteBeard's Northeast Corridor focus.

"A larger firm would increase our ability to attract mergers in other markets," the memo said, and create the biggest firm within the global Baker Tilly network, which reported sales of more than $3 billion last year, almost half of that in the United States.

A separate note from Ciaruffoli to "ParenteBeard Team Members" said the combination would be the 12th largest accounting firm in the U.S., with offices in 28 cities. It directed employees with questions to firm president Jeff Ferro and other senior managers.

ParenteBeard grew from the merger of Parente Randolph - which Ciaruffoli had moved from Wilkes-Barre to Center City in hope of building a larger firm - with Reading-based Beard Miller in 2009. Staffing peaked at more than 1,100, but Ciaruffoli has said that the firm had found it necessary to realign practice groups to meet customer demand, and acquisitions have been followed by layoffs as well as departures of veteran accountants and managers for other firms.

For example, ParenteBeard added four partners and 22 staff from Baltimore-based Invotex Group in February, then laid off a total of 22 at offices around the firm June 2, after two senior executives departed.

215-854-5194 @PhillyJoeD

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