Q&A/M&A
FROM PAGE 1
likely to remain the case down the road.”
PRE- AND POST-GAME CHECKLISTS
Though firms have myriad reasons for diving
into M&A — succession, geographic expansion, new specialty niches and/or personnel — the processes behind a profitable and
lasting union can often be painstaking, and
occasionally extend out several years before
both parties agree to sign on the dotted line.
Chief among the issues that have to be
considered are firm cultures, and HR and IT
infrastructures, as well as the target’s reputation with existing and former clients across all
practice areas, and its community profile.
“I’ve worked on deals that have been completed within 90 days, and I’ve been part of
other deals that ultimately closed or failed after discussions as far-reaching as two years,”
revealed Allan Koltin, chief executive of Chicago consultancy PDI Global and one of the
industry’s highest-profile M&A brokers.
Koltin breaks down the merger process
into three parts: social dating and compatibility, exchange of financial and operations
information, and what he termed the “
bottom of the ninth” or the final reality check.
“We’ve done so many deals that we have
[the evaluation process] down,” stated Joel
Cooperman, managing partner at New York-
based Citrin Cooperman, which in November
“When the credit is refundable, it can lead to
a potential for abuse. For 2008, there were er-
rors because people had too much income to
take the credit. There will likely be problems
with people taking the credit for 2009, both
purposeful and otherwise.”
Ryan Himmel, CPA and CEO of online tax
and financial forum BIDa WIZ, agreed. “Dates
are crucial on the new credits, especially for
the First-Time Homebuyer Credit,” he said.
“People aren’t always forthcoming with the
correct information. It’s important that the
CPA do extra due diligence when it comes to
credits and deductions this year.”
Practitioners should also be aware of a
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merged in Pennsylvania-based Carrow Doyle
& Associates. “Our first meeting is where we
see if we like them and then decide if we want
to proceed. Then if we feel there’s a reason to
go for ward, I’ll have them meet our partners
without me. Then we can decide if they are
age-, merger- or discipline-appropriate. We
then follow that with a letter of intent and
then due diligence. We look at their finan-
cials, as well as non-proprietary data like ages
of partners, fees, as well as compensation,
and see how they fit.”
“As part of our transition checklist we have
partners in charge of tax, accounting and op-
erations and they submit reports,” he con-
tinued. “Then we evaluate it again and ask if
this is a go or no-go. If not, I ask under what
conditions would you do this deal?”
Howard Kies, managing partner at Rich-
mond, Va.-based Cherry Bekaert & Holland,
explained that one of his firm’s strategies
before commencing merger talks is to speak
with people in the home community of the
potential acquiree.
“We were looking at a firm in Miami and
we didn’t know anyone in Miami, so we
spoke to outside parties as well as law firms
and bankers to gauge what type of reputation they had. Over the years, we have had
talks with firms that didn’t go past the first few
meetings. Sometimes it’s the culture, other
times it may be something else. Perhaps you
don’t get the sense it will be a success or a
new mandatory e-filing requirement in the
November legislation, warned Luscombe.
“While it’s not effective until next year, it will
require nearly all professional preparers to
e-file,” he said. “The only ones excluded are
those who prepare 10 returns or less. There’s
no guidance yet on exceptional situations,
such as a last-minute computer crash or some
other circumstance that precludes last-minute filing.”
LOSSES AND DEBT
The expanded NOL carryback period is the
major law change that will affect 2009 returns,
said Natalie Tucker, manager in the national
tax practice at RSM McGladrey. “The election
must be made by the due date of the return for
the last year beginning in 2009,” she said. “Fis-
cal-year taxpayers actually have three years
to make the election because they can have a
fiscal year ending in 2008, 2009 or 2010.”
In addition to the NOL carryback, cancella-
tion-of-debt or COD income will be an issue
for this filing season, maintained John Lanza,
tax service coordinator at RSM McGladrey’s
New York office.
“This will be an issue that people will miss,”
he said. “The rules have changed. If the lender
didn’t actually cancel the debt, but changed
good match. A firm’s culture is not just the
work environment, but the type of clients
they want to serve.”
Koltin of PDI said that if firm cultures are
different, it’s important to find out why they
are different and, more important, whether
one side has the ability to embrace the other
firm’s culture.
MORE CLIENT FACE-TIME
This tax filing season could be like those of
a number of years ago, observed Scott Van
de Ven, of Cape Girardeau, Mo.-based Van
de Ven. “My expectation is that there will be
tinkering with the tax law into the filing sea-
son,” he said. “Things expired and then were
re-instated during filing season. And when
they make provisions retroactive, it usually
marketing-related consulting), said that his
firm’s “sweet spot” candidates are firms do-
ing between $2 million and $5 million, and
that it is currently eyeing a nine-state radius
in the Midwest, with a number of unions
currently in the pipeline. Most recently, the
firm merged in Decatur, Ill.-based Sleeper
Disbrow Morrison Tarro & Lively.
