A Buffet of Synergy

As most of you know we teach a fair amount of CPE each year with roughly 90 percent of it centering on the intricacies and strategies surrounding M&A. We never seem to tire of explaining the reasons to merge and conversely reasons NOT to merge – which to the surprise of many, we advise clients on the latter more times than you would think.

Some firms obviously merge for revenue growth, while others may wade into the arena for geographic reasons – perhaps to establish a footprint in a market they currently don’t have a presence. Certainly succession or lack thereof remains a prime motivator for many smaller firms to merge up. But often, a firm decides to add new client niches that it may not possess the expertise to offer and therefore has to look outside.

A prime example of the above-mentioned strategy took place just recently, when two Top 100 firms, after years of prolonged discussions, decided to tie the knot – BDO of Chicago and SS&G out of Cleveland. The two firms had been speaking on and off for years about the possibility of coming together but for one reason or another didn’t pull the trigger until this month.

For those who know a bit about each firm, the merger instantly catapults BDO as arguably the biggest player in one client vertical – restaurants. The union adds some 300 restaurant clients to BDO including franchisees of many of the major foodservice players in the country – Burger King, Pizza Hut, Domino’s, Panera Bread and Wendy’s  - all brands we’ve frequented at one time or another - as well as large full-service operators such as The Palm and Cameron Mitchell Restaurants.

The restaurant niche represented some 15 percent of SS&G’s annual billings, which according to Accounting Today’s Top 100 Firms hit $90 million in fiscal 2013.

I always wondered why more firms never ventured into the restaurant vertical and here’s why – outside of the federal government, the foodservice industry is the country’s largest employer, which means there should be more than ample opportunity to go around.

Plus I would imagine the fringe benefits would be rather easy to swallow – pun intended.