Accounting firms KPM, DLM plan merger

When KPM CPAs PC and Davis, Lynn & Moots PC merge Jan. 1, each firm will bring something to the table the other lacks.

KPM focuses on manufacturing, distribution, financial and auto dealership industries while DLM specializes in the education, government and nonprofit sectors.

“I think it’s a complementary thing. We have something that they don’t, and they have something we don’t,” said Managing Partner Randall Moots, who joined the DLM as a partner in 1988.

Discussions between the two firms began in November 2012, slowed during this year’s tax season and heated back up after the tax rush, said Jim Lewis, incoming KPM managing shareholder effective May 2014.

Lewis, who started his career at KPM in 1981, said because the firms are merging, as opposed to an acquisition, no cash is exchanging hands. The merged firm will operate as KPM CPAs.

Looking for complementary niches is a trend in the industry, Lewis said, noting DLM’s nonprofit business is an ideal fit for KPM, which maintains steady work but peaks with a busy season January–April 30. That peak leaves excess capacity at KPM during the summer and fall months, when DLM’s work surges with audits of government entities and schools. “We do somewhere in excess of 150 audits a year,” Moots said.

Additionally, DLM has experience in peer review to the merger, an area KPM was lacking, Moots said. Peer review is a requirement for licensure in Missouri that involves auditing other firms’ accounting and auditing work and reviewing their quality control systems.

“We’ve known (DLM) and they’re very highly respected in the area of government and schools, so we’re getting into areas we haven’t been,” said Mike Redmon, KPM’s current managing shareholder who’s been with the firm since 1976. Redmon’s term expires at the end of April 2014, when he’ll conclude two three-year terms.

The merged KPM CPAs would have about 100 employees – depending on additions during the upcoming recruiting season – and a combined 17 shareholders. DLM’s signs will soon reflect the merger, but no logo changes are planned at this time.

For now, the two groups will continue working in their respective locations. KPM, which owns its current building at 2003 E. Sunshine St., has about 20,000 square feet, and DLM’s offices encompass 8,000 square feet at 3828 South Ave. However, neither location is large enough to accommodate the combined staff.

After a search of existing real estate and vacant land, the decision was made to build from the ground up. KPM CPAs plans to lease two floors from Bill Beall Co., which will own the three-story building slated for construction at Republic Road and Fremont Avenue next to Arvest Bank.

“We’ll have a chance to build how we want it. … That area is growing for the future,” said Redmon, noting the location has three ways in and out. Traffic patterns and accessibility were factors for the new company.

Lewis said KPM will occupy 33,000 square feet on the first and second floors of the 49,500-square-foot building. The third floor remains an option, he added, but the firm wants to move in first and then determine need. If plans stay on track, officials will break ground on the building Nov. 1 with an anticipated move-in date of Oct. 1, 2014.

For KPM, Lewis said the merger indicates its eye on the future.

“The older partners aren’t going to get a lot out of this,” he said. “It’s mainly for the younger people. We want this firm to be around for a long time. We spend a lot of time on succession plans. … We look at this as a growth opportunity.”

Beyond the numbers, KPM and DLM use the same audit and tax software, share similar cultures and employees at each firm have known each other for years, Moots said.

“I think that our philosophies are similar. Our operating styles are similar,” he said. “This is a good fit.”

Moots said DLM had been approached in recent years by firms in Kansas City and St. Louis.

“I think that they’re happy as long as they’re going to be working with the people they’ve been working with,” Moots said, regarding client response to the merger. “There will be no change in the level of service.”[[In-content Ad]]