KPM absorbs 7th largest local CPA firm

It’s a time of growth, goodbyes and new beginnings at KPM CPAs PC.

Next month, the accounting firm will merge with Springfield-based Hlavacek Morris McIntyre Yates & Danielson PC, a move that combines the area’s second and seventh largest area accounting companies, according to Springfield Business Journal research.

Company officials say no cash is changing hands in the deal, which is expected to close Nov. 1, roughly two weeks before the organizations say farewell to their old offices and hello to new digs at 1445 E. Republic Road. Commercial property management firm Bill Beall Co. is the owner and developer of the $6 million, 50,000-square-foot property that will house 108 offices – one for every staff member – and a floor available for future growth.

The merger is the second this year for KPM, which officially joined forces with Davis, Lynn & Moots PC on Jan. 1, and follows an accounting industry trend in recent years as partners age and prepare to retire. It also comes following some notable exits from KPM – two former shareholders have left since July 2013 to start their own Springfield accounting firms. One of the shareholders, Larry Ellison, filed a lawsuit in April against KPM’s shareholder group and a civil suit later that month claiming age discrimination. The other shareholder, Bill Miller, launched Miller & Associates CPAs and Advisors LLC in June after leading an exit of seven KPM staff members.

Jay McIntyre, the managing shareholder at Hlavacek Morris McIntyre Yates & Danielson, said he’s unperturbed by the exits.

“I’ve known the people who are still there, and I trust their integrity,” McIntyre said, adding he’s been talking with KPM Managing Shareholder Jim Lewis for 10 years about their firms joining forces.

KPM headquarters
Carpet is in place and paint is on the walls of the bottom two levels at KPM’s new headquarters. But the third floor remains largely bare and many finishing touches are needed before Lewis and crew can occupy the building Nov. 14.

Lewis said the third floor could be leased out by Bill Beall Co. after KPM has occupied the building for two years, but he doesn’t think that will be necessary.

“We’ll probably be taking that third floor by this time next year – if we don’t do anymore mergers,” Lewis said.

Over the past year, McIntyre said talks with Lewis became more serious following the Davis, Lynn & Moots deal and as the building at Fremont Avenue and Republic Road took shape. While terms of the merger were not disclosed, McIntyre said he and managing partners Wayne Hlavacek, Mark Morris and Bryan Foster would become KPM shareholders.

McIntyre and the 37-year-old firm’s 13 employees specialize in payroll processing, wealth management and controllership services, largely assisting credit union, construction and hotel customers.

“It’s a high-profile, quality firm with young talent and the ability to bring in more young talent,” said McIntyre, who is slated to lead KPM’s wealth-management division. “Davis, Lynn & Moots also brings a lot to the table with their merger last January as far as audits and peer-review strength. Compliance issues are huge for us.”

Lewis said the latest merger strengthens KPM’s specializations of tax preparation, auditing, retirement planning, wealth planning, business valuations and payroll.

The managing partners said there would be no reductions in staff.

“This was a team recruit by KPM,” McIntyre said. “That was very important.”

Undeterred by lawsuits
While KPM partners are focused on the future, their attorneys are still defending the age discrimination charges brought by Ellison. The former shareholder filed a lawsuit against KPM’s shareholder group, BTC Partnership LLP, on April 10 – five days before the tax deadline.

In the case, Ellison is asking to be paid for his ownership share in BTC, plus $500,000 in punitive damages – or the lesser of five times his actual damages – to deter the company from similar conduct in the future. On April 30, Ellison, 69, followed up with a civil suit in Greene County Circuit Court, claiming he was blocked from serving on the firm’s executive committee and overlooked when client lists were distributed to shareholders.

Both cases are ongoing, though Miller is no longer named in the civil suit after his exit from the company. Ellison declined an interview for this story, referring questions to his attorney, Randy Scheer of Sanders Warren & Russell LLP.

On Oct. 23, BTC Partnership attorney John D. Hammons Jr. filed a memorandum opposing the plaintiff’s motion for partial summary judgment. According to county circuit court records online, there are no scheduled hearings set for the cases.

Miller said he didn’t know if Ellison’s claims had merit. Miller said he and his practice partners left for their own reasons.

Miller said KPM had focused more in recent years on auditing services, so he moved to set up his own specialized tax consulting firm.

“My practice and the people who went with me, we wanted to focus on what we do best,” Miller said, adding he didn’t consider the KPM mergers would benefit him or his new CPA partners. “There’s also a trend for boutique firms that emphasize specific areas and aren’t trying to do everything.”

KPM’s Lewis said Ellison’s lawsuits would be handled in court, and the legal issues would not deter the firm from growing.

The greater the firm’s resources, Lewis said, the more attractive it becomes to new accountants entering the field. In addition, partners in accounting companies are generally older, he said, and may not have planned for the future. In fact, two of DLM’s shareholders didn’t make the transition to KPM. “Some of these smaller firms don’t have succession plans,” Lewis said.

On Sept. 29, Springfield’s largest accounting firm, BKD LLP, announced the second largest merger in its 90-year history when it acquired 140-employee firm Wolf & Co. in Chicago. That came three days after it closed on a deal to acquire a boutique firm in Dallas, underscoring a national M&A trend among accounting companies.

The next step for KPM might be expanding the footprint into larger markets such as St. Louis, Kansas City or Tulsa, Okla.

“I’ve got a vision of being outside Springfield, but I don’t want to put any limits on it,” Lewis said, adding it would be up to shareholders to determine the organization’s course. “We’ve got the infrastructure now. We’ve got the building to expand.”[[In-content Ad]]