Accountancies BDO and RSM acquire consulting firms in the US

15 February 2018

Accountancy professional services firms BDO and RSM have both completed acquisitions of US-based consultancies. The deals, for PBC Advisors and SecureState were both advised by Allan D. Koltin, CEO of Chicago-based Koltin Consulting Group.

The US consulting industry is the globe’s largest and most mature market of its kind, accounting for nearly half of the world’s consulting economy. According to the latest available data, the US advisory scene has seen sustained expansion over the past five years  in particular, having recently seen growth of 7.1%, as it reached a value of $58.72 billion.

The size and continued growth of the US consulting market, with the backdrop of a steadfastly bullish US economy, has made mid-sized consulting firms in America hot commodities. A recent surge of merger and acquisition activity in the market has seen Capgemini spend $500 million on US customer engagement firm Liquihub, while EY’s American consulting wing purchased Citizen, a strategic digital design firm based in Portland, Oregon, for an undisclosed fee. Insight Strategy Advisors, a US-based management consulting firm for the life sciences industry, was acquired by Precision Medicine Group, among other deals in a hectic January.

The rash of activity has continued into February with two more high-profile acquisitions. Global professional services firm BDO has purchased health industry advisory PBC, while RSM has completed a deal for global management consulting firm focused on information security, SecureState.

BDO buys PBC Advisors

As the American health consulting sector continues to heat up, amid sustained uncertainty in the sector following a continued inability by the current Whitehouse administration to pass legislation regarding the future of state healthcare provision, multiple M&A deals have taken place. As clients look to prepare for an uncertain future, activity for sought after consultancies in the sector has seen a major boost. Most recently this was exemplified by DAS Health, which acquired Integra to strengthen its healthcare IT offering. 

Now, BDO USA has expanded its health care advisory services practice by merging in the consulting division of PBC Advisors, a firm based in Oak Brook, Illinois, near BDO’s Chicago home base. PBC Advisors has been advising physicians and hospitals for more than 30 years in areas such as mergers, strategy development, interim management, financial operations, medical group formation, and provider-sponsored health plan development.

PBC Advisors’ accounting, tax and wealth management divisions will still operate independently under the PBC Advisors brand, but will join BDO Alliance USA, an association of accounting, consulting and professional services firms. They will continue to operate from its existing offices in Oak Brook, but elsewhere, the deal sees three executives from PBC – Chad Beste, Jim Watson and Janet Bliss – become Partners at BDO, while nine other professionals are also joining the firm, collectively relocating to BDO’s office. BDO, which last year brought in annual revenues of $1.41 billion, now has approximately 300 professionals in its health care practice. Financial terms of the deal were not disclosed.

BDO buys PBC Advisors

Jay Duke, National Managing Partner for advisory Services at BDO USA, said of the deal, “We are extremely pleased to build on our presence in the Chicago market and add complementary resources to our national healthcare advisory services practice and The BDO Center for Healthcare Excellence & Innovation. This is truly a win-win scenario, as we receive an injection of new talent and service offerings, while PBC’s clients benefit from an expanded array of services.”

PBC Advisors also sees the BDO merger as a good opportunity, using it as a way to expand beyond the Chicago market. Chad Beste said of the agreement, “To reach the next level of growth and expand our footprint, we need the national brand name and resources that BDO can provide. As part of BDO, we will have the national platform and channels to continue building on our success.”

RSM acquires SecureState

2018 theoretically presents a major opportunity for consulting firms looking to enhance their position within the cybersecurity space. After 2017 not only saw a huge spike in cyberattacks – such as the WannaCry hack which impacted computers used by the UK’s NHS, among others – but two major cybersecurity consultancies suffer from breaches. The world’s largest cybersecurity firm Deloitte suffered a major attack which could have lasted for several months, while Accenture, the sixth largest such firm, was found to have left a large cache of sensitive information without password protection on their cloud storage.

Since then, multiple firms have leveraged M&A activity to strengthen their arm in the space. Most recently, this saw KPMG acquire cybersecurity business Cyberinc, adding 190 experts to its global workforce.

Now, professional services firm RSM has bolstered the cybersecurity offering of its US wing, announcing the acquisition of Cleveland-based SecureState, a global management consulting firm focused on information security. Financial terms were not disclosed for the definitive agreement between the two firms, which sees RSM acquire all assets of SecureState upon the expected close date on March 1st.

RSM acquires SecureState

SecureState, founded in 2001, was named as one of Crain's Fast 50 companies – which recognises the market's fastest-growing companies – in 2014. Now, as the firm looks to further boost its growth prospects, its integration into RSM will allow it access to a number of global markets. The acquisition also bolsters RSM's security and privacy practice, and will add SecuresState’s entire workforce of more than 50 people to the company, taking RSM’s total number of full-time employees in the sector to 127. This will also see SecureState founder and CEO Ken Stasiak join RSM as a Consulting Principal upon the deal's closing as the two firms combine.

Brian Becker, National Consulting Leader for RSM, said in a statement regarding the deal, "Cybersecurity is cited by middle market business leaders as one of the foremost risks to their business. We have been experiencing tremendous growth in our security and privacy services due to clients' needs in this area. We are thrilled to enhance our ability to help existing clients and other middle market businesses address their cybersecurity concerns by joining forces with SecureState. This is yet another example of RSM's commitment to being at the forefront of the evolving needs of middle market businesses."

Ken Stasiak added, "We are thrilled to be joining RSM. Our expertise and service offerings represent a perfect fit for RSM's growing security and privacy practice. We are excited to join the foremost provider of consulting services to middle market leaders, and we look forward to continuing to serve our client base while at the same time helping RSM's many clients achieve stronger levels of security within their businesses."

Deal advisor

Allan D. Koltin, CEO of Chicago-based Koltin Consulting Group, advised all four firms on both deals. Commenting on the PBC deal with BDO, Koltin commented, “The consultants of PBC Advisors chose BDO because of their compatible cultures and BDO’s depth of resources in health care. The combination brings together one of the top healthcare consulting groups in the Greater Chicago region and BDO’s comprehensive, national healthcare practice to provide wide-ranging services across the industry.”

Regarding RSM’s purchase of SecureState, meanwhile, Koltin said the acquisition is particularly meaningful for RSM as it continues to grow. He stated, "This was a real coup for RSM and will help to significantly expand their security and privacy consulting practice." he said. "SecureState was sought after both by many national accounting and consulting firms as well as private equity groups. Ken Stasiak is an incredible visionary and entrepreneur and he and his team will thrive in RSM."


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