The consolidation wave in the accounting industry has washed ashore in Maryland once again, with American Express Tax and Business Services Inc. gobbling up two small independent firms, and one of Maryland's larger firms making plans to sell itself to a new Chicago-based venture.
American Express TBS, a division of American Express Co., said yesterday that it has acquired the Towson firms of Lorenz & Associates, and Bowers & Associates. Both accounting and consulting firms, which employ 15 combined, specialize in the health care industry and will relocate to American Express' downtown Baltimore office.
Terms were not disclosed.
Meanwhile, Bethesda-based Reznick, Fedder & Silverman has been named recently in U.S. Securities and Exchange Commission filings as an acquisition target of Chicago-based CenterPoint Advisors Inc.
CenterPoint filed for a $24.3 million initial stock sale in a venture to form a nationwide professional services business. CenterPoint was formed in November to acquire 11 accounting and insurance firms.
Proceeds from the stock sale would help pay for the acquisitions.
Reznick, with 165 employees in Baltimore, and about 500 in its offices in Bethesda, Boston, Charlotte, N.C., and Atlanta, would be the largest, the SEC filing said.
Reznick had 1998 revenue of $47.9 million, ranking No. 22 among accounting firms nationwide.
Reznick officials would not comment on the possible acquisition yesterday. Calls to CenterPoint were not returned.
Robert C. Basten, the former president and chief executive of American Express TBS, left the company to hold those titles at CenterPoint. While with American Express TBS he oversaw its entrance into the Baltimore market in 1997 with the acquisition of Walpert, Smullian & Blumenthal in Towson.
Last year, American Express TBS acquired Wolpoff & Co. LLP, one of Baltimore's largest accounting firms.
According to the U.S. Commerce Department, firms that provide traditional accounting services generated about $59.3 billion in revenue in 1997. Further revenue growth is expected at an annual rate of about 9 percent through 2002.
With the accounting industry booming, it is necessary to be as large as possible, said John Gary Bowers and Bernard Lorenz, founders of the latest Baltimore firms to be snapped up.
"I found it difficult to keep up with the needs of my clients," Bowers said. "We began to outsource, but that made me worry about the quality. We ended up turning down some clients." Joining American Express TBS "allows us to meet all of the demands of our clients," he said.
"We did good work," Lorenz said, "but it was nothing compared to what we can do now that we're with a larger organization. Now, we can approach our clients on an entirely different level."
American Express created the TBS division in 1990. Through its acquisitions, it intends to become a one-stop financial services shop, said Arnold R. Scheinberg, man- aging director of the 250-employee tax and business services unit.
Other companies such as CenterPoint "are seeing the light the same way American Express did," Scheinberg said. "At some point in time, there may be a merger of the consolidators."
Other local deals among accounting firms include Towson-based Coyne & McClean merging with Clifton Gunderson LLC on June 1. Clifton Gunderson, a multiregional firm, has offices in Baltimore, Greenbelt and Richmond, Va.
Last month, Baltimore-based C. W. Amos & Co. LLC was acquired by HRB Business Services, a subsidiary of H&R Block Inc.
But other accounting firms are trying to beat back the trend.
In September, two local accounting firms said they were pooling their resources to keep their share of the market. Baltimore's Levin, Zwagil & Block P.A. and staff joined Naden/Lean LLC of Lutherville. That combined firm has about 50 employees.
Pub Date: 5/08/99