Armanino LLP has agreed to merge in RBZ LLP of Los Angeles. The deal expands Armanino’s presence into Los Angeles.
“We’ve been looking at this for a number of years to try to find the right partner in southern California to unite the space. In RBZ, we found that partner,” Armanino’s CEO Andy Armanino (pictured) said in a phone interview with Accounting Today, Mergers & Acquisitions' sister publication.
“We’ve done enough of these [mergers] over the years, but nothing really of this size. It had to be a cultural fit. This one is a very, very good cultural fit. I never would have expected it because we kind of gotten frustrated searching for the right partner in Los Angeles.”
The deal started to take shape last year when Andy Armanino was invited to be a guest speaker at RBZ’s partner retreat. Armanino challenged RBZ's partners to think about things differently. “What I loved is that these people engaged into the conversation,” said Armanino. “They wanted to understand how they can make their business better or look at their business differently, and even consider changes that might make sense.”
Up until a year ago, RBZ was “fiercely independent” and one of their strategic objectives was to stay as an independent firm. However, after the partner retreat, RBZ had a change of heart. “They called and said that they wanted to start a discussion on how we might consider merging our two firms,” Armanino recalled. “It was a slow dating process, but we got to know each other better. Over the last four to five months, we worked hard at putting the deal together.”
The combination expands RBZ’s practice areas in business management, specifically in the entertainment industry, which Armanino didn’t have. RBZ also has a solid grasp on legal services and franchises. But the one niche RBZ was looking for that it found in Armanino was its presence the technology industry in Silicon Valley. Armanino said that his firm's strongest industry niche is in technology.
“This agreement is a boon to our people and our clients who can now tap into Armanino’s deep expertise in business technology consulting,” Harvey Bookstein, co-founding partner of RBZ, said in a statement. “The businesses we work with can greatly benefit from Armanino’s solutions in budget and forecasting, business reporting and analytics, cloud solutions and ERP.”
With any merger there is some kind of overlap of services. Together the companies combine for deeper practice areas in the real estate, middle market and nonprofit industries as well as a stronger international practice. Armanino said the plan is to send a clear message of where it stands in the West Coast. “We are going to take our strong marketing we have here, to let everyone know that we are the dominant player in California.”
Armanino has revenues at roughly $130 million. At the time of the RBZ merger announcement, the firm updated its revenues to $155 million. Armanino confirmed that the increase in the firm’s revenues was from a merger that closed in January 2015 (see Armanino Merges in Berger Lewis).
Los Angeles-based RBZ had revenues of $28 million, but has since increased its revenues to $40 million, which also stemmed from a merger (see RBZ Merges in Kaufman + Bernstein).
Armanino and RBZ did not use an outside group to close the deal, but Armanino did speak with industry analyst and Koltin Consulting Group's CEO Allan Koltin about a number of potential deals in the past. “He felt that since we are the largest California-based firm, by a fair margin, he felt like if we partnered with a significant California firm it would be a game changer on the West Coast. Needless to say, he was very excited when I called him,” Armanino shared.
“The firm adds value to clients through its consulting and advisory practice at a time when most only have a compliance practice, giving it a significant competitive advantage,” Koltin said in a statement.
The combined firm will be named Armanino, and will keep its RBZ Los Angeles office location. Partners and staff will be continuing to serve its clients without disruption of services.