Even in an age of consolidation, last week’s announced merger between West L.A.’s RBZ, the fifth-largest accounting firm headquartered in Los Angeles, and San Ramon’s Armanino was a surprise to some.
Though Armanino is a much larger firm and the new entity will keep the Armanino name, the parties are calling the deal a merger, not an acquisition. Financial terms were not disclosed.
“No money changed hands, it was not a purchase,” said RBZ co-founder Harvey Bookstein. “We’re truly folding our assets into their entities.”
Bookstein, who started RBZ more than four decades ago, said the deal will give his clients access to Armanino’s expertise in business technology consulting. Analytics and cloud solutions are also strengths for the Bay Area firm.
Armanino, meanwhile, will pick up accountants with expertise in entertainment and legal services as well as gain access to Southern California’s burgeoning tech scene.
He added that many clients have a statewide presence and this gives RBZ the ability to serve such companies better rather than splitting the work with a Northern California firm.
“I know Harvey, we’ve been friends for many years, and I never thought he would do this,” said Ronald Friedman, a partner in the Century City office of accounting firm Marcum. “But we (Stonefield Josephson Inc.) merged with Marcum in 2010 because all these big firms are going be just bigger and it really helps to be with a bigger firm. You get better quality control, more resources to pull from within the firm and you can go into different industries.”
RBZ was founded in 1975 and has 140 accounting professionals, ranking it No. 14 on the Business Journal’s list of accounting firms. It was projecting about $40 million in revenue this year. With RBZ in the fold, Armanino, founded in 1969, is expected to generate $155 million in revenue.
The combined firm will keep the Armanino name, though it will retain RBZ’s Wilshire Boulevard office as well as the firm’s partners and staff. The parties would not say whether RBZ partners would become shareholders in the merged firm, which together will have 750 employees.
The merger will boost Armanino’s presence in Southern California, where it presently has just a San Diego outpost. The firm also has offices in San Francisco, San Jose and Santa Cruz as well as in the Chicago suburbs and in Portland, Ore.
Bookstein said that one of the merger’s goals is for RBZ to act as a nucleus and find other expansion office locations in areas like the San Fernando Valley, downtown Los Angeles and Orange County.
Andy Armanino, managing partner of the firm his father founded, met the RBZ team when he was invited to speak at RBZ’s Carmel retreat last summer. Bookstein was impressed when he heard about the tech-savvy way Armanino runs his firm and how he saw the future of accounting.
As for Armanino, he thought RBZ’s culture would be a natural fit with his Bay Area firm.
“They were very much engaged with thinking about the business in a different way, willing to think outside the box,” he said.
Armanino said he left Carmel thinking he could partner with this group, and after “dating slowly for a while,” they finally did.
“We’ve got two elite teams coming together,” he said, “and together we’ll blanket California and its largest markets.”
The merger will be effective as of Aug. 1, pending customary closing conditions.
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