Some time last evening we received a quiet little tip about a firm we rarely talk about:
Doeren Mayhew out of Troy, MI sold out to private equity on Wednesday. Press release coming soon. Junior partners are furious.
Lo and behold, this press release appears on Doeren Mayhew’s website. It’s dated August 23 but wasn’t there when we searched for it late Friday.
Doeren Mayhew, a national CPA and advisory firm, has entered into an alternative practice structure with Audax Private Equity (“Audax”), an alternative investment manager and capital partner to middle market companies, to support the firm’s future innovation and growth. Terms of the transaction, expected to close in September, were not disclosed.
Our tipster tells us it’s a majority stake but has no specifics other than that. What they lack in transaction details, our tipster makes up for in juicy gossip:
Non-voting shareholders were left completely in the dark and only told by email today. The voting partners haven’t even bothered to show their faces in the office since the sale. Non-voting shareholders were offered an insulting bonus that won’t be paid unless they stick around for 5 years.
And of those bonuses they added:
Non-voting shareholder bonuses vary from person to person. Unrelated to book size. They’re basically just playing favorites. People who they probably don’t care if they leave get the minimum. People they want to stay get more even if they have no book of business.
Doeren Mayhew is #53 on both the Accounting Today Top 100 and INSIDE Public Accounting Top 100 with $137,400,000 in revenue. And growing fast according to them:
Doeren Mayhew has demonstrated significant growth in the last decade, securing the No. 53 spot on INSIDE Public Accounting’s Top 100 listing of the largest U.S. CPA and advisory firms. With roots dating back to the 1930s, Doeren Mayhew’s more recent growth over the past two decades has been attributable to continuous talent development, expanded service offerings, and added technical depth, achieved organically and through mergers and acquisitions.
Audax’s investment provides additional capital to help Doeren Mayhew accelerate its growth and invest in enhancing the firm’s service offerings, technology infrastructure, and overall employee and client experience. Through the investment, Doeren Mayhew will also look to broaden the firm’s geographic footprint via continued acquisitions. The firm’s current leadership team will remain in place and continue to manage operations as well as provide the strategic direction for the firm.
As with other firms who’ve told the private equity vampire “sure, you can come right in through that window,” Doeren Mayhew will operate an alternative practice structure with Doeren Mayhew Assurance handling the audit side and Doeren Mayhew Advisors, LLC for business advisory, tax, and non-attest services. Both entities will operate under the Doeren Mayhew brand.
“The firm has demonstrated a strong track record of driving both organic and inorganic growth,” said Adam Abramson, a Partner at Audax Private Equity. “We look forward to partnering with them to continue building on their momentum.”
Anyone feeling some type of way about this deal is welcome to contact us to chat (anonymously). Text 202-505-8885 or send me an email.
Yet another instance of useless boomers partners selling out before riding off into the sunset as multi millionaires, leaving a dead firm in their wake. There is literally no incentive whatsoever for junior partners and senior managers to stick around. None. Not one. Audax is going to lose a lot of money in this deal when the smart employees all leave. They clearly didn’t think it through when they bought a professional services firm whose only asset of value is its at-will employees. And why stick around to fight for 40% of the pie when they can go make partner anywhere else and share 100% of the pie? Or better yet, splinter off and start their own firm. This “investment” makes no sense whatsoever and is nothing more than a donation to retired partners.
Your just wrong here so I would think, its actually the opposite. Firms need to continue to grow, to provide oppertunities for there staff to move up and you will loose people if you don’t provide that growth. Many firms can’t afford to buy up firm after firm and Private Equity, is a way to provide the financial means to do so. Now I’m unfamiliar with this firm, and how there internal promotions work and how willing they are to make new shareholders. I have been through this process, and will tell you that, from my experience it actually opens up the door, for faster promotions within which has to happen if you are in a growth phase, or a current enviorment where we are seeing less people becoming CPA’s, and more retiring. If this firm was planning correctly and I have to assume they are, based on there excellent reputation this wouldn’t hinder anyone from moving up. It would only provide more oppertunities to do so. We are going to see much more of this and many small firms, merging with these firms. I won’t be jumping ship, to rebuild my relationships. I’m staying put, and riding the growth waive and hopefully will be a part of the next generation of leadership at my firm. I know the oppertunities are there to oversee offshore staff so the future is now.
The CEO of this firm is Chad Anschuetz.
Just a random thought for…..”Chad A”.
There’s no way that was a serious comment.
Or maybe I should say:
Their’s know weigh that was a series of commint.
Did anyone else read this illiterate word vomit in the voice of Christopher Walken with all of the inexplicable commas/pauses?
The very idea that firms can’t grow without acquiring other firms and that staff can’t move up the ranks without selling out to private equity leeches is delusional at best. Historically, plenty of accounting firms have successfully grown organically based on their own reputation alone and plenty of staff have started as interns and eventually become partners themselves all without blood money from private equity. Just because Doeren can’t grow organically doesn’t mean that every other firm shares the same shortcoming. At the end of the day we are a service business built on our reputation. Clients have no reason to stick around for worse service and higher prices at P.E. owned firms when they can get much better service (and a better price) anywhere else.
*You’re, it’s, opportunities, their, lose, private equity is not a proper noun, their, their, opportunities, wave, opportunities.
Remove “so” from the first sentence, put a period after “here”, and remove the comma. Actually, remove most of the commas in the paragraph. Very few of them are used properly and confuse the tone and pacing. While the sentence starting with “I have been” and ending with “retiring” is not technically a run-on sentence, it reads as one and is quite difficult to follow.
The argument is poorly made; try to remember the “because, therefore, since” sentence structure for persuasive essays. Narrative inconsistencies don’t help either. It doesn’t make sense that you can know of the firm’s “excellent reputation” if you also are “unfamiliar with this firm”.
D-, see me after class.
Firms aren’t using PE cash to increase staff salaries, they’re using that money to finance Boomer retirements and McMansions in Sarasota. By the way Chad, how are you both “unfamiliar with this firm” and also somehow very familiar with their “excellent reputation”
“Now I’m unfamiliar with this firm”….
There is no way this is real. This can’t actually be the CEO of this firm. If your going to come out and comment, at least have someone in your marketing group give you better talking points and proofread.
Aren’t the youngest boomers in their 60s? With mandatory retirement how many of them actually are still working much less “selling out” ?
It’s not all older partners. Just the deadweight ones with made up positions that haven’t been on the line in years and are still collecting a huge check. At my firm that is at least 75% of partners over the age of 60. Not mad though – I kind of aspire to get to that point.
Older Gen X/younger Baby Boomer, it doesn’t really matter. The vast majority of firms don’t have mandatory retirement ages unfortunately and those who do rarely enforce them. And don’t be fooled – their pictures on the firm website all predate the Great Recession. If you actually saw these dinosaurs in person you would know that they are in fact archetypal boomers single-handedly keeping the hair dye industry in business.
There seems to be this weird prevailing notion that firms must continue to grow or end up acquired by a competitor. Accounting firms are not publicly traded companies beholden to external shareholders like Amazon or Microsoft. Adopting this perpetual growth mindset as a profitable privately-held operation is asinine. Why can’t you simply develop organically and continue promoting generations of hard working professionals to eventually reap the same rewards?
Going the private equity route tells me one of two things happened here: (1) the business was being horribly mismanaged and needed to dig themselves out of some massive debt hole; or (2) the “voting partners” wanted to cash out and leave the younger generation holding the bag, with what sounds like a pat on the back as thanks for helping prop up the deal.
My genuine condolences to the employees. My sarcastic applause to the voting partners for pulling off what sounds like another excellent swindle in today’s public accounting industry.
https://www.courthousenews.com/accountants-blamed-in-250m-ponzi-scheme/
Seems like they really managed to turn things around.
Oh wow! An accounting firm was alleged go have done something wrong 15 years ago and never found guilty of anything. Cool story.
They reached a confidential settlement for a large enough sum to shut up the investors, as all innocent parties do.
https://www.crainsdetroit.com/article/20110607/FREE/110609905/doeren-mayhew-2-directors-reach-settlement-with-investors-in-edward
I’m loathe to defend the firm on this one, but I think the reality is you can’t judge guilt based on a settlement. This is a business, not a celebrity accused of sexual assault. The idea of spending whatever it takes to clear your name is not something a bunch of partners are going to sign off on, and clearly the reputational damage was minimal.
If it was so above board, why all the extra legwork to conceal it? Why wasn’t it set up in the client’s name or the firm’s name or in even in the partners’ names? Why involve their wives and kids in hiding the scheme? Your attempt here to cover for them is pretty transparent and frankly just sad.