Good morning and happy Monday! I heard you like news so here’s some just for you.
A Los Angeles firm is doing a reverse pioneer thing and planting a flag in Salt Lake City:
Salt Lake City’s growing and vibrant business base, experienced workforce, and the presence of world-class accounting programs at local universities are prompting HCVT, the largest CPA firm based in Los Angeles, to open a sizable office in the market, company officials announced today. HCVT is the third largest CPA firm in the west and the 33rd largest nationally.
HCVT’s new office is in the heart of downtown Salt Lake City at 650 Main and will ultimately accommodate up to 50 professionals. Since 2014, the firm has operated an office in Park City and an office co-working space in Salt Lake City since 2023. HCVT currently has 12 full-time employees in Utah.
“Rather than making acquisitions, a key element of our growth strategy is to open offices where there are experienced talent pools and outstanding undergraduate and graduate accounting programs,” said Vicken Haleblian, HCVT’s CEO and managing partner. “Doing so gives us access to a steady stream of high-caliber job candidates each year, while also enabling us to tap the experienced and robust accounting alumni networks that exist in these areas.”
The Federal Reserve of San Francisco has a branch in Salt Lake, why not an accounting firm that sounds like a typo too?
INSIDE Public Accounting published some advice for partners considering their private equity options. In this bit, they explain the mergers and acquisitions we’ve been seeing from PE-backed firms lately:
PE investments typically take two forms: The larger, more well-established firm is known as the platform investment, while smaller firms tend to be viewed as add-on or roll-up opportunities. PE firms typically first invest into a platform firm and inject a significant amount of capital to fuel growth. The platform firm, with guidance from its PE investors, then rolls up smaller firms – often regional or specialized players. In turn, the platform firm grows larger, gains economies of scale, and becomes more profitable by realizing greater synergies.
For example, a $50-million accounting firm might attract $100 million from a PE firm. Of this, let’s say $20 million goes into buying equity, with the remaining $80 million earmarked for acquisitions. At the end of the hold period, the platform firm should be far larger, far more profitable, and therefore, far more valuable to the market – enabling the PE firm to realize a significant gain on its exit.
As far as I’m aware we haven’t yet gotten to the exit stage of the PE frenzy.
Oh wait, what’s this? A mid-market firm in UK is looking for a buyer:
The mid-market accountancy firm Dains has joined the stampede of professional services firms putting themselves up for sale, in a process that its private equity backers are hoping will fetch £250 million.
Birmingham-based Dains, which employs nearly 700 people and is currently owned by the buyout firm Horizon, has drafted in advisers from the investment bank Rothschilds to run the auction, according to people with knowledge of the matter.
Alright so I guess we are at the exit stage. That was fast.
Horizon first took a stake in Dains in 2021, with a £20 million investment that would go on to finance seven different acquisitions across the UK and Ireland. Such a “roll-up strategy”, in which private equity uses its deep pockets to merge several smaller companies together, thus giving them scale and allowing for cost savings, is popular in the accountancy world.
Whatever, no one cares about this firm. Check this out though:
Last week Grant Thornton’s US firm, which is owned by another private equity firm called New Mountain Capital, loaded $2.31 billion of debt onto the firm’s balance sheet, $410 million of which was to fund an acquisition of its sister firm’s advisory business in Ireland.
JFC.
University of Missouri St. Louis writes about the UMSL 2024 Student Leader of the Year, a future CPA:
When Brett Paubel transferred to the University of Missouri–St. Louis from Southwestern Illinois College for the start of the Fall 2021 semester, he was looking for more than just a familiar place to continue his educational journey.
Like so many people across the country, Paubel craved connection after the isolation of the COVID-19 pandemic that had shifted him, by his own admission, into “kind of an awkward kid” who had to be pulled out of his shell to engage in small talk in social settings.
It’s safe to say Paubel, who is graduating this week from the 2+3 program with his bachelor’s and master’s in accounting, with an emphasis in information systems, has found his community during his UMSL career. Consider what Marcia Countryman, the Accounting Club faculty advisor, wrote when she nominated Paubel for UMSL’s 2024 Student Leader of the Year award:
“Through his unwavering leadership, strong university service, selfless peer mentorship and visibility as a role model, Brett has contributed to the development and growth of students on campus. Brett is one of the most outstanding students that I’ve had the pleasure to work with throughout my 20-plus year career.”
It should come as a surprise to no one that this outstanding student is headed to PwC. It’s nice to see someone talking openly about how difficult the early days of the pandemic were and how isolating it was for so many of us.
Good luck on the exam, Brett! That is not sarcasm, we genuinely wish you well.
This person on r/accounting has it all figured out.
The reason public is dying
byu/Shyskeptic inAccounting
And it will only get worse.
LinkedIn co-founder Reid Hoffman is afraid he’s going to get hit with a revenge IRS audit because he supported Kamala Harris for president.
Hoffman, whose net worth was valued by Forbes at $2.6 billion as of Monday, told “The Diary of a CEO” podcast on Monday that he is bracing for “personal and political retaliation because I tried to help Harris get elected.”
“I think that there’s a greater than 50% chance that there will be repercussions from a misdirection and corruption of the institutions of state to respond to my having tried to help Harris get elected,” Hoffman told podcast host Steven Bartlett.
The podcast:
Deloitte finds itself at the center of a terrible data breach in Rhode Island:
The State of Rhode Island has confirmed that its social services portal, the RIBridges system, has been subject to a major security threat.
It is likely that cybercriminals have obtained files with personally identifiable information in the cyber-attack, Rhode Island’s Department of Human Services (DHS) said in a statement.
The State was informed by its vendor, Deloitte, about the data breach and confirmed that there was malicious code present in the system on December 13.
“To the best of our knowledge, any individual who has received or applied for health coverage and/or health and human services programs or benefits could be impacted by this breach,” the DHS said in a statement.
That statement from Rhode Island governor Dan McKee explains more:
On December 5, the State was informed by its vendor, Deloitte, that the RIBridges data system was the target of a potential cyberattack. At that time, it was unclear if any sensitive information was breached. At that time, appropriate federal law enforcement and agencies were notified, as well as the Rhode Island State Police.
After consultation with our state IT department, Deloitte immediately implemented additional security measures and started to assess the threat. It was important, for security reasons, to keep this knowledge internal until we could secure the RIBridges system. At the same time, our team began an investigation into what data may have been compromised, and how a possible attack was able to occur.
On December 10, the State received confirmation from Deloitte that there had been a breach of the RIBridges system based on a screenshot of file folders sent by the hacker to Deloitte. On December 11, Deloitte confirmed that there is a high probability that the implicated folders contain personal identifiable data from RIBridges. On December 13, Deloitte confirmed there was malicious code present in the system, and the State directed Deloitte to shut RIBridges down to remediate the threat. State police and federal law enforcement are involved in an advisory capacity and no further leads have been provided.
There is already a lawsuit.
Related?
EY Australia wants to sell off a $60 million tech supply business:
During a gold rush, you buy picks and shovels. That’s what EY’s dealmakers will be telling buyers as they bring Computer Room Solutions – which provides things like server racks, security caging, data hall ceilings and server containers to some of Australia’s largest data centre operators – to market.
Street Talk understands EY’s deal team has been appointed to sell the 18-year-old business which makes around $60 million revenue and $12 million at the earnings line.
The provincial healthcare system of Prince Edward Island in Canada signs another contract with KPMG to try and fix their terrible wait times for healthcare.
Health P.E.I. has signed a new contract with KPMG, one of the “big four” consulting firms, worth close to $4 million in a bid to improve wait times for surgeries and diagnostic imaging, and to improve hospital patient flow.
Last June’s 16-week contract with the consulting firm was worth $1.9 million. Upon completion of this new contract, KPMG will have earned close to $6 million from Health P.E.I. over the course of 12 months by May 2025.
Health P.E.I. CEO Melanie Fraser had to explain why there was no bidding for the contract.
The new KPMG contract, like the first contract, did not go through a public tendering process, meaning Health P.E.I. did not publicly seek out competing bids for the work.
P.E.I. Treasury Board policy states that government contracts over $50,000 should go through a competitive bidding process “as standard practice” to ensure the best value for taxpayer dollars.
When asked about why KPMG was selected for the new multi-million-dollar contract as opposed to other large consulting firms like PricewaterhouseCoopers or Deloitte, Fraser noted an exception in Treasury Board tendering rules in cases of “extreme urgency.”
“These timelines are unacceptable. The wait times are unacceptable,” Fraser told The Guardian.
Yeah, that doesn’t really answer the question. But good luck with that (that one we definitely meant sarcastically).
OK I’m done for now. We’ll dig deeper into that Deloitte hack thing. Please, I beg you, if you see something interesting let me know via email or text so we can write it up. Love you, mean it.
