Catherine Heigel, left, General Counsel and Corporate Strategies Officer for Elliott Davis, handles merger paperwork as Nick Decosimo, center, and Rick Davis prepare to sign the merger agreement Wednesday at the Chattanooga Convention Center.From its start in 1971 by three local accountants, Joseph Decosimo and Co. grew into Chattanooga's biggest accounting firm through both internal growth and acquisitions of other CPA firms in other markets.
But after four decades of acquiring other firms and businesses, Decosimo inked a deal Wednesday to merge with a bigger CPA firm in South Carolina to create the fifth biggest accounting firm in the Southeast. On Jan. 1, Decosimo will combine with the Greenville, S.C.-based Elliott Davis to create a combined firm with more than 800 employees working out of 17 offices.
The combined firm, to be known as Elliott Davis Decosimo, will handle more than $100 million a year in accounting and tax work from offices in the Carolinas, Georgia, Tennessee, Virginia, Ohio and the Cayman Islands.
"We weren't looking to merge with anyone, but in talking with the folks at Elliott Davis it became clear that it made a lot of geographic and market sense to come together," said Nick Decosimo, the managing partner for Decosimo. "Both companies share the same type of work culture and we look forward to building upon our individual successes to create a firm with a more powerful regional focus."
Decosimo said the merger is not being done to cut costs or to cash in on either of the firm's successes. The partners for Decosimo voted unanimously to approve the merger and will gain three seats on the combined firm's new 9-member executive committee.
"This is truly a merger of these companies," Decosimo said. "We expect to grow our combined company and, while some people's job responsibilities may change some, we expect to need our staff and more to meet our future growth."
Rick Davis, managing partner for Elliott Davis, said his firm has wanted to expand into Tennessee, Alabama and the Atlanta market and targeted Decosimo as a possible merger candidate five years ago. He said Decosimo "shares our values" and will enhance their firm's presence in key areas such as serving hedge funds, health care firms and other new geographic markets.
Accounting Today, an industry publication which tracks mergers among accounting firms, recently reported that the industry consolidation "is showing no signs of letting up" as firms try to grow in size to attract new talent and customers. The magazine ranked Elliott Davis as the nation's 52nd biggest CPA firm last year and ranked Joseph Decosimo & Co. as the 87th biggest CPA firm in the United States. Combined, the firm will be among the top 30 accounting firms in the country.
Under the terms of the deal, Rick Davis, who is currently managing shareholder of Elliott Davis, will lead the combined firm. Nick Decosimo, one of three sons and a daughter of Joe Decosimo in the Chattanooga firm, will remain managing partner of the combined company's Chattanooga office and will be one of the three Decosimo representatives on the new executive committee.
The combined company will be headquartered in Greenville, but Davis said key personnel and leaders will be spread across the company.
"What is attractive is that there is no overlap between the two firms in where we operate and they have substantial strengths in serving financial institutions and in growing the markets where they have acquired other firms," Decosimo said. "That is something we haven't done as well as Elliott Davis."
Decosimo audits only one publicly traded firm, the Ooltewah-based Miller Industries, while Elliott Davis is the accounting firm for 40 publicly traded companies.
Through its work with Chattanooga native Mercer Reynolds and his business partner, Bill DeWitt, in Cincinnati, Decosimo has worked in the sale of five major league baseball teams, including George Bush's purchase of the Texas Rangers. Decosimo handles the accounting for private companies with revenues up to $3 billion and hundreds of multi-million-dollar investment funds, foundations and businesses.
Decosimo Corporate Finance, LLC, a separate company that provides investment banking services, is not involved directly in the merger, although it will continue to work along with Elliott Davis Decosimo in providing financial services.
"This combination positions us to serve our clients with an even broader range of expertise across a wider geographic footprint," Davis said.
Both firms have experienced significant growth in recent years. In 2013 alone, revenues for Elliott Davis increased by 14 percent. So far in 2014, Decosimo has experienced 8 percent revenue growth.
Over the past three years Elliott Davis has posted 24 percent revenue growth and 40 percent growth in employees. With the merger with Decosimo, Elliott Davis will have doubled in size in just five years, Davis said.
Contact Dave Flessner at dflessner@timesfreepress.com or at 757-6340.