These accounting firms took a different approach to shaking up their structure
Forvis acquired the U.S. unit of Mazars and formed a new network with the firm internationally, following plans by peers involving private equity, IPOs and a new employee ownership model.
Accounting firm Forvis acquired the U.S. unit of Mazars as part of a new international partnership, marking another unique structural shake-up in the industry as peers carve out divergent paths to boost their market share.
The firms finalized the arrangements on Saturday following an agreement signed last November. The deal creates a combined global audit and advisory network with nearly $5 billion in annual revenue.
The partnership will allow Mazars to build on its existing U.S. presence and Forvis to plant its flag internationally. Forvis currently has limited consulting operations in the U.K. The firms’ executives agreed to an acquisition in the U.S. because they both operated there, and they agreed they would only maintain one operation in each country in which they were located.
Neither Forvis nor Mazars, which is based in Paris, took on debt as part of the transaction.
The network contains two members: Forvis Mazars LLP in the U.S. and Forvis Mazars Group SC, a partnership spanning more than 100 countries. Global accounting and consulting networks are generally structured in each country as separately owned entities that share technology, branding and intellectual property. Equity partners hold shares or units in the firm, generating returns and giving them a piece of the business.
Mazars’s roughly 1,000-person U.S. workforce, including 100 partners, joined Forvis under the terms of the deal. The combined firms now have about 7,700 people, including nearly 660 partners, in the U.S. Before the deal, Forvis had 6,700 people, including 584 partners, all in the U.S. Twenty-six of the firms’ partners retired as of the deal’s closing. The global network will total more than 40,000 people.
The deal is among a series of moves by accounting firms to revise their ownership structure as they face greater capital needs and difficulty recruiting workers. Two of the bigger players outside of the Big Four, Grant Thornton and BDO, turned to a private-equity injection and an employee stock ownership plan, respectively. Ernst & Young last year abandoned an ambitious plan to split its advisory and audit arms into separate businesses.
“We’ve evaluated the pros and cons of all of those, and this frankly is our answer to the dynamic market that we’re in," said Tom Watson, chief executive of Forvis Mazars, formerly Forvis. “It enables us to grow globally and domestically here in the U.S., and to continue to be led by our partners over the long term, which we feel like, for our firm, is a very strong position to be in."
U.S. mergers and acquisitions involving accounting firms totaled $378 million across 34 deals this year through May 30, according to data provider Dealogic. That compares with $33 million across 80 deals in 2023 and $147 million across 75 deals in 2022.
Forvis, which was formed from a merger of BKD and Dixon Hughes Goodman in 2022, reported $1.69 billion in revenue last year, almost all of which was in the U.S. Mazars, which notably worked for former President Donald Trump’s company, the Trump Organization, booked nearly $3 billion globally in 2023, including $258 million in the U.S.
Forvis and Mazars placed eighth and 31st among accounting firms, respectively, in terms of U.S. revenue, according to Inside Public Accounting, a practice-management resources provider.
There was no significant difference in salaries paid at the two firms, making it unnecessary to adjust pay, Watson said.
Forvis Mazars plans to boost hiring of both new hires from college campuses and from rival firms and it is considering new acquisition opportunities in coming years amid ongoing consolidation in the industry, said Hervé Hélias, who has served as Mazars’s global chair and will lead a new global board for the network. “There’s probably another consolidation wave on the market in the U.S. and other countries as well," Hélias said. “We will be very open to any growth opportunities."
Through the network, Forvis and Mazars will share many tools and technologies, but not all. The two firms each have certain proprietary technologies that they will continue to use separately, but there will be more alignment over time, Watson said.
Write to Mark Maurer at mark.maurer@wsj.com
