Baker Tilly and Moss Adams Merge, Creating the 6th Largest U.S. Accounting Firm With Private Equity Backing

Baker Tilly and Moss Adams, two prominent mid-market accounting firms, recently merged, creating a powerhouse with a combined annual revenue exceeding $3 billion. This merger positions the new entity as the sixth-largest accounting firm in the United States, surpassing competitors like BDO, Grant Thornton US, and CLA. The newly merged firm will operate under the Baker Tilly name and remain an independent member of the Baker Tilly International network, encompassing a workforce of 11,500 employees. Strategic Rationale Behind the Merger In a joint interview with Business Insider, Jeff Ferro, the current CEO of Baker Tilly, and Eric Miles, the former CEO of Moss Adams, shared their perspectives on the merger's strategic significance. They highlighted several key benefits: Enhanced Service Capabilities: By merging, the firms have pooled their unique strengths and expanded their service offerings. Ferro emphasized that the merger adds "a bunch of arrows into our quiver," referring to the broadened range of services and tools available to clients. Geographic Reach: Moss Adams, primarily focused on the West Coast, and Baker Tilly, covering the East and central regions with some international presence, now offer a more comprehensive national reach. This extended coverage is crucial for meeting the evolving demands of mid-market clients, who increasingly need diverse and specialized services. Accelerated Growth Plan: Ferro revealed that Baker Tilly's strategic plan involved growing through acquisition, which aligns perfectly with the merger. The private equity firm Hellman & Friedman (H&F), which acquired a stake in Baker Tilly in 2024, is also making a significant additional investment to support the enlarged firm's strategic initiatives. This financial backing will enable the firm to invest in technology, data analytics, and AI, enhancing its competitiveness and ability to deliver value to clients. Scale and Efficiency: The changing landscape of mid-market clients necessitates a larger scale and broader scope of services. Ferro and Miles noted that clients now demand more comprehensive solutions, including fixed costs for training and development, and advanced technologies. These requirements push firms to scale up to remain competitive, and the merger provides the necessary platform. Future Outlook and Ambitions Miles, set to become the CEO-elect of the combined firm, is optimistic about the future. He envisions the new Baker Tilly reaching a $6 billion annual revenue within five years, effectively doubling its current size. Both executives agree that the merger is a significant win, not just in terms of financial growth but also in positioning the firm to lead in the market. The mid-market segment, in particular, is experiencing a shift in expectations. Clients are seeking more integrated and sophisticated services, and the merged firm is well-equipped to meet these demands. Miles highlighted that the decision to merge was driven by a strategic outlook, aiming to strengthen the firm and prepare for future challenges. The partnership with Baker Tilly not only addresses these changing client needs but also positions the firm to proactively shape the market. Industry Impact and Trends This merger is indicative of a broader trend in the accounting industry, where private equity is playing an increasingly influential role. Traditionally, accounting firms distributed profits among equity partners, who also had a say in firm governance. However, private equity investments provide substantial capital for technological advancements and service expansion, albeit at the cost of reducing partner control. The involvement of private equity in this deal underscores the industry's transformation. It reflects a shift toward more centralized management and strategic investment, enabling firms to stay ahead of technological and market trends. Industry insiders view this trend positively, noting that it can accelerate innovation and adaptation in a rapidly changing sector. Company Profiles and Industry Insights Baker Tilly, founded in 1980, has built a strong reputation for providing advisory, financial, and business services. Its acquisition by Hellman & Friedman and Valeas in 2024 marked a significant milestone, making it the largest firm in the industry to be partly owned by private equity. This financial backing has already facilitated substantial growth and strategic investments. Moss Adams, established in 1916, is known for its deep expertise in various industries and its focus on the West Coast. With a history of client-centric services, the firm brings valuable regional insights and a robust client base to the new Baker Tilly. Both CEOs are confident that the merger will enhance the firm's ability to innovate and adapt, ultimately benefiting clients and positioning the firm as a leader in the mid-market segment. The industry's continued evolution, driven by technology and changing client needs, suggests that similar mergers and acquisitions may become more common in the future.