Lexington, KY - It started with a casual lunch back in May. Diane Medley's accounting firm, Chilton & Medley of Louisville, were doing some work for a not-for-profit group. The board of the nonprofit included Mike Mountjoy of Mountjoy & Bressler, a Lexington accounting firm.
The purpose of the lunch was to discuss some of her firm's work for the nonprofit. A merger of the two firms "was not on our minds at all," Medley said.
But, after some discussion of the similarities of the two firms, as well as their differing specialties, a merger is what eventually happened, creating Kentucky's largest certified public accounting firm.
"This is a marriage of equals," Medley said. "These are two excellent firms with long track records of client service and community involvement. It's a perfect match."
Mountjoy and Medley will be co-managing partners in the new firm, Mountjoy Chilton Medley. The merger creates a firm of more than 100 CPAs and 200 total employees. The two firms had been similar in size and with similar-sized clients. Mountjoy & Bressler had offices in Lexington, Covington and Frankfort, which will continue under MCM. Louisville was the only office for Chilton & Medley. Deciding where the Louisville office will be is one of the issues still to be resolved in the merger, which was announced September 21.
While the two firms were similar in size, their areas of expertise did not often overlap, making the merger appealing to both sides. Some examples of where the two firms will complement each other are health care and real estate development.
While Mountjoy & Bressler had more expertise in construction, Chilton & Medley had more experience in real estate.
Those two areas "are grouped together a lot of the time," said Trish Featherston, a partner at Mountjoy and Bressler and in the new firm.
And while Mountjoy & Bressler had done more work with hospitals, Chilton & Medley has done a lot with private practices and other ancillary health care markets.
With Lexington being a health care hub for the eastern half of Kentucky and many regulatory changes afoot in government health care regulation, CPA firms have been kept busy with compliance audits for health care providers and insurers. The partners in Mountjoy Chilton Medley will use the new firm's greater range of expertise as a selling point for existing and potential clients.
Shane Satterly, a partner from Mountjoy & Bressler in Lexington, said that the first question that has come from clients is, "'Are you still going to take care of me?' To which the answer is, of course, 'yes.'"
And he said the broader base of knowledge will help the merger firm serve clients more effectively.
Medley described it as "having a bigger tool box" that will better enable them to address the wide range of issues that can come up in business.
"Clients will still work directly with the same person they have always worked with, but now we'll have internal contacts to help with issues we might not have been able to in the past."
Being a larger firm will also allow those within the firm to sharpen their skills in their area of expertise, Medley said.
"Back in the old days, people did a little bit of everything," she said, but in today's business world, "clients demand expertise."
CPAs provide such services as advice on strategic planning, obtaining financing, remaining compliant with government regulations and tax laws.
"Clients get a lot more than number crunching," Medley said.
Another advantage of the merger, Mountjoy said, is that "this will be a Kentucky-based firm serving Kentucky businesses and keeping tax dollars in the state versus hiring an out-of-state firm with a local satellite office. We are committed to Kentucky."
The partners said the merger also makes the firm more attractive to top college graduates.
"It gives a new, young accountant more opportunity," Medley said.
While much of the growth of a CPA firm can be attributed to referrals and word-of-mouth among the business community, Medley said the firm would be "aggressively marketing our services that people need."
Featherston added that "growth was one of the reasons for the merger."
Mountjoy & Bressler, founded in 1980, was Kentucky's largest CPA firm even before the merger. Chilton & Medley, founded in 1988, was the largest Louisville CPA firm in total employees and second-largest in CPAs.
While some business mergers are seen as a way to cut costs in a tight economy, the partners in MCM said there are few redundant positions and there will be no layoffs related to the merger.
Partners in the firm did say that there would be some movement of employees among the four offices, but that is still being worked out.
And they do see some promise in the economy recovering. "The credit crunch is over," Satterly said. "Banks are beginning to loosen their policies."
And Medley sees more people willing to make investments now than during the past year.
In looking at the Lexington market, Satterly said that "there are a lot of good firms here that we look forward to competing with."
One of those competitors is Crowe Horwath. Steve Jennings of the Lexington Crowe Horwath office said that while he does see it as the merger of two good firms, it is not as significant as a large, outside firm entering the Lexington market would be.
"I don't think it changes the way we do business," he said.