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Rumor Mill: Two Top 35 Accounting Firms (One In the Top 15) Are In Merger Talks (UPDATE: Friedman and Marcum Merger Official)

[UPDATE on May 3] The news we broke last week (scroll down) came to fruition today, as the merger between Friedman and Marcum is now official. Here is the press release from Marcum:

Leading national accounting and advisory firms Marcum LLP (“Marcum”) and Friedman LLP (“Friedman”) today announced that they are in advanced discussions related to a proposed transaction in which Friedman will merge into Marcum, resulting in a national top-12 firm with approximately $1 billion in annual revenue and more than 3,400 associates.

The merger of Marcum (ranked No. 15 by Accounting Today) and Friedman (ranked No. 33) is anticipated to close in the summer of 2022. The transaction will combine two well-regarded national firms with a shared emphasis on superior service, outstanding talent, industry specialization, and a focus on meeting clients’ needs in a rapidly evolving business landscape. The combination will:

  • Deepen the firms’ capabilities in key service areas, including public company audit and assurance, digital assets, cybersecurity, real estate, construction, and other advisory services. It will be one of the largest firms serving Chinese companies listed on the U.S. stock markets.
  • Give Friedman clients access to expanded services, including strategic information technology consulting and wealth management.
  • Combine the best of two employee-centric cultures with a continued commitment to diversity, equity and inclusion; learning and development; and work/life balance.
  • Enable the Firm to enhance and scale investment in technology, talent, and innovation.

The combined firm will operate under the Marcum brand and continue to be headquartered in New York City, with offices throughout the continental United States, China, Ireland, and Grand Cayman.

“Marcum and Friedman share common roots in the New York area, extensive histories of exceptional client service, similar employee-oriented cultures, and a commitment to leading in emerging growth areas in our profession. We view this transaction as a very natural fit and are excited about our shared future together,” said Jeffrey M. Weiner, chairman and chief executive officer of Marcum, who will maintain both leadership roles once the proposed transaction is completed.

“Friedman has experienced record growth, hiring, and revenues over the past two years, giving us a position of strength from which to consider our next strategic move. After extensive discussions, it became clear to us that combining our resources with Marcum would be in the best interests of our clients, partners, and employees,” added Frederick R. Berk, co-managing partner of Friedman.

“Friedman has been fortunate during its history to grow through selective mergers, the addition and retention of great clients, and the thoughtful contributions of employees at every level of our firm. Joining with Marcum is the next logical step in that evolution. Our complementary practices and entrepreneurial mindsets form a powerful foundation for long-term strategic growth,” said Harriet Greenberg, co-managing partner of Friedman.

[UPDATE on April 26] It sounds like the merger between Friedman and Marcum is a foregone conclusion. Our source who tipped us off Monday about the two firms being engaged in merger discussions told us this morning:

Yesterday Friedman employees were on a call with [Marcum Chairman and CEO] Jeff Weiner. It was discussed about a potential merger, but it appears it’s already done, just crossing off legal or admin items. Yesterday afternoon, the Marucm Partner group was notified of the merger.

Marcum will be acquiring Friedman. Friedman employees are not happy about it. Some of Friedman things such as Summer Fridays and expense reimbursement bonus will come to Marcum. Knowing Marcum … they will be removed after a year.

So what exactly were Friedman employees told yesterday? Fortunately someone from that firm got in touch with us this morning and told us this:

Can confirm that Friedman and Marcum expect to merge to be included under “Marcum LLP” — told during town hall yesterday — 95% chance expected to occur. Friedman currently in due diligence stage — expected to be completed during July or August 2022.

The Friedman employee told us that management “tried to frame [the merger] as it will be rosy, and depending on your office and group, that will dictate how much change there will be (New Jersey office expects less change than New York office).” Our Friedman source said he/she is ambivalent about the merger.

They are saying everything (title, salary, etc.) should carry over and probably in a year will be meshing based on the office location and size — most people don’t like change so I presume most employees are ambivalent. It’s probably better for partners vs. employees overall I guess.

Marcum and Friedman have yet to respond to a request for comment on the merger rumors. We’ll continue to update this article if we get any new information.

[Original article posted the evening of April 25.]

Coming on the heels of a mega-merger in mid-February when top 20 public accounting firms BKD and Dixon Hughes Goodman (DHG) announced their nuptials, which when finalized will create a new yet-to-be-named top 10 firm, we are hearing that one of the 15 largest firms in the U.S. is in the talking stage of their pre-merger relationship with a firm in the top 35.

We have not yet received a response to this rumor from the two firms allegedly involved in merger discussions, but here is the tip we got earlier today from a reliable source:

Rumor has it that Friedman is merging into Marcum. Friedman employees are having a meeting today and it will be discussed. I don’t know anything else.

According to the latest top 100 firms report from Accounting Today, Marcum is the 15th biggest in terms of revenue ($799 million as of December 2021), while Friedman sits at No. 33 ($178 million as of December 2021). So if what we were told is true about the two NYC-based firms, a Marcum/Friedman merger would put combined revenue at about $977 million. Assuming Friedman merges into Marcum, Marcum would slide between Crowe at No. 11 ($998.7 million) and Moss Adams at No. 12 ($954.5 million).

We’ll update this article if either of the two firms are willing to comment on the rumor, but if any of you at Marcum or Friedman have been told about a possible merger between the two firms, give us a shout using the contact information below. All tipsters will be kept anonymous.

Related article:

Rumor: BKD Is Going to Merge With Either DHG, Moss Adams, or Plante Moran Today (CONFIRMED: BKD and DHG)