October 21, 2006

Merger Shifts Landscape
Post and Courier
By Peter Hull

Charleston, SC - The prospect of two of the region's biggest certified public accounting firms joining forces with the Southeast's largest number-crunching operation may s ound daunting to smaller rivals.

But the local competition in the financial record-keeping world is taking the deal in stride, with most viewing it as an opportunity to add to their lists of clients.

Gamble Givens & Moody and Pratt-Thomas & Gumb and Co., both local heavyweights based in Charleston, said this week that they are merging and then joining forces with an even bigger outfit, North Carolina's Dixon Hughes.

They said the combination will create a "super-regional" full-service accounting operation that already counts many of the region's largest employers as clients.

Terms were not disclosed.

Such mergers often create opportunities for smaller firms to pick up clients who prefer to deal with a locally based business, said William A. Russell III, a principal with locally based accounting firm Jarrard Nowell & Russell.

"It's fantastic news for smaller guys," Russell said Friday. "Not everyone needs a big firm."

Russell pointed to the banking industry: While most account-holders stay put when their community bank is acquired by an out-of-town company, others inevitably take their money to other small institutions. The same holds true when it comes to tax returns and audits, Russell said.

"People like to feel important," he said.

By merging with Dixon Hughes, which is based in Asheville, Gamble Givens & Moody and Pratt-Thomas & Gumb are set to become part of the nation's 17th-largest accounting firm, with annual revenue of $125 million last year.

The two local firms are scheduled to switch over to the Dixon Hughes name Nov. 1.

As ink on the deal dried, more details emerged Friday about how the new operation will shape up.

Brian Moody of Gamble Givens & Moody will head a three-man local management team, aided by Rudy Thomas and Roy Strickland, both shareholders of Pratt-Thomas & Gumb.

Thomas will head the combined firm's tax division, while Strickland will oversee the audit and litigation consulting divisions.

Moody said most of the combined 125 staffers will work out of Pratt-Thomas & Gumb's East Bay Street headquarters. He also said there could be some employee transfers between satellite offices in Kiawah Island, Mount Pleasant and Summerville.

The senior members of both firms will stay, and no layoffs are planned, Moody said.

"We're expecting the growth to be so dramatic we'll be looking to add people," he said.

Moody, who serves on the Charleston County School Board, said he quietly opened merger talks with his firm's crosstown rival about 15 months ago "in cafes and on street corners." They often chose distant locations so they wouldn't be recognized, he said.

The two discovered they had more in common than they had thought, Moody said. Talks soon turned to the potential threat to their businesses from so-called super-regionals like Dixon Hughes, with 900 workers and 24 offices.

Moody said the marriage with the North Carolina company was, in many ways, a defensive move. "The market, ultimately, will decide if we were right," he said.

Founded in 1972, Gamble Givens & Moody is the senior of the two Charleston-based CPA firms. Pratt-Thomas & Gumb set up shop in 1994.

With only one Fortune 500 company based in South Carolina - Columbia's Scana Corp. - it'll be interesting to see whether the two firms will change their business strategy as they are folded into Dixon Hughes, said Tommy Taylor, a partner with Charleston's McKnight Frampton & Co.

Mitch Fischbein of Schleeter Monsen & Debacker CPAs, which dates back to 1919, said the mom-and-pop approach has worked well in the Charleston accounting industry. He said smaller firms will be happy to pick up any of the larger firm's clients who get lost in the shuffle.