Armanino and Brown Smith Wallace to merge

San Ramon, California-based Armanino LLP will merge with St. Louis-based Brown Smith Wallace effective Aug. 1, 2021, both firms announced Wednesday.

The deal adds Brown Smith Wallace’s strong presence in the Midwest to Armanino’s home base in California, as well as its growing operations in the Pacific Northwest, Texas, and the Chicago area.

“We think we can really be a firm to contend with in the Midwest,” CEO Matt Armanino told Accounting Today, citing Brown Smith Wallace’s reputation in the area, the depth and strength of its client relationships, and the broader capabilities and range of services that Armanino brings, particularly in technology, where the firm has invested heavily in areas like data and analytics, blockchain, and artificial intelligence. “Our ability to go back to those clients and have even broader conversation about their challenges — particularly around technology — is super-exciting.”

Both firms are members of Accounting Today’s Top 100 Firms; Armanino ranked No. 21, with $359 million in revenue in 2020, while Brown Smith Wallace ranked No. 77, with $59.99 million. The combined firms will have 19 locations and close to 2,000 employees across 31 states.

All Brown Smith Wallace employees are expected to join Armanino, and both current and future leaders at the St. Louis firm will be slotted into similar leadership positions.

“We’re mapping between 45 and 50 people from staff up through partner into specific leadership roles,” said Brown Smith Wallace managing partner Tony Caleca, who will serve as Midwest Market leader for Armanino, continuing to lead the St. Louis office and joining the firm’s Operating Committee, its primary leadership group. “It’s exciting for our people — the messaging is that we’ve always empowered our people, and to put them in an environment like this that creates additional opportunity is great.”

A common vision

The two firms have had a close relationship for several years, thanks to their mutual memberships in accounting firm network Moore Global. (Caleca is currently chair of Moore North America, and Matt Armanino is vice chair.)

“The conversation started a couple of years ago — this was not a shotgun wedding at all,” Armanino explained. “It was natural to share strategies and ideas, and we started to collaborate more, our teams were working together, doing proposals together within the network, collaborating on women’s initiatives and DEI initiatives … . We just started working together, and it just became apparent that we are really good together. With some firm combinations that you see, you scratch your head and say, ‘Is that really going to move those firms forward?’ We knew that was the case here.”

“We had no anticipation that a merger would be the result, but sometime in the middle of 2019, we looked at each other and said, ‘Should we think about doing this together?’” recalled Caleca. “If you had asked, ‘What’s your vision?’ I’d have pointed at Armanino as the next evolution of what our firm would look like.”

After a year of considering the idea, both firms had come to the realization that a merger made sense — just in time for the COVID-19 pandemic to sidetrack the discussions.

“It was frustrating and disappointing to stop the conversation, but it was the right thing to focus on our clients and our people and protect them and get through it,” Armanino said. “The irony is that we got even closer together during the pandemic, sharing notes every week — ‘What’s going on? How are things? How are you responding?’ Through that process, we got closer and closer together, and it was a joy that we performed so well in the crisis, and we came out stronger and we had the luxury of returning our focus on this exciting opportunity.”

Similar experiences during the pandemic only cemented their certainty that the two firms were a good fit. According to Armanino, “The most important thing is the strong cultural connection. The reason we’re coming together is that our firms have always cared about the same things: We exist to create opportunities for our people to thrive, and to wrap our arms around our clients and help them thrive.”

In highlighting the firms’ common dedication to developing and empowering their people and their clients, Caleca drilled down to one specific quality: “The founders of both our firms established cultures of servant leadership,” he explained. “That molded me — I view myself as a servant leader, and Matt is clearly one as well. What’s most important is how you take someone else to a level they didn’t think they could achieve on their own.”

Future strategy

The growth plans for the combined firm going forward are aggressive — Armanino said he expects to hit between $800 million and $1 billion in revenue by 2025, with an even split between organic and inorganic growth.

The firm is certainly committed to geographic expansion, but only with the right partners at the right time. “I had a staff person ask, ‘Are we a national firm?’ Considering we have employees in just about every state, and clients in all of them, by some definitions, yes, we are a national firm. We’ve grown well beyond just being a California firm,” Armanino said. “But we’ve never been a firm that felt we need to plant the flag in a market. If there’s the right market that provides access to the right clients and opportunities for our people, we’ll explore it.”

Overall, he’s highly optimistic about Armanino’s future prospects as a firm that stands out for its uniquely innovative and entrepreneurial approach.

“There’s a lot more that gets me up in the morning than keeps me up at night,” he said. “We live in a time of abundance. There are two groups of firms — those who are concerned about what the future holds and whether they can keep up, and others, including us, that really see that we’re living in an incredible time of abundance, with more opportunities to do cool things.”