Moss Adams announced that it will merge in Salt Lake City-based risk management and advisory firm the Cadence Group, effective Aug. 1.
The combination gives Seattle-based Moss Adams, which is the largest independent firm on the West Coast, its first foothold in the Salt Lake City area. The Cadence Group also has an office in San Francisco.
“Their market presence in Salt Lake City is a really attractive element for us,” Eric Miles, managing partner of the consulting practice at Moss Adams, told Accounting Today. “The technology industry is the largest segment of the firm, and our fastest growing segment. We see the connections between and the movement of people from Silicon Valley to Salt Lake City increasing, particularly since the pandemic. It’s a growing tech hub, and its potential for more growth is even bigger. Getting a presence there helps us service both existing and target clients much better.”
Miles noted two other attractive elements to the deal: added capability in core attest and compliance services, particularly around SOC reports, and two new attestation services.
“SOC reports are a core need of our technology clients, and for any cloud-based SAAS provider they are critical. As more organizations go online, we’re seeing a boom in the need for SOC reports, and this doubles the size of our SOC capabilities,” he explained.
The new services involve ISO 27001 certification for clients whose platforms are used internationally, and FedRAMP attestation for businesses that want to work with the federal government.
Founded in 2005, the Cadence Group offers a range of other risk management services, including SOX 404 compliance, PCI compliance, penetration testing, and internal audit services.
Financial terms of the deal were not disclosed. Moss Adams ranked No. 11 on Accounting Today’s 2021 list of the Top 100 Firms, with $819 million in revenue, 340 partners and almost 3,200 staff. All 75 professionals from The Cadence Group will join Moss Adams, including 10 partners. Cadence Group president Gordy Jacobsen will join as a partner in the firm’s SOC team, joining existing Moss Adams partners in leading that effort.
Behind the merger
“We’re very selective when it comes to combinations, and we had been looking in Salt Lake City for years,” Miles said.
The two firms began to think of a combination around four years ago, but the original seed of the merger had been planted before that.
“The original connection was that one of our partners used to work with Gordy at [Big Four firm] PwC,” Miles said, which led to his meeting Jacobsen and Cadence Group co-owner Travis Nielsen while on a trip to Salt Lake City. “We hit it off and have been talking over the years. They’ve hit an inflection point, where they need to invest in infrastructure — it’s faster and more cost-effective for them to combine with us rather than build it themselves. There’s a cultural fit and it really helps them accelerate.”
While many firms paused their M&A activities due to COVID-19, Miles said the pandemic didn’t slow down the deal at all.
“In some ways, it actually made it easier — we didn’t feel the pressure to get on a plane,” he recalled. “We would just jump on a video call. If anything, it sped the process up a bit, because the frequency of meetings was higher.”
Going forward, the firm plans to use the Cadence Group as a foundation for expanding in Salt Lake City, according to Miles: “We view that as an emerging market, and we’re going to use this combination to build a full-service Moss Adams location there.”
Sourced from Accounting Today - written by Daniel Hood