Is a leader a leader if no one follows him? That’s the question facing Robert H. Charron, managing partner of Carlin, Charron & Rosen, the Westborough, Mass.-based accounting firm with a brand-new office in Glastonbury.
In January, Charron announced plans to merge the firm into UHY Advisors, a Chicago-based company that ranks 14th in the nation among accounting firms.
But some of Carlin Charron’s 16 equity partners, 12 of whom needed to approve the deal for it to go through, balked.
“Most of the negotiations were done at the beginning, with myself and Tony, and it’s fair to say we couldn’t have gotten along any better,” Charron said, speaking of UHY’s New England region CEO, Anthony P. Scillia.
“But there were a number of people involved in negotiating the details, and you really need to get a consensus,” Charron added.
That consensus never materialized for Charron, even though the firm announced the merger plans publicly in January.
Charron declined to say whether the issue came to a vote, citing a non-disclosure agreement. He also declined to release the names of the firm’s equity partners. But he expressed confidence that he would remain as managing partner and the clients would retain confidence in the firm, despite the failed merger.
Scillia said that as negotiations proceeded, there were no unexpected surprises on UHY’s end that killed the deal.
Expansive Vision
In January, UHY hoped the move would be the beginning of a series of expansions in the Northeast that would enable the firm to grow its business among mid-market clients. CCR, which targets retailers, manufacturers and others businesses in the range of $50 million in annual revenue, seemed a good fit.
“On a personal basis, it’s a disappointment,” Scillia said, noting his good working relationship with Charron.
“I think together, we probably would have done better [if we had merged]. Bob and I still believe that would have been an opportunity.”
But now that the CCR deal has collapsed, Scillia said UHY will step back and concentrate on tax season.
“Right now we’re going to take a big long breath and see what happens,” Scillia said.
UHY’s plans to close its Hartford office and sublet its space at One Financial Plaza have been scrapped, as those employees will no longer be moving to CCR’s office in Glastonbury. The firm also maintains offices in New Haven and Stamford, part of a Connecticut presence of about 90 total employees and 40 CPAs.
Both companies said it wasn’t impossible that the merger would be reconsidered in the future.
Exposure Issue
Other local accounting executives were surprised that the merger had been announced without approval by other partners.
Richard V. Kretz, managing partner of Kostin, Ruffkess & Co. in Farmington, said he’d been involved in six mergers, most recently the acquisition of the Springfield, Mass. firm Themistos & Dane in 2005.
“Generally, most firms when you’re doing this, you’re trying to keep it confidential,” Kretz said.
“You’re trying to make sure the cultures are going to blend and the clients will be able to stay with the firm. And then at the end of the day, are the partners going to be in a better place?”
“The process of announcing before it’s really done can really come back and bite you.”
Thomas J. Filomeno, president of Filomeno & Co., in West Hartford, was equally surprised at the announcement of the merger at such an early stage. But he said the end of negotiations probably didn’t come as bad news to CCR’s clients as most customers don’t like mergers in the first place.
“I think actually, it’s not a negative from a client services perspective,” Filomeno said.
