Hartford Business Journal

24 HARTFORDBUSINESS.COM | FEBRUARY 5, 2024 FOCUS: Accounting (From left) Michael Sabol, Stephen Giamalis and James Mahoney. Mahoney and Sabol lead Glastonbury-based CPA firm MahoneySabol, which has absorbed Giamalis and Co. in a recent merger. PHOTO | CONTRIBUTED Succession Plan Accounting merger activity heats up as aging partners eye retirement, firms look for growth UConn School of Business, for example, has seen dwindling enroll- ment, from about 160 undergraduates at the peak in 2017, down to around 90 this past fall, school officials said. Additionally, Bureau of Labor Statis- tics data shows more than 300,000 U.S. accountants and auditors left their jobs in the past few years, leading to a 17% decline in employed accountants compared to 2019. Connecticut employed 15,960 accountants and auditors as of May 2022, BLS data shows. Buyer's market Andrews said mergers have always been an industry option, but 10 years ago, it was more of a seller's market. Today, it's more of a buyer's market. "There are probably 10 firms out there for every two people looking to buy," he said. Rosenberg Associates said "the merger frenzy continues with no end in sight because a substantial number of aging partners in the CPA industry have been unable or unwilling to develop new partners." They have been "prioritizing the here and now – taking care of clients – at the expense of succession plan- ning," Rosenberg Associates said. Andrews said he fields calls contin- uously from smaller firms looking to By Hanna Snyder Gambini hgambini@hartfordbusiness.com A s founding partners in small accounting firms age, they are faced with few options for retirement. Some can pass the company down to an up-and-coming partner, but a continuing workforce shortage in the accounting industry means fewer young people are joining the profes- sion or moving up the ranks. As a result, many smaller firms run by aging Baby Boomers are looking for merger opportunities with larger outfits, a trend that shows no signs of slowing, industry experts said. In early January, accounting firm Giamalis and Co., with nine employees, merged with much larger CPA firm MahoneySabol, both based in Glastonbury. Farmington-based accounting firm Federman, Lally & Remis, with about 13 CPAs and 18 employees, recently announced it has been acquired by national accounting firm Marcum LLP, which has Connecticut offices in Hartford, West Hartford, New Haven and Greenwich. A year ago, Glastonbury-based CPA firm Fiondella, Milone & LaSaracina merged with Bregman & Co., which has offices in Stamford and Avon. Drew Andrews, managing partner and CEO of Hartford-based accounting and consulting firm Whit- tlesey, said the main factor driving mergers is the significant number of smaller firms with aging partners who are looking toward retirement, but don't have the "backup" on staff to fill their shoes. Andrews said he often gets calls from smaller firms looking for a merger partner, but making deals happen isn't easy. Michael Sabol, a founding partner at MahoneySabol, said a recent survey by consulting firm Rosenberg Associates found 25% of all partners are over the age of 60, and 60% are over the age of 50. Those numbers in Connecticut are likely higher, and ages older, as the national statistics may be skewed by many young partners in much larger firms nationwide, Sabol said. "Smaller firms are headed by partners close to retirement, and they have two options, merge or have younger leaders take over," Sabol said. A challenge for many small firms is having the right people in line "who can take the torch and continue." This is a challenge for many firms due to another industry roadblock, labor, as there are fewer students seeking accounting degrees and taking the CPA exam. The accounting program at the

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