One of the area’s largest accounting firms is looking to become a one-stop dealmaker for its clients.
Keiter has created an in-house merger and acquisition arm. Dubbed Keiter Transaction Advisory Services, the new group handles the actual deal-making portion of M&A transactions, rather than clients separately seeking out an investment banking firm or business broker.
The new division is manned by recent hires Jim McGrath and Matt Austin, both whom came from the dealmaking world. McGrath was previously with former Richmond-based investment banking firm Ewing Bemiss & Co. before and after it was absorbed by an arm of KPMG.
Austin was previously with local private equity firm Virginia Capital Partners and most recently with NewMarket Corp.
Keiter principals Carroll Hurst and Mike Gracik are also leading the group, in addition to their other duties at the firm.
Gracik said the idea was born out of Keiter’s long track record of helping clients on the accounting side of M&A deals, a part of the business that has picked up steam in recent years.
“We’ve had a number of clients that have sold themselves or made acquisitions over the years, so we have a lot of have a lot of experience of working on those client transactions, structuring them from the tax side,” Gracik said.
He said its practice of helping clients with company valuation, tax implications and succession planning related to buying or selling a business has grown to be about 10-12 percent of the firm’s overall revenue last year, which reached about $25 million.
“In the last few years it’s become one of the fastest growing areas in our firm,” he said.
Keiter will target deals mostly involving companies with earnings of $2 million to $10 million annually, which they call the lower middle market.
“We’re focused particularly on companies that don’t want hire a full-service investment bank,” said McGrath, who is managing director of the new unit.
While they’ll be competing with investment banking industry on certain deals, McGrath doesn’t call the new venture a traditional investment banking firm.
“We call it an M&A advisory firm with investment banking expertise,” he said.
Keiter will make its money on deals either through billable hours or with a transaction fee, depending on the client and the situation.
The new endeavor is already catching on, as Gracik and McGrath said they have multiple transactions in the works, about half of which are with existing clients from the accounting side.
While not naming names, Gracik said one deal involves a local retailer looking to sell of a division and another for a food service distribution company in Pennsylvania.
Keiter has 150 employees firm-wide, all operating from its headquarters in Innsbrook.