Driven in part by a tight market for talent and a partner’s retirement, a Richmond accounting firm has merged into a larger competitor from Northern Virginia.
Kimble CPAs, a 14-person firm in the West End, last month became part of Alexandria-based KWC.
It’s the second such deal for KWC in Richmond in five years. In 2017 it added Biegler & Associates and its 16-person team to its ranks as part of its entrance into the local market.
“We had a presence there already and were looking to expand that when Kimble came across my desk,” said Connie Hammell, KWC’s managing partner. “I had been seeking out a firm just to bolster our current presence and for technical expertise as well.”
KWC was attracted to Kimble’s book of business handling tax work for closely held, small- and medium-sized businesses and nonprofits, a practice KWC was looking to grow.
From Kimble’s perspective, co-founder Kim VanHuss said her firm needed some new talent on the audit side of the practice after her co-founder Bill Berry retired in April.
“We were picking up a lot of work and needed additional resources behind us,” said VanHuss, adding that she also needed help with back office tasks such as HR and IT.
She and Berry started Kimble six years ago when they spun off from Elliott Davis, a larger firm that closed its Richmond office.
Upon Berry’s retirement, VanHuss said she enlisted local M&A advisory firm Sterling Point Advisors to shop around for a merger partner for Kimble. She said she talked to several suitors and KWC was by far the best fit.
One notable selling point, VanHuss said, was when she brought up with Hammell the fact that Kimble allows its employees to work a four-day, 32-hour work week from May to Labor Day as a breather from its busier months. It’s not a perk that all firms provide, and she wasn’t sure another firm would want to honor that post-merger.
“I said, ‘Connie, we work a 32-week during the summer.’ She goes, ‘Yeah, we do that too,’” VanHuss said. “I didn’t talk to another firm during this process that had that.”
The deal closed July 25.
All of Kimble’s employees came over as part of the deal, including VanHuss, who is now a partner with KWC.
The structure is similar to KWC’s deal with Biegler, whose founder and namesake Steve Biegler has stayed on and is now managing partner of KWC’s Richmond office. The Kimble name will soon be retired in favor of the KWC brand.
Hammell said mergers are one way that firms like KWC are combatting a hiring challenge that’s hit the accounting industry in recent years.
“We’re facing an extreme labor shortage that’s a result of two things,” Hammell said. “One is baby boomers retiring and there’s an unbelievable knowledge loss with that.”
The second is a trend of fewer accounting graduates coming out of colleges, which Hammell attributed in part to extra requirements that may push some accounting students into having to attend a fifth year of school.
“Everyone is facing the same issues and we’re all trying to solve it in our own ways,” she said.
VanHuss, 61, who has been in the industry since graduating from University of Richmond 40 years ago, said the pandemic added to those recruiting woes.
“During the pandemic hiring was extremely difficult,” she said. “We weren’t on campus recruiting or going to networking events making those contacts. The pandemic really shut down the (recruiting) pipeline. So, I think we’re feeling the effects of that.”
The addition of Kimble will bring KWC’s annual revenue up from $18 million pre-merger to around $22 million post-merger, Hammell said. That’s up from $15 million when the Biegler deal was made in 2017.
The combined firm now has 112 employees and, for now, two offices in Richmond. The Biegler-led group works from 5911 W. Broad St., while the Kimble group is still in its office at 6806 Paragon Place.
Hammell said neither of those two offices is large enough to host the entire Richmond team under one roof, so the search is on to secure a single, larger office by the end of the year. She said they’re homed in on Innsbrook.
KWC was founded in 1983. It was represented in the Kimble deal by law firm Rees Broome. Kimble was represented by Whiteford, Taylor & Preston.
Hammell said KWC isn’t actively on the hunt for any other Richmond deals at the moment.
“We’re not looking to become a mega regional firm,” she said. “This was the right opportunity at the right time.”