PhillyDeals: Phila.'s ParenteBeard loses partners to rival accounting firm

One of the biggest professional firms based in Philadelphia - the accounting firm ParenteBeard L.L.C., an upstate success story that chose the city as its headquarters during its rapid growth of the mid-2000s - is losing a major practice group to a national rival, following departures by other partners.

Twelve partners at the firm's Center City-based bank-auditing practice have resigned to join Chicago-based BDO USA L.L.P's offices in Philadelphia, New York, Wilmington, and Woodbridge, N.J., and new BDO offices in Harrisburg and Reading. The two firms made a deal allowing BDO to offer jobs to an additional 97 ParenteBeard staff who work with the partners; they may also choose to stay.

What's going on? "The simple fact is that we experience turnover," ParenteBeard chief executive Robert J. Ciaruffoli, architect of the firm's expansion by merger and its mid-2000s move to Philadelphia from Wilkes-Barre, said in a statement. "We have made strategic decisions to part ways with practices that were not aligned with our strategic plan."

I asked if partners used to having a say in the management of smaller firms had a tough time adjusting. "Certainly, we take the issue of corporate culture seriously," Ciaruffoli wrote back.

"We are fully confident in the team we currently have in place - across all service lines and all industries," he added.

BDO USA is happy to pick up the group, said its chief executive, Wayne Berson, in a statement confirming the move, which I first reported from industry sources in the "Philly Deals" blog in June.

The partners include Richard T. Farrell from ParenteBeard's Philadelphia office, Alan Molin from its Clark, N.J. office, and others who turned in their resignations to Ciaruffoli. Farrell and Molin both worked at Beard Miller Co., which Parente acquired in 2009.

There have been other departures at ParenteBeard since early last year. Dominic Caglioti, formerly a member of the Parente board, is now at New York-based Friedman L.L.P., which has expanded its South Jersey office. Caglioti has been joined at Friedman by Mark Nicastro, once a rising star at ParenteBeard, whose practice includes emerging technology companies. Also from South Jersey, John E. Rafter left to start a firm with fellow ParenteBeard alumnus Leonard Lewis.

Collen Vallen has left ParenteBeard's forensic-accounting practice for New York-based Citrin Cooperman, while her former colleagues Richard Gering, Dana Trexler Smith, Joseph Lesovitz, and others joined EisnerAmper. And four partners left to join Reinsel Kuntz Lesher (RTL), in central Pennsylvania, late in 2012, joining three partners who made the same move at the start of that year.

AccountingToday lists ParenteBeard as the largest accounting firm based in Philadelphia and the 21st-largest nationally, with $169 million in revenue last year (the four largest firms each exceed $5 billion).

ParenteBeard was the only one of the top 25 firms where revenue fell (less than 1 percent), and the one with the biggest decline in total staff, down almost 6 percent to 978. (Staffing was up at most firms.)

Whatever the turnover, "we've been able to attract new and different talent to ParenteBeard - talent that is passionate about working here," Ciaruffoli said. "We've made an investment in cultivating that talent. In the end, our decisions are driven by what serves our team members and clients best."

Mergers and reorganizations are typically disruptive. They aren't necessarily fatal, as BDO's own recent growth in Philadelphia, after a previous difficult merger, shows.