Orange County Business Journal

Local Exec Promoted in McGladrey Deal

Jane Yu Thursday, December 1, 2011

Accounting firm McGladrey & Pullen LLP completed a $610 million acquisition of RSM McGladrey Inc. from H&R Block Inc. and named an Orange County executive to head its newly combined western region.

The acquisition reunites the two McGladrey entities, which separated a decade ago.

Don Natenstedt is an Irvine-based McGladrey & Pullen veteran who will go from partner to regional managing partner.

Natenstedt will remain in the Irvine office of the Bloomington, Minn.-based certified public accountant firm. He will oversee about 600 employees and about 50 partners in 10 offices throughout California, Washington, Nevada and Arizona.

McGladrey’s Irvine office has about 120 employees and is the firm’s biggest office in California. It also has offices in Los Angeles, San Diego and Northern California.

A 1999 partnership deal with Kansas City-based H&R Block split McGladrey into two separate entities: McGladrey & Pullen and RSM.

“The main reason for the partnership with H&R was access to their capital,” Natenstedt said.

McGladrey & Pullen operated under the traditional partnership structure as an audit consulting firm, providing public accounting services.

RSM has been the accounting subsidiary of H&R Block, offering non-public services such as tax and consulting services.

The recent acquisition puts two McGladrey arms back together in a traditional partnership-based structure.

“The partners are excited to reunite,” Natenstedt said. “We are really continuing our business in the middle market. That’s our sweet spot. H&R Block wanted to focus on their individual tax practice. It was a good situation for us.”

The Irvine office sees about 50% of its client base in manufacturing and distribution, and 20% from community banks, according to Natenstedt.

“We also do a lot of work with private equity groups and healthcare,” he said. “There won’t be a lot of change. The plan is to gradually grow what we have.”