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Friday, May 24, 2024

Marcum Buys LTSP To Expand in OC

Nearly 100 area accounting workers

Mark Murphy, Doris Farinacci and Mark Simurda started their accounting careers at Newport Beach’s LTSP Inc. in the mid-1980s.

The threesome eventually took over the firm, becoming partners in the 1990s.

After more than 35 years of working at a boutique accounting firm, they decided to sell their firm to New York City-based Marcum LLP in a deal announced earlier this month. Financial terms were undisclosed.

“It was a difficult decision,” Murphy told the Business Journal.

“In the end, it will be a win-win for us, our clients and Marcum.”

Continuing Trend

The deal is the latest in a consolidation move among Orange County accounting firms. In the past two years, at least seven other prominent OC firms have taken down their shingles in favor of a larger national or regional firm that wants to expand into Orange County.

These include KSJG joining Withum Smith+Brown PC; HMWC with Eide Bailly LLP; White Nelson with CLA LLP; Kramer Olsen with BPM LLP; Bolar Hirsch with Armanino LLP; Squar Milner with Baker Tilly US LLP; and Hall & Co. with MGO LLP.

The OC-based companies say the acquisitions will help them expand services and participate in larger deals.

On last year’s Business Journal list of largest accounting firms, LTSP ranked No. 41 with 23 employees while Marcum, which has a Costa Mesa office, ranked No. 23 with 64 employees.

On this year’s list, the LTSP acquisition helped boost Marcum from No. 23 to No. 19 with 96 employees (see list, page 30).


Business Adviser

Founded in 1976, LTSP had provided a variety of customized accounting and advisory services to closely held businesses and high-net-worth individuals. Among other areas, it had expertise in real estate, manufacturing and distribution.

In the last five years, the company’s reduced its headcount from 30 to 23. Murphy said the accounting industry “is definitely changing.

“The old CPA model was becoming a commodity,” Murphy said. “The profession is morphing into a partnership model where we work together with a client and agree on a goal.”

His agency didn’t have all the resources needed to service its clientele and would find itself outsourcing to provide expertise, he said.

By contrast, Marcum provides a variety of services such as R&D credits, costs segregations on the tax side and industry specific expertise.

“These days, it’s hard to be a generalist,” Murphy said. “You need to be experts to bring that service. We could be good in a couple of areas, but not all.”


5th Cali Spot

The Newport Beach office will be Marcum’s fifth in California. It also has locations in Costa Mesa, Los Angeles, San Francisco and San Jose.

Its Costa Mesa office, where Philip Wilson will remain managing partner, has 10 partners, including the firm’s national leaders for tax controversy, tax credits and incentives, and cybersecurity and digital forensics. Another Costa Mesa partner is a regional leader in its national cannabis practice and has published about accounting considerations for cannabis operators.

The Costa Mesa team also serves several public companies, including Marathon Digital Holdings (Nasdaq: MARA), whose CEO Fred Thiel works out of an office in the Irvine Spectrum and last month was profiled by the Business Journal.


Buying Spree

Orange County is reflective of a national trend of consolidation in the accounting industry, Murphy noted.

Marcum, which began in 1951 and is ranked the 15th largest nationally by Accounting Today, has been on an acquisition spree of late, buying 10 firms since 2019 prior to the LTSP purchase.

Last month, Marcum announced it would acquire Friedman LLP, which Accounting Today ranked No. 33. The combination, expected to be completed this summer, creates a top 12 accounting firm with $1 billion in annual sales and more than 3,400 employees. The acquisition will help Marcum expand into Asia, including the potential to be the largest auditor of Chinese-based companies trading on U.S. exchanges.

Marcum says it’s dedicated to helping entrepreneurial, middle-market companies and high net worth individuals achieve their goals. It works with both privately held as well as publicly registered companies, and nonprofit and social sector organizations.

Marcum also hosts large business summits for executives in industries like tech, construction healthcare and food and beverages.

“LTSP is a strong cultural fit with Marcum that brings great synergies for the clients and staff of both firms,” Marcum Chairman and Chief Executive Jeffrey M. Weiner said in a statement.

Weiner, who joined the firm in 1981, has been managing partner since 1990 when it had 20 employees.

Murphy said the key reason to go with Marcum was a similar client base.

“They work with a lot of closely held entrepreneurs and high net worth individuals,” Murphy said. “We fit in well with their client base.

“We’re embracing it and excited it. It’s going to be a great thing.”

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Peter J. Brennan
Peter J. Brennan
Peter J. Brennan has been a journalist for 40 years. He spent a decade in Latin America covering wars, narcotic traffickers, earthquakes, and business. His resume includes 15 years at Bloomberg News where his headlines and articles sometimes moved the market caps of companies he covered by hundreds of millions of dollars. His articles have been published worldwide, including the New York Times and the Washington Post; he's appeared on CNN, CBC, BBC, and Bloomberg TV. He was awarded a Kiplinger Fellowship at The Ohio State University.

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