CLA acquires Sobel, greatly expanding its presence in N.J.

Major national firm stresses culture fit, commitment to clients as it prepares to market CLA brand in coveted region

CliftonLarsonAllen, the fast-growing national accounting firm known as CLA, will announce Wednesday morning that it is acquiring Sobel & Co., the 66-year-old boutique firm based in Livingston that has long been a brand name in New Jersey, ROI-NJ has learned.

The acquisition will greatly enhance CLA’s presence in the Garden State. The firm, which already has more than 1,600 clients in the state, is acquiring a firm that has 20 partners, 200 employees, more than 7,000 clients and $32 million in revenue.

Alan Sobel.

Financial terms of the deal were not announced.

The deal may appear to be just another in a long line of acquisitions for CLA, which has grown its revenues from $600 million to nearly $2 billion since the firm was created in 2012. Sobel & Co. Managing Member Alan Sobel and CLA Northeast Regional Managing Principal James Watson said it is more than just the big getting bigger.

Watson said CLA operates with a commitment to individual client care that is not often found at a firm of this size. The reason: CLA’s recent surge in size means it is a collection of smaller firms dedicated to service — but service they can now provide with greater resources on a greater scale.

“We operate like the biggest little firm in the country,” Watson said.

The firm, which was created by the 2012 merger of Clifton Gunderson (based in Milwaukee) and LarsonAllen (based in Minneapolis), said it was looking for the right fit in New York and New Jersey as it underwent its massive expansion, Watson said.

“We’ve always looked at the Northeast as a great opportunity to continue to build the CLA brand and to see significant growth,” he said. “Our growth created an opportunity for us to go out and look and see where we may have gaps in our ability to serve a local community.

James Watson.

“So, we’ve always had an eye on New Jersey, but we’re pretty picky. We’ve had a couple of conversations over the years, but we had never found a firm that checks all the boxes — and looks at the world like we do — until we met Sobel.”

Sobel, who began looking for a partner to better handle the changing nature of the sector, said the feeling was mutual.

“We feel the principles and values of CLA align with ours,” he said. “And the good news is that one of CLA’s philosophies is, ‘Power to the frontlines.’ They’re entrusting us to help drive them in the New Jersey marketplace.”

Sobel and Watson spoke with ROI-NJ about the acquisition. Here’s more of the conversation:

ROI-NJ: Talk about CLA’s presence and plan for New Jersey?

James Watson: We’ve had a good presence in New Jersey — and we have the ability to serve New Jersey through our Pennsylvania and New York offices. But part of our CLA promise, a big part of the purpose of why we exist, is to create opportunities for our people, our clients and our communities. Being in the community is very important to us.

So, while we have a presence in New Jersey, we knew that we were never going to be able to really hit our potential in the state unless we had relationships that were built and ingrained within the local community. That’s why we’re so excited. We can take what Sobel’s built, add some resources around it to create more capability and then grow from there.

ROI: Adding resources is a key to this acquisition — sort of a 1+1=3 scenario. Talk about how and why increasing resources became so necessary for Sobel?

Alan Sobel: Every five years, we go through a long-term strategic planning initiative. This year, our focus seemed to migrate toward threats toward our industry, including the talent wars that are taking place because there’s a shortage of people coming into and staying in our profession. Couple that with the rising investments required to keep pace in the area of technology and the other disruptions in our industry, like private equity coming in and buying accounting firms, and we had to take a hard look and say, ‘How do we maintain our independence and legacy?’

ROI: Talk about the fit: First, culturally?

JW: It was somewhat serendipitous, quite frankly. Someone reached out and said, ‘We have a firm here in New Jersey that we have a relationship with, would you like to meet?’ And we got together some of our leadership team, some of Alan’s leadership team and had a dinner. Right off the bat, it just felt like we were talking to CLA people.

We didn’t really get into a lot of the nuts and bolts of things. We didn’t talk about financial issues. We just kind of got to know each other. And I would say, from that day to today, it’s been very clear that our cultures fit very well. That’s the foundation that has to be there for us to be able to have success.

ROI: Talk about the fit: Professionally? Sobel is known for its work with nonprofits and family-owned businesses, among other areas. How does that fit with CLA?

JW: We’ve built CLA around having deep industry specialization. So, once we got through the culture conversation, we started to see that there is a lot of industry specialization at Sobel & Co. that works for us, too.

The nonprofit piece is very exciting. We have arguably the largest nonprofit practice in the country. If you look at single audits, which is generally specific to nonprofits, we do more single audits than any other firm, including the Big Four. So, we were very excited about that ability to serve nonprofits.

When CLA came together, we said we did not want to compete with the Big Four on the audit and assurance side. We don’t want to be an SEC firm. Most firms our size do. We want to serve those locally, privately held businesses and those in regulated industries — not-for-profits, health care, financial institutions — and do it in a way that is highly specialized and brings a lot of different capabilities to those clients.

AS: This aligns with Sobel. Our firm really has been built over the years on the backs of family-owned, privately owned entrepreneurial businesses: supermarkets and real estate companies, construction companies, manufacturers, distributors. What James just said was so important to us. We were not looking to change our practice — we were looking to blend our practice with somebody who was serving the markets we are.

Notwithstanding their size, what is particularly unique about CLA is that they serve the entrepreneurial, family owned, privately owned business area in a very big way. For us, CLA represents the continuation of the ability to serve those clients in a meaningful way.

ROI: The next step will be getting the CLA name out there. What are the marketing plans?

JW: We’re still a young brand, so we’ve spent the last couple of years building our brand and getting it out into the market. And the New York metro area is one of our strategic areas, from a marketing perspective.

But, as it relates to Sobel joining us, our first goal is to take care of our clients. We want to have ambassadors within the market from Sobel really driving the CLA brand. We’ve always had amazing growth through serving the heck out of our clients and our clients referring us to other clients — that’s been the backbone of a lot of our success.

AS: New Jersey is unique in a lot of ways. I’m excited to be able to bring that uniqueness and the New Jersey marketplace to the people at CLA in a more formal way than they’re currently doing it.