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Sax LLP Accounting seeks to grow its offerings, footprint in the northeast

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From left, Kevin Hansen, co-managing director of the Hunter Group, Frank Pawlowski, co-managing director of the Hunter Group, and Joseph Damiano, managing partner at Sax LLP, pose for a portrait at Sax LLP in Clifton.
From left, Kevin Hansen, co-managing director of the Hunter Group, Frank Pawlowski, co-managing director of the Hunter Group, and Joseph Damiano, managing partner at Sax LLP, pose for a portrait at Sax LLP in Clifton. - ()

Clifton-based Sax LLP Accounting recently acquired the accounting firm Hunter Group CPA in Fairlawn. The acquisition, which closed on Nov. 1, increases Sax’s size to 30 partners and a total of 168 employees and gives it offices in Clifton, Fairlawn and New York City. The move also expands the company’s footprint in the northeast and will result in Sax expanding and renovating the second floor of its office in Clifton to accommodate Hunter Group’s 30 employees.

As a result of the acquisition, Sax is now one of the top 10 accounting firms in the state and top 100 in the country, both by size and client list. Sax was also ranked third in the Top 10 Accounting Firms and Privately Held Businesses in the state ranking by NJBIZ in 2016.

The terms of the acquisition were not disclosed. Joseph Tarasco, CEO of the Accountants Advisory Group, consulted on the transaction.

Kevin Hansen, a co-managing director at the Hunter Group, said the acquisition, “gives us a bigger footprint in the New York metropolitan area. A lot of the industries that we focus on complement Sax’s areas of expertise and niches very well.”

Sax LLP Managing Partner  Joseph A. Damiano told NJBIZ that both firms complement each other as they each specialize in mid-market real estate ownership businesses, construction firms, manufacturing and distribution companies, physician-owned healthcare providers, family owned businesses and services for high-net-worth families. The acquisition also cements the legacy of each firm – both are celebrating more than 60 years in business.

“Clients will remain unaffected by the acquisition,” said Damiano. “The reason we wanted to do this is we share the same client-first philosophy. From a synergy standpoint, both firms approach New Jersey businesses in a very similar way, which is why we both grew through the years,” said Damiano. “We’ve both been around for 60 plus years, we have a similar philosophy of working with family run businesses and all we’re doing with this acquisition is bringing these two businesses together and making a bigger platform for our clients.”

Damiano added that the combination was a means of cementing the future of both firms and continuing their legacy.

Real Estate, Manufacturing/Distribution and Construction companies make up roughly 45 percent of Sax’s overall business. While the newly expanded Sax remains committed to growth in these areas, as a result of the acquisition they will also look to expand their Family CFO, Healthcare and Not-for-Profit practices. 

The acquisition should benefit both firms, said Hansen. “We think that the Family CFO practice will be a high area of growth for both firms,” he said. Sax’s Family CFO practice, he said, provides personalized attention to the financial affairs of high-net-worth individuals and families.

Damiano added, “In the New Jersey area, you have a lot of money being passed down to new generations, and these next generations need help in managing their finances and managing their overall office.”

Going forward, the combined firms will continue to look to grow organically, and educate their clients on new accounting rules regarding real estate leases. The firm will also look to gain more international clients that are seeking to set up offices in the state.

Sax hired about a dozen new employees starting Nov. 6 between all three offices, Damiano said. Hanson added that both firms have used internship programs over the years. He said interns are usually hired in January and February and many are later offered full time positions.

 Hansen also said that another area of potential for the firm is international companies.

“One thing we’ve seen is a lot of international businesses, many of them software and technology companies, coming into New Jersey and setting up satellite offices,” said Frank Pawlowski, co-managing director of the Hunter Group. “With this merger, we’re hoping to work with more of those types of clients.”

Pawlowski who focuses on real estate, explains one big challenge for the firm is to educate clients on the Financial Accounting Standard Board’s (FASB) new rules regarding leases. Last year, FASB changed the Generally Accepted Accounting Principles (GAAP) to require companies to report leases as both assets and liabilities on their balance sheet, even if the tenant’s intent is to return the asset to the landlord.

In the past, if a company leased a building, all it had to do was expense the least costs on a monthly basis, said Pawlowski. “Now you have to capitalize the lease upfront, so that’s going to change the way the presentation of the balance sheet will look,” he said.

“We look forward to working with our clients as we get them up to speed in understanding the changes in revenue recognition as it relates to GAAP,” added Pawlowski. “That impacts loan covenants and lines of credit that businesses rely on. Eventually, clients will have to discuss with their banks how these changes could affect the covenants of their existing agreements.”

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Vince Calio

Vince Calio

Vince Calio covers health care and manufacturing for NJBIZ. You can contact him at vcalio@njbiz.com.

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