In the latest installment of our occasional conversations with Fort Worth newsmakers, Larry Autrey, CEO of Fort Worth-based accounting firm Whitley Penn, speaks with business editor Bob Francis. On June 13, Whitley Penn announced it was merging with Greenville, South Carolina-based Elliott Davis to form Elliott Penn, a firm with $400 million in revenue and a presence in some of the fastest-growing markets in the country.
This conversation has been edited for length and clarity. To hear more, please listen to the audio file attached to this article.
Larry Autrey:Once we started looking at what markets we wanted to be in, we were like, “Wow, that happens to be in the same market that my friend Rick’s firm (Rick Davis, CEO of Elliott Smith) is in.” So my management team said, “Well, let’s see what that could look like.” And I said, “Well, let me go sit down with Rick.” We spent probably a week together just putting evaluations together around our firms, visioning what it would look like, making sure we could agree on, what I’d say, is the tough stuff first. And then brought it back to our teams and said, “I think we’ve got something that works. Let’s see if we can hammer it out and present it to the partners.”
And so, it happened fairly quickly, but probably couldn’t have happened if Rick and I hadn’t had a 15-year relationship where we trusted each other pretty well. It’s been fun. I mean, I’d have to say that. We both have said, “Boy, can you imagine, you get the lawyers involved in this thing, what it would’ve been like if we didn’t trust each other?”
Bob Francis: You can say that in a lot of circumstances, I think.
Autrey: Yeah, in anything probably.
Francis: What’s the timeframe? When did you both start talking about it?
Autrey: I think Rick mentioned the idea probably a year ago, but we didn’t sit down and really start getting into the details and talking until January. Probably January or February, it was just Rick and I trying to hash through things, like could we sell a change in name to our partners? Could we sell what would be perceived as a 50/50, even though valuation may be different than that? And could our teams buy into splitting all the leadership roles 50/50, when neither one of us had ever done that before? We’d always effectively acquired firms.
And like I say, I get back to, over and over again, I don’t know that I could have done it with anybody else. So it was literally I trusted Rick. His firm’s culture is just like ours. I’m sitting here looking out over Greenville, South Carolina, right now. And I tell everybody if you could take Fort Worth and separate it from the DFW and put about 3,000 more living units downtown, it’d be Greenville.
So they’re just alike, which having his firm grow up here and my firm grow up in Fort Worth, I think creates a similar culture.
Francis: In terms of the geographic markets that you both serve, is there any overlap or are they all pretty separate?
Autrey: No, we don’t have any overlap. They’re separate. We’re just in Texas; they’re in Greenville, South Carolina, Columbia, South Carolina, Raleigh, Durham, North Carolina, Charlotte, North Carolina, Nashville, Tennessee, Chattanooga, Tennessee, and Augusta, Georgia.
Francis: In terms of the types of market that you serve, the businesses you serve, are there some similarities and differences there?
Autrey: We’ve always said our business in Houston and in Fort Worth is similar. When everybody left the client accounting services space, the outsourced accounting, we kept it. That gives us a small business bent all the way in Houston and Dallas, to companies. So, Dallas is probably a larger client market than any of our other markets. And the private equity piece of that market plays well with Charlotte and Greenville. I would say Dallas is probably a bigger client market than all of the other offices either firm has.
Francis: Are they in the energy space at all?
Autrey: They are not, no. There’s really not any energy in this (South Carolina) market at all, other than some alternative energy. So we’re both a little bit in that space, but no, in terms of oil and gas, there’s none up here.
Francis: In terms of number of employees, what does that look like?
Autrey: Yeah, there’s almost the same number of employees, somewhere around 700 in each. And depending on whether you pick full-time equivalents or pick… They actually do their internships in the summer, so they’ve got an extra 100 people in the summer that we don’t have. And in the spring we do ours and we have an extra 100. So, it’s that internship period probably being the only difference.
Francis: And you’re going to be co-CEOs?
Autrey: We are. Yeah, both of us are… Rick’s the old guy. He’s four days older than me.
Francis: Oh, wow.
Autrey: He was born on March 10 in ’62 and I was born on March 14 in ’62, so we’re 60 years old. Both of us had great leadership teams, but now we’ve got a great team. And so, no doubt that a CEO will come out of that after we transition.
Francis: What’s going to be considered the headquarters, or how are y’all working that out?
Autrey: We’re going to do a virtual headquarters, Greenville and Fort Worth. Both of us have almost our entire operations team in each location, and we’re going to share the operations team. I mean, the vision, obviously, is that this is a billion-dollar firm down the road. And so, we need to build a structure that can support that. In realizing that we’ve got teams in two different markets, we may end up with operations teams in multi-markets after that. I think maybe that’s one of the benefits of COVID, was that we kind of did learn how to run things from multiple locations.
We joked about the fact that Rick and I both own second homes in the mountains of North Carolina, in Cashiers, North Carolina. And so, some of our teams have said that we should name the headquarters Cashiers, North Carolina, which has about 300 people in it.
Francis: I’m sure whatever economic development team they have there, they would love it.
Autrey: But it’s been a good place for us to get away and be able to kind of work through the details of this without the hustle and bustle of our offices.
Francis: It sounds like you’re going to keep your office where it is at the moment for the next few years.
Autrey: Yes. I don’t envision us really changing much of anything in the local market. What we realize is that, I’ll use manufacturing as an example, because I think we have a really good manufacturing group in our firm, in Whitley Penn. But when you add what Elliott Davis has to it, then you create some real depth in the industries.
And you can take something like energy. Well, they don’t have any, so we’re not going to add anything from a national practice standpoint. But if you take almost all of the other, whether it’s technology or distribution, manufacturing distribution, even the hospitality or retail section, neither one of us had the depth we wanted, but now we do. So I think we can go after clients that are bigger, together, than we could without it. Now our banking practice is probably the one that becomes a national practice on day one, probably 350 banks and 50 credit unions combined. We become a national player on day one in that.
Francis: Are you seeing any particular growth areas in the industries you serve at the moment?
Autrey: Almost all industries are growing right now. The thing we probably both have been focused on is growing the consulting side of the business, the audit tax practice, long term businesses, both traditional, have some good growth in them right now. But the piece that we had not competed with probably the larger firms is the consulting practice. I think we’re seeing our consulting practice growing probably faster than anything else.
Francis: There obviously weren’t any big economic factors that really led to this, it doesn’t sound like.
Autrey: No, it was really that both of us wanted to be in growth markets. So we had both kind of said, “Let’s look at net migration states and net migration cities.” And when he came out of it, he said, “You know where that leads me?” And I said, “Yeah, I know. It leads you to my back door.”
And he said, “And yours leads me to my back door, so why would we go to each other’s market and kick each other’s teeth in when we’re a whole lot better together?”
Francis: You’d end up trading employees back and forth probably.
Autrey: Yeah. Trading employees, trading clients. And at the end of the day, nobody’s any better off.
The markets, there’s still net migration markets that we like. We still like the rest of the southeast, Florida, Georgia. And we, in fact, still like Oklahoma and Louisiana and Arkansas, because they’re close. We know the markets, they’re net migration states. So now it’s trying to find markets that are net migration, and in a couple of firms there’s some great national practices that we can take.
So we’ll continue to look at that area and stay with people – I’m trying to think of how to say this without being offensive – but people like us, that are… I mean, I said they talk like us, (which) is part of it. But I’m probably less comfortable in New York or Chicago or L.A. or San Francisco than I am in Texas, Tennessee, Georgia, Florida, the Carolinas, and business is just similar there.
Francis: In terms of the name, how long will that take to sort of transition to?
Autrey: I think we’ll be Elliott Penn on day one. So Nov. 1, that’ll be the name, and I think we’re designing logos and kind of ready to go.
Francis: When do you expect it to close then?
Autrey: Nov. 1 will be our official first day.
Francis: What law firm did you use to close the deal?
Autrey: The Elliott Davis firm used Nelson Mullins, and we used Jim Bradbury, who has been our longtime general counsel.
Francis: It seems like you tried to keep it fairly simple and that probably helped in a lot of ways, then.
Autrey: Like I say, I think the fact that we had trust from the beginning was a huge deal and that made it much more simple than a deal that size could have been.
Bob Francis is business editor for the Fort Worth Report. Contact him at firstname.lastname@example.org. At the Fort Worth Report, news decisions are made independently of our board members and financial supporters. Read more about our editorial independence policy here.