merican Express Tax and Business Services (TBS) announced on July 13, 1998, that it had acquired the non-attest assets of Goldstein Golub Kessler & Company (GGK), which according to TBS is the largest single-office accounting firm in the United States, employing more than 400 people. TBS also named GGK Chair and Managing Partner Gerald L. Golub Chairman of TBS and promoted acting CEO Jeff Yabuki to CEO of TBS.

TBS says that the organizational structure for providing services to GGK clients is similar to the one used by Checkers Simon & Rosner in Chicago (see The CPA Journal, February 1997). TBS provides all the services to the former GGK clients except attest services, which are performed by GGK LLP using staff leased from TBS.

The acquisition of the GGK assets represents the long-awaited breakthrough by TBS into the New York market. According to a TBS spokesperson, TBS was able to reach an agreement with the New York State Education Department (SED) that would enable it to provide the nonattest services that GGK previously provided. Much of this work is performed by or under the supervision of CPAs, who would use that designation in providing those services. SED, according to an article last year in Accounting Today, had had questions as to whether the TBS model could be used under the regulatory structure in New York.

AICPA chair Stuart Kessler, a partner of GGK, on the same day wrote to many of his colleagues in the profession informing them of the "merger" but stating that he had not participated in the discussions or negotiations with TBS. He went on to say that he intended to serve out his term as chair and that he looked forward to a "bright future for my firm, and our profession."

No price was disclosed for the acquisition. The usual TBS price is in the neighborhood of .8 to 1 times annual billings. It is unknown whether there was a premium paid to break into the New York market. GGK's revenues are estimated to be in the $50 million range.

According to a 1997 Public Accounting Report survey, GGK had 20 SEC clients. GGK may be the first of the TBS acquisitions to audit SEC registrants, and it remains to be seen how the SEC will view the TBS/GGK arrangement for audits of public companies.

Yabuki has been with TBS since 1987 and has been acting CEO since the departure of Robert Basten in March 1998. In addition to serving as chair of TBS, Golub will be responsible for the New York operations of TBS.