August 1999

BOWMAN'S ACCOUNTING REPORT ANALYZES THE CENTERPOINT ROLL-UP

As reported in last month's News and Views, CenterPoint Advisors, under the leadership of Robert Basten, has filed a registration statement with the SEC to go public. The organization includes eight CPA firms with revenues of about $150 million and a number of complementary organizations in the insurance and group benefits business.

Bowman's Accounting Report, in its April issue, analyzed the roll-up and the financial rewards to the consolidating firms. The new organization will operate along the American Express Tax and Business Services model, with shell CPA firms doing attest services using employees leased from CenterPoint. The nonattest accounting practices will be operated by CenterPoint Advisors (originally known as Cornerstone Professional Advisors), which rumor says will have another name change, presumably retaining the CPA acronym.

The roll-up and securities offering will result in cash and stock payments to the firms of on average 1.5 times revenue, which will result in goodwill of approximately $234 million. Bowman's details the complicated manner in which the compensation of the firms will be split. In essence, CenterPoint gets the first slice of earnings before payments to the CPA firms' owners. But the selling owners, who will be receiving less cash compensation, will have the potential of increases in their CenterPoint share holdings, and undoubtedly there will be stock options and other compensation incentives to motivate existing employees and attract talent. *

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