Steven Kass: Rothstein Kass and KPMG is a “Hand in Glove” Fit

Just a couple of weeks after the official announcement of the KPMG acquisition of Rothstein Kass, RK MP Steven Kass expresses strong optimism for the future and tells IPA how the move is a natural evolution for his firm.

Steven Kass

Steven Kass

“The world of business isn’t stagnant,” Kass says. “We weren’t exploring opportunities and we weren’t for sale.” But Kass also recognized that the financial services arena that RK serves has changed considerably in recent years. “The financial sector has become more diverse, clients are becoming more global and more institutional in nature,” Kass adds. “The financial services industry is becoming more sophisticated, and we needed to evolve.”

Dispelling a long string of rumors about RK shopping for buyers, Kass tells IPA that KPMG approached RK in January 2014 to share a vision of the possibilities if the two firms united. “Our first meeting lasted over five hours,” Kass says. “We spent a lot of time talking about core values and philosophies regarding both client service and approach to our people.” RK has always prided itself on being a high-performance firm with a high-performance culture. Kass says he felt incredibly comfortable talking about common philosophies, and in the end felt that the combination with KPMG was a “hand in glove” fit.

Kass acknowledges that much of his career has been spent differentiating RK from the Big 4, so how does his firm now pivot to being “one of them?” “It’s an easy conversation with clients,” Kass says. With the ever-changing business environment and an increasingly sophisticated client base, this is the “perfect next step” for RK.

According to Kass, the only segment of RK that is not joining KPMG is the family office group, which has spun off from the firm. Kass rejects the notion that there will be major layoffs as a result of the acquisition, which has occurred in previous large acquisitions within the accounting profession. “This is a complementary play, not a cost-cutting measure, so there is very little redundancy among staff,” he adds. He acknowledges that any time there is significant change in an organization, there is always the possibility of losing employees, but he feels strongly that the vast majority of the RK staff will thrive in a KPMG environment. “I’ve always been a people person, and their [RK staff’s] opportunity to succeed has always been important to me,” Kass tells IPA. Feedback from staff has been positive, he says.

Several MPs of New York-area firms have indicated to IPA that they are watching developments closely. Reactions to the deal have varied from “we’re looking for opportunities to pick up staff and clients” to a strong interest in the economics of the deal and how either side comes out ahead. Kass acknowledges that some of his counterparts are quite curious about the deal.

“We told some of our friendly competitors about it before the deal was announced, but haven’t had the in-depth conversations with other MPs,” Kass says, adding that he has been busy and “deep in the integration process.”

The deal with KPMG is expected to close June 30. Kass says that when he talks to other firms, he will not discuss details because both sides signed non-disclosure agreements.

When asked if this deal signals any shift in strategy among the Big 4 looking to expand by aggressively pursuing Top 50 firms, Kass is clear. “I don’t see this as the tip of any iceberg. This was a unique situation and I expect it to remain unique.”

At 57, Kass still has a long career ahead of him, and an integral leadership role to fill in the alternative investment practice of his new firm, KPMG. “This is an exciting time,” says Kass. “We’re really looking forward to being one firm and moving forward together.”

View IPA’s June 4th story, KPMG Acquires IPA 25 Firm Enhancing Alternative Investment Practice.