Construction Expertise Prompts Mechanical Contractor’s Return to Barnes Dennig & Company for Corporate Acquisition
Company called former audit and tax advisor for advice on limiting the tax consequences when buying firm back from parent.
In the spring of 2003, Scott Teepe decided to buy his company back.
Teepe, president and CEO of TP Mechanical Contractors—a plumbing and mechanical design and installation company with locations in Cincinnati, Columbus, Indianapolis and Louisville—gathered his management team. He proposed to purchase his company’s division from American Plumbing & Mechanical, Inc. (AMPAM), a national conglomerate formed in 1999 with the merger of 10 similar companies.
The team agreed, and Mark Moler, controller, suggested that the company select an outside accounting firm to review the purchase proposal and its structure. His choice? Barnes Dennig & Company, who had managed the company’s corporate financial statement, audits, and corporate and individual tax consulting work before.
“We worked with Barnes Dennig for a couple of years before we joined AMPAM,” recalls Moler, who notes that AMPAM transferred all audit and taxation work to two different large, international accounting firms during the interceding four years. “I wanted to bring back Barnes Dennig because of their expertise in the construction and contracting field.”
Moler contacted Steve Hube, a director at Barnes Dennig, in July 2003. Together, Hube and Dave Phelps, senior tax manager at Barnes Dennig, reviewed the purchase proposal that TP Mechanical’s management team and attorneys had put together.
“As we looked at the initial transaction, we noticed that it was structured in such a way as to create significant tax consequences to TP Mechanical,” says Hube.
“So we recommended a different approach,” adds Phelps. “Structuring the arrangement into different layers of ownership for the actual working business entity saved the shareholders substantial amounts of tax dollars.”
Hube and Phelps also recommended changing a few positions on the allocation of the purchase price with respect to contractor claims, thereby saving TP Mechanical additional taxes.
Teepe and Moler agreed with the recommended course of action, and the deal went through in just over three months—with TP Mechanical’s new ownership finalized in early October 2003. “Barnes Dennig led us through that transition period, and they developed some really good tax-savings ideas and suggestions,” says Moler. “They got us where we are today.”
So pleased was Moler with Barnes Dennig’s work in restructuring the company’s acquisition, there was no question that he also wanted the firm to again provide accounting, audit, and tax services.
“If we wanted to compare the auditors we’ve worked with over the past few years, Barnes Dennig asks the good, solid construction-practice related questions that the other firms just didn’t have a clue about,” Moler says. “Steve and Dave ask us things that somebody who didn’t know our industry wouldn’t think to ask, but probably should.”
About Barnes Dennig & Company
Barnes, Dennig & Company is the area’s second largest locally based CPA firm and a leader in providing business counsel to tax, accounting and consulting clients throughout the region. The firm offers a complete array of professional services that includes financial reporting, financial analysis, tax service, and business advisory services.
The firm’s consulting expertise includes estate planning, retirement planning, business valuation, costing and pricing consulting, and profit improvement. Strategic planning, succession planning, performance-based compensation, and organizational development consulting are available through the firm’s alliance with Partners In Change LLC. Technology consulting is available through the firm’s IT consulting subsidiary, Vero Software.
For more information, please visit www.barnesdennig.com, or call 513-241-8313.
About TP Mechanical Contractors
TP Mechanical Contractors provides both design/build and plan & spec mechanical contracting services, such as plumbing, HVAC piping, sheet metal, specialty and process piping, fire protection, maintenance, and service contracts to a variety of commercial and industrial markets.
The company’s commercial customers include medical and pharmaceutical companies, office buildings and towers, distribution and warehousing, hotels and motels, research and development laboratories, multi-family residential complexes, light commercial facilities, retail-entertainment-recreational buildings, universities and colleges, and institutional facilities. Industrial customers include water treatment plants, petro-chemical factories, pulp and paper mills, steel and aluminum processors, foundries, food and beverage manufacturers, and specialty plants and mills.
TP Mechanical employs about 500 at locations in Cincinnati, Columbus, Indianapolis, and Louisville. For more information, please visit www.tpmechanical.com, or call (513) 851-8881.