Houston-Based Accounting Firm Merges with Six Other Companies.(Knight Ridder/Tribune Business News)

Jul. 19--After two years of negotiations, the largest Houston-based accounting firm has merged with six other companies to create the nation's 13th largest accounting firm.

Mann Frankfort Stein & Lipp joined forces with four other accounting firms and two consulting companies to form Centerprise Advisors, based in Chicago.

"Mann Frankfort will still handle all clients in Houston, but if our offices don't have an expertise, they will seek help from our affiliates," said Milton Frankfort, the firm's managing director.

The deal, announced Tuesday, comes after the accounting firms scrapped plans late last year to create the same company and take it public.

All but one of the firms will retain their names. Brunswick Integrated Computer Solutions, which has its principal offices in Dallas and Akron, Ohio, will change its name to Centerprise Information Solutions.

"They've formalized something that other firms are doing informally -- setting up alliances with other CPA and service providers," said Arthur Bowman, publisher of the Atlanta trade journal Bowman's Accounting Report.

"There is a lot of belief that the one-stop shop is the way to go, but the jury is still out if (Centerprise's) way is the best way to do it, or to do it through soft alliances," he says.

Centerprise will target its consulting and tax services to privately held companies with revenues of $5 million to $100 million.

The new umbrella firm will be headed by Chairman and Chief Executive Officer Robert Basten and Vice Chairman Richard Stein, a member of the management committee at Mann Frankfort.

Before spearheading the Centerprise deal, Basten was CEO of American Express Tax and Business Services, the division of the financial services giant that began the consolidation trend among regional accounting firms.

Originally, the Centerprise deal was conceived as a merger of 11 regional accounting and consulting firms. The principals in the firms were going to swap their ownership stakes for stock in Centerprise.

Then, an initial public offering of 10.5 million shares in Centerprise was going to be taken to the market priced between $11.50 and $13.50 per share.

Despite getting the Securities and Exchange Commission to approve the filing, Basten called off Centerprise's IPO in November. At the time, he cited poor market conditions.

Several factors came together to make it a less than ideal time to take an accounting business public. At the end of 1999, investors enamored of Internet stocks paid scarce attention to anything without a dot-com appendage.

Plummeting stock prices for Century Business Services, a publicly held consolidator that has grown by following the American Express model of buying the tax and consulting portions of certified public accounting firms, further dried up interest.

The final complication may have been the SEC's ruling that Centerprise would have to write off its good will -- the premium paid for acquisitions exceeding the book value -- in 15 years rather than the old 40-year timeframe.

But the formation of Centerprise lays the groundwork for an effort to revive Wall Street interest in the company.

"There are no immediate plans to take it public," Frankfort said, "but the ultimate goal is that Centerprise will grow and become a public company."

To underscore that commitment, Mann Frankfort has offered its 225 employees stock options in the privately held Centerprise.

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