Defections, Merger Shake Up Closed World : Hollywood: Breakup of Breslauer, Jacobson, Rutman & Chapman changes the status quo of managers’ world.

It isn’t often that the secretive world of Hollywood business managers is shaken up, probably due in part to its origins in the staid world of accounting.

But that’s what happened this week when three partners with the elite firm of Breslauer, Jacobson, Rutman & Chapman chose to leave to form their own company.

The defections of Nancy Chapman, Terry Bird and Bonnie Grey proved the catalyst that prompted what remains of the Breslauer firm to merge with competitor Siegel, Feldstein, Duffin & Vuylsteke, a West Los Angeles accounting firm specializing in entertainment that has enjoyed close links to the music industry.

At stake is the day-to-day accounting that goes on behind the scenes involving millions of dollars earned by Hollywood’s top stars, directors, musicians and executives. Despite inroads by major accounting firms over the years, the business largely remains in the hands of a few boutique firms that clients use largely because they push highly personal service.

The very low profile Gerald Breslauer for years has been widely regarded as something like Hollywood’s unofficial chief financial officer, handling money and helping invest funds for the likes of David Geffen, Steven Spielberg, Michael Jackson and Bruce Springsteen. In large part, Breslauer’s firm has grown thanks to referrals from prominent Hollywood lawyer Barry Hirsch and the influential Creative Artists Agency.

Breslauer, through a spokesman, declined to discuss the events. But in a statement Thursday, Breslauer said that the merger with Siegel, Feldstein gives the firm better geographic representation in New York, San Francisco and Boston and “access to a larger pool of competition professions” to serve clients.

In an interview, partner Barry Siegel said that the merger should be completed by May 1. The name of the new firm has not been decided, although Siegel said one possibility is that there will be a new umbrella name under which each firm would operate as a division.

In a statement, Chapman, Bird and Grey said they chose to leave because of a “shared business objective and mutual desire to offer more personalized yet sophisticated hands-on financial and business management services” to clients.

Which clients will chose which firm in the split up is still being decided. But sources note that Breslauer--who started in the business in 1951 out of UCLA--commands an unusually high degree of loyalty and trust in Hollywood.

In 1990, sources close to Breslauer estimated that his management company directly managed about $750 million in assets.

One of Breslauer’s most visible deals--one that proved to be ill-fated--involved investing in the parent of Mercantile National Bank in Century City. Breslauer had long dreamed of creating a business managers’ bank and helped spearhead an investment group that included Creative Artists Agency and such stars as Demi Moore, Tina Turner and Richard Dreyfuss.

But Mercantile National, hit hard by real estate-related losses shortly after the investment was made, was told by regulators to improve its financial condition.