Can the accountancy profession find a way to build a sustainable future among great disruption? Vipul Sheth looks for an answer.
Is it all quiet on the Western Front? It’s fair to say that, in the battle for the future ownership of the accountancy market, there is a slight lull in proceedings.
The last few years have seen dozens of financiers providing a war chest to firms in an attempt to build scale, efficiencies, broader services and broader reach. There can be no doubt that the landscape for accountancy and advisory services has been disrupted.
But, with so many deals made and players looking at similar types of acquisitions and bolt-ons, it feels like the dealmaking has dried out for the moment. It should also be noted that private equity runs in investment lifecycles – and there will be a period of bedding in and integrating the various assets at play. So, what next?
There are tales of disgruntled staff and disgruntled clients among some of these new model firms – certainly there are independent practices that have taken opportunities to bulk up on new people and new customers.
We haven’t seen a collapse though – certainly nothing to compare to the demise of the trio of consolidators 15-20 years ago; namely: Tenon, Vantis and Numerica. And then there’s the independent firms. I recently wrote a blog about their potential – certainly focusing on differentiating themselves from the pack.
Ultimately, both types of practices have succession issues to resolve – and resolution will be a critical part of their strategy. Simply, for the PE-backed practices, they must grow and be more efficient while keeping their people and their clients happy – and then they will have to find a new owner to take it to the next level. So far, we haven’t seen any huge PE flipping going on… and one wonders how much driving of EBITDA can be achieved without both great ambition and application.
Independent firms are, ironically, in a similar boat: to grow, improve and then find someone to take their practice onto the next level. Can they find people internally to buy out the existing owner-partners? Even in a ‘custodian’ model where goodwill isn’t a factor, finding the next sets of hands to steer things is far from easy.
Succession (i.e. a sale) is, in some ways, the tail wagging the dog for both types of practice. Setting out a great strategy that shows a knowledge of the clientele, what to serve them and done in an efficient, high-quality, manner, will make your practice attractive for either private equity or the next generation of accountancy owners.
Vipul Sheth is founder and MD of Advancetrack
