All-Ireland movement gathers
pace

Within the past 18 months, three Irish firms have been involved
in mergers and acquisitions that created all-Ireland practices.
Carolyn Canham discovers that changes in the
political climate have encouraged a much closer relationship
between the Republic of Ireland and Northern Ireland economies.

On 13 October 2006, the UK and Irish governments, together with
the major political parties in Northern Ireland, initiated the St
Andrews Agreement, which set forth a roadmap for the devolution of
power in Northern Ireland. This marked the final stage of a peace
process that began with a cease-fire in 1994.

In the month prior to the St Andrews Agreement, Praxity Global
Alliance member Farrell Grant Sparks was involved in a merger that
created an all-Ireland firm. During the 12 months following the
agreement, two other mid-tier accounting firms pursued similar
all-Ireland practices: Baker Tilly O’Hare merged with PKF Ryan
Glennon to create Baker Tilly Ryan Glennon, and Mazars Ireland
acquired a Northern Ireland specialist team focusing on the
construction sector.

Mazars Ireland managing partner Joe Carr tells IAB the
peace process has led to Northern Ireland and the Republic of
Ireland growing towards a single economy. Baker Tilly Ryan Glennon
managing partner John Glennon agrees, adding this was the main
motivation behind the firm becoming an all-Ireland practice.

“Our clients, particularly in property [and] construction, began to
see the opportunities in Northern Ireland as the peace process
emerged and started doing business in Northern Ireland… so that’s
why we needed a Northern Ireland presence,” Glennon says. “Ireland
is a very open economy so people tend to look outwards for
expansion; the whole economy is export-based.”

An inspiration

Glennon calls the peace process inspirational, especially the
co-operation between the Northern Ireland First Minister Ian
Paisley from the Democratic Unionist Party and his former political
adversary, Deputy First Minister Martin McGuiness from Sinn
Féin.

“I can remember travelling to Northern Ireland during the troubled
times because we always alternated [Institute of Chartered
Accountants in Ireland – ICAI] meetings between Dublin and Belfast,
and British soldiers were driving around in armoured cars. Now when
you visit, it’s just a completely different place,” Glennon
recalls. “Ian Paisley opened our new institute premises [in 2007] and he gave an absolutely brilliant speech – he is the previous
enemy of the southern Irish and he was encouraging southerners to
come up and invest and participate in business life.

“Truly, there wasn’t much business done across the border during
The Troubles and now it’s great. Even from the internal running of
the firm, we would never have recruited in universities in Northern
Ireland; we now do. We recruit, we pool staff with our Northern
Ireland practices, we market jointly as one brand… there’s no
issues with southern staff selling [services] into the northern
client base and I’m not so sure ten years ago whether that would
have been the case.”

KPMG Ireland has been an all-Ireland firm since 1974 when it opened
an office in Belfast. The firm’s managing partner, Terrence
O’Rourke, has also noticed an increase in cross-border business in
recent years, particularly in the property sector. “A lot of Irish
property developers started looking in Belfast for opportunities
and around the north of Ireland,” he says.

Being an all-Ireland practice has benefited KPMG in a number of
ways, O’Rourke claims. “Telecommunications clients, consumers,
consumer market clients like the drinks industry, and all the rest,
they look at Ireland as an all-Ireland economy. For those people
looking for support from their tax advisory and auditors, it was
great to be able to give them that service – so I think it is a
definite benefit to us,” O’Rourke says.

One thing that has helped facilitate the movement towards
all-Ireland accounting practices is the fact that the profession’s
regulator, the ICAI, is an all-Ireland body, so the firms are
regulated on an all-Ireland basis.

The institute tries very hard to ensure the regulations it develops
work on both sides of the border, O’Rourke claims. “That kind of
attitude that the ICAI had, supporting firms that want to operate
across the border in Ireland, has been great because it has meant
that some of the difficulties we could have had, by having to have
two sets of internal regulations or two sets of auditing
methodology just doesn’t happen because the ICAI supports all
all-Ireland practice,” the KPMG managing partner says.

Having different currencies in the two fiscal jurisdictions is the
biggest challenge Mazars has faced in its all-Ireland practice,
Carr says. “Being non-eurozone [in Northern Ireland] certainly does
get in the way, but that’s probably the primary thing,” he
explains.

More to come

In addition to the encouraging political situation, the EU 8th
Company Law Directive, which comes into play this year and allows
auditors qualified to work in one European country to sign off on
audits in other European countries, will also encourage
cross-border mergers throughout Europe, O’Rourke says. “The
traditional issues in the world of globalisation and technology,
and obviously the European regimes and single currency, are making
borders less of an issue. I suspect it may happen that there will
be more of that,” he says.

O’Rourke, Carr and Glennon all forecast the establishment of more
all-Ireland firms. Carr says it makes absolute business sense for
service companies to work on an all- Ireland basis. “Those that
don’t do that, I think in time will be disadvantaged. So I would
certainly see this trend continuing… it just makes an awful lot of
sense for a business,” he says.