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.