Simon Michaels has big boots to fill. His predecessor Jeremy Newman was a high-profile figure in the UK accounting profession who led BDO Stoy Hayward for seven years, increasing the firm’s revenue from £201 million ($392 million) in 2001 to £350 million in 2008.
Michaels says he will stamp his own management style and approach to the role. “My challenges and those of the business are different now,” he says. “They are different because we have an improved market position and the economy is going to be more challenging over the next couple of years than it has been over the last few years. It is not about doing things differently for the sake of it, it is about the fact that the business will need other things over the years to come.”
Increasing market share
Michaels admits to being hugely ambitious despite a deepening sense of economic unease among the UK public. He wants to improve the firm’s position and grow ahead of the market. At present, the firm has about 3 percent market share.
“As a business we are very keen to use the challenges in the marketplace as an opportunity for us to invest and grow,” Michaels says. “There is a huge gap between Grant Thornton and ourselves, and the Big Four, and what I want us to do is to dominate that gap in the market.”
|Simon Michaels, BDO Stoy Hayward|
Michaels also wants to break down some of the barriers and prejudices he believes exist in the marketplace in order for BDO Stoy Hayward to gain a greater market share of large listed clients. “We don’t want to be Big Five,” he adds. “What we want to be is the most distinctive player in the marketplace and to have a very clear identity in an otherwise grey market where all firms are seen to be broadly the same.”
The firm is on the lookout for further mergers or acquisitions where they exist, following its acquisition of actuary and pension firm Wolanski Checkley Fisher in April and tax specialists Chiltern last year.
Michaels anticipates fierce competition from the Big Four over the next few years in assurance and audit but tax and advisory remain two key areas that offer big opportunities for the firm. These openings exist in the traditional advisory services lines of corporate finance, restructuring and forensic but also outsourcing.
“Increasing complexity in the tax market is marginalising some of the smaller players, which is creating more opportunity,” he says. “There are conflicts of interest which are providing us with more opportunity to win more market share.”
The firm’s leadership structure has been one of the first areas to change under Michaels’ stewardship. BDO’s leadership team has shifted from a geographical-led emphasis to a matrix where services lines, geographical areas, clients and markets are all represented.
“That system makes sure that right at the top of the organisation all the relevant constituent parts are represented, including our people,” Michaels says. “We have our head of people there to make sure we are engaging with the business and we are giving our people everything they need.”
Clients’ needs are firmly at the heart of Michaels’ approach to the business as is his desire to ensure BDO is the most cohesive firm in the market.
“The philosophy I have is that we put clients absolutely at the heart of everything we do and, secondly, we operate as one firm, so we are the most joined-up organisation in the profession,” he notes. “Clients get absolutely everything BDO has to offer, we bring the right skills to the table, but we don’t have these [service] silos that exist elsewhere.”
While Michaels’ predecessor became well-known as a vocal commentator in the competition and choice debate, he singles out governance as a hugely important area he will pay attention to.
“Governance is at the forefront of investors’ minds,” he says. “For the market to have confidence in the accounting profession, to the extent there is that public interest element, it is very important the profession is seen to adopt the highest levels of corporate governance, but also to put itself at the forefront of industry discussions with regards to governance.”
The new BDO leader revels in the competitive environment offered by his firm’s rivalry with Grant Thornton but he won’t be drawn into a slanging match.
“I find it stimulating having some competition,” he says. “Growth and where you are in rankings are important but it is not the be-all and end-all.
“The more important bit is around the market proposition and position, and the long-term sustainability you can get from getting that bit right. Securing leadership positions in your target market is more meaningful than the league tables.”