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March 1, 2010

Financial crisis causing firms to consolidate

The economic downturn has led
accounting firms to consider their M&A strategies, according to
senior figures from Baker Tilly International, UHY International
and MSI Global Alliance.

Baker Tilly International chief operating
officer Paul Ginman told a round table discussion in London last
month that consolidation presented accounting networks with a new
set of challenges on how to balance geographical membership.

“We are witnessing increased levels of
consolidation in the profession. Individual firms are assessing
their own situation and, depending on their position, selling or
acquiring,” he said.

“Networks have to consider the implications of
that on their membership – ultimately they could end up with
stronger or weaker coverage.

“Consolidation is an opportunity for firms and
I suspect most accounting firms in the Western world are talking to
someone else.”

James Mendelssohn, the chief executive of
multi-disciplinary association MSI Global Alliance, added: “I think
running a network or association you are always aware of the firms
that are good – you know, it is the nature of the beast.

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“The current climate is forcing people to
think more carefully and look at things more closely than in good
times.”

UHY International executive director James
Vrac paints a different picture.

Vrac says UHY International member firms are
less interested in mergers and acquisitions and more looking at
leveraging network resources and working together to gain an
advantage across service lines.

“We are not seeing firms talking about mergers
and acquisitions so much, as they are talking about expanding
service lines as a strategy for dealing with precarious financial
conditions,” he said.

In Asia, however, this is less so. Vrac said:
“I think that in some parts of Asia the regulatory environment is a
little less onerous than in developed economies, so they perhaps
have more flexibility and entrepreneurial spirit to start engaging
with firms they want to affiliate with or network with locally as a
form of protection.”

 

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