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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.

“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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