Horwath International’s medium-term goal is to climb from its
position as the ninth-largest global accounting network in terms of
fee income into the top seven within four years. “To achieve that
we would have to be one of the top ten in Europe. It’s basically
what we are committed to,” the network’s regional director for
Europe, the Middle East and Africa, Bernard Delomenie, told

This month, Horwath secured a sizeable new French network of 12
firms called Horwath Partenaires France. Despite the addition,
Delomenie said, the network is only the 13th largest in Europe – a
contrast to its position elsewhere in the world. The network’s US
representative, Crowe Chizek, is the country’s seventh largest. In
the key markets of China and Australia, Horwath member firms are
fifth, and a recently secured Russian firm is estimated as seventh
largest in the country.

Breaking into the European top ten will not be easy for Horwath
because most of its competitors are based in the UK. Delomenie
said: “It is therefore very difficult for our member firm in the
UK, Horwath Clark Whitehill (HCW), to become as big as our global
competitors are. HCW is very good and growing, but they cannot
compete in size with BDO, [Grant Thornton] or Baker Tilly in the
UK, and considering the importance of the UK in the profession, we
need to compensate in the rest of Europe.”

A good year

The addition of the new French network comes on the back of a good
year of recruitment for Horwath International. In the past 12
months the network added Australia-based WHK Group, Greek audit
firm SOL – which Delomenie said audits about 60 percent of the
Greece’s stock exchange – and the new member in Russia.

The Russian and Greek representatives are not yet full members of
Horwath International and don’t carry the network’s name. Delomenie
explained that this is due to Forum of Firms requirements and will
change when the new representatives’ audit methodology is fully
compliant with the rest of the network for transnational clients.
“We are spending a lot of time training people [in Russia] and we
believe it is going very well. It is the fastest-growing Russian
firm today,” Delomenie said, adding that the largest Horwath client
in the world is Russian oil giant Rosneft.

Other developments from the past 12 months include the
reorganisation of Swedish firms and a new addition in Tanzania.
Horwath also expects to announce a large signing in Dubai soon.
“This firm is number five or six in the [United Arab Emirates] and
Oman. It is a very big firm and it will totally change our position
in the Middle East,” Delomenie revealed.

The current recruitment focus for the network includes the Baltic
region, Serbia, Bulgaria and Central Asian countries such as
Kazakhstan, Uzbekistan and Kurdistan. The network is also looking
to increase its presence in Italy, and northern and western
Germany. Delomenie said growth could come from a combination of
organic growth and merger and acquisitions: “We would be always
willing to look towards other firms, but we believe we have very
strong foundations now in the key markets – the UK, Germany,
France, Italy, Spain and Russia. We have very good firms in those
six countries, we are happy about it, and we want to grow around
that. If other people approached us, they would have to discuss
with our current member firms.”

Horwath International chief executive Frank Arford says that
Horwath is in growth mode. “We’d like them to get in the position
of getting recognised as market leaders,” he said. “We’re trying to
work towards good strategic alignment of our large firms in terms
of which market segments they are going to focus on and alignment
in terms of allocating resources to build speciality consulting
areas. We also have an initiative we call the demand creation
initiative and that has two purposes. One is to help, through
training, our member firms become more effective at generating
business. The second is to help them really create within their
firms a formal sales management process so they know the prospects
in their new business pipelines and they’re tracking them and
working on them.”


Middle market focus

Internationally, the network’s strategy is to focus on serving
clients in the middle market and, in some cases, larger clients.
“We would like to be able to deliver those services across borders
anywhere in the world to those middle-market clients,” Arford said,
adding that speciality areas include international tax, risk
consulting and corporate finance.

Horwath International believes it falls under the International
Federation of Accountants’ definition of a ‘network’. Arford
explained: “We already have created common standards, but through
training and inspections we are working hard at having all of our
member firms follow and apply the common standards. We’re not quite
there yet, but I’d say that we’re making really good progress. In
2008 we were able to become a full member firm of the Forum of
Firms. That took quite a lot of work in 2007, so that was one
indication of that fact that we want to have worldwide

With membership of the Forum of Firms secured, focuses in 2008
include identifying how to comply with the independence standards
for assurance and developing prospects for speciality

The new French representative, Horwath Partenaires France, is a
national network that was formed from two previous groups – former
members of the Constantin network plus Didier Kling and Associates,
Dauge & Associés and Fidelio. The member firms’ combined fee
income of about €40 million ($58.2 million) in 2007 includes
revenues of €20 million from in and around Paris. Horwath says the
network is placed within the top ten groups registered with the
French regulator to perform statutory audits in the country.

Delomenie said there is “very good chemistry” between the firms:
“We believe it is going very well. There is a very good momentum
and we believe it will grow even more.”

Marc de Premare is a member of the Horwath Partenaires France
executive committee and is in charge of international relations
within Horwath International. He was also a partner at Horwath’s
previous representative, Constantin, before it merged with Deloitte
France. There were two reasons why de Premare decided to stay with
Horwath. The first was to provide a continuity of services to
clients and the second was to continue a “strong relationship” with
many of the Horwath member firms throughout the world. “I also
wanted to leverage on the growth of the Horwath network, being one
of the key pieces of the new organisation in France,” de Premare

On the hunt

The key targets for the new firm in the year ahead will be sharing
expertise within working committees and recruiting new member firms
for the French network. de Premare said the network is looking for
new members in specific geographic locations, as well as ones that
can add areas of expertise. Other criteria are that firms have
strong positions in their regions, partners with a willingness to
co-operate and an independent strategy for their own firm.

Another challenge will be increasing Horwath’s brand recognition in
France. It is quite low at present because Constantin did not carry
the Horwath name, de Premare said.

Brand recognition is not just an issue for Horwath in France. The
US member firm – Crowe Chizek – also does not currently carry the
Horwath name. “They’re working hard on [adopting the Horwath
name],” Arford said. “It’s a difficult process in the US, they
literally have to apply in all of the 50 states and it’s taking a
lot of time… they’ve been working on that for nine months, trying
to go through all 50 states, but they’re making good process and I
think they’ll be finished up this summer some time.”

The US firm is also trying to build its geographic presence on the
East and West Coasts. Arford said Crowe Chizek will look for
well-established firms and there are also plans to expand coverage
in the western provinces of Canada.

Carolyn Canham