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April 30, 2008

New UHY International leader predicts 20 percent global growth

New UHY International leader predicts 20 percent global growth

An aggressive expansion strategy and strong services to the middle market have driven UHY International’s growth in the “20 percent range” during the past year, according to new president John Wolfgang.

The global head, who took office from former president Ladislav Hornan late last month, exclusively told IAB that UHY’s growth in terms of membership will be about 25 percent – which includes 15 new member firms in 2007. Wolfgang said the association’s revenue growth is driven by services to the “dynamic middle market”. “That is really where we play very well in the marketplace, both in the US from a national standpoint and I think globally in an international environment. That type of business is one we understand well,” he said.

He said drivers behind the growth vary: “I think in general it’s capital raising, it’s merger and acquisition work and it’s some of these target area services like the [US] Foreign Corrupt Practices Act and [UK] Money Laundering Act, and unfortunately some bankruptcy and insolvency areas.”

New firms UHY has recruited member firms in Colombia, Uruguay, Pakistan and Sri Lanka in recent months and negotiations are at an advanced stage over the addition of a new Irish firm. Wolfgang said the association is also investigating an opportunity in Kazakhstan, however, a new member firm in China is what he is most enthusiastic about.

“The one big country that we had a bit of a weakness in was China and we just changed our member in China this year,” Wolfgang said. The new firm, Vocation International, is the 11th-largest firm in China, with about 600 people, Wolfgang said. It is registered with the US Public Company Accounting Oversight Board and Wolfgang said the managing partner is very “Western thinking”.

UHY International was left without a Chinese member firm last year, when the association’s previous member elected to merge with a well-established Shanghai firm and a Guangzhou firm, with the aim of creating the fifth-largest firm in China. The impetus behind the merged entity came from the Chinese government, which seems intent on creating serious competition for the Big Four.

Wolfgang said the merged firm was determined to have an international affiliation with one of the ten largest international accounting bodies; therefore, the pitch from UHY to represent it was unsuccessful.

“We said we know we’re not a big ten, but look at us in a little different way than just revenue numbers,” Wolfgang said. “Look at us from a standpoint of revenue per office or revenue per staff and per partner. When you look at our numbers from that perspective, rather than just per total revenues, our rankings in there go up fairly substantially. What we tried to demonstrate to them all unsuccessfully was that we have larger officers, larger clients than many of the other networks that they might be looking at.”

The areas of activity in China that are of most interest to UHY are inward investment and global clients setting up operations.

Wolfgang, who is managing partner of US firm UHY Advisors, said he is seeing a lot of special-purpose acquisition companies that are raising millions of dollars of “blank cheque money” to be used for investment in China. UHY Advisors has about 12 clients that have a base in China.

Carolyn Canham

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