THERE ARE TIMES when running an international network of independent accountancy firms must feel like spinning plates; as soon as one plate is stabilised, another begins to wobble. Over the past 12 months, Jean Stephens, chief executive of RSM International, has been spinning more plates than most.
Thankfully for Stephens, the wobbles seem to be passing. Having lost its UK member firm, RSM Tenon, last year after it was merged into Baker Tilly following a pre-pack administration, RSM was set to be left with a gaping UK-sized hole in what Stephens describes as “critical market” for the network, while the network also parted company with its Canadian member firm.
Stephens managed to avoid having to plug the gap in its UK – and pull off a real coup – at the same time by bagging Baker Tilly as its newest UK member firm. Baker Tilly will formally join RSM International later this year on completion of a notice period with its former eponymously titled network Baker Tilly International.
Speaking to Accountancy Age, Stephens says last year was a “year of change and growth” for the seventh largest global accountancy network. Across the networks change is in the air, with national firms increasingly switching between global networks and alliances.
Last week, KPMG and EY in Denmark announced that they “reached an agreement on all outstanding issues associated with their respective Danish practices”, paving the way for KPMG’s Danish practice to become part of EY as of 1 July. While last year also saw Top 50 firms Littlejohn and Cooper Parry ditch former network PrimeGlobal to join PKF International, which itself had lost its UK member firm to BDO following a merger between the two firms.
“We are embracing the opportunity of change,” says Stephens. “I’m always very focused on ensuring we have a strategic direction. We like our firms to coincide with that strategy.”
The deal with Baker Tilly meets that strategy, Stephens says. As a “long-term firm” with “the depth of capability that comes with size”, Baker Tilly has a “natural alignment” with respect to its core values, focus on quality and aspirations for growth. At the same time, the deal makes sense for Baker Tilly, explains its managing partner Laurence Longe.
Amid the talk “natural alignment” between RSM, one of the clear benefits for Baker Tilly is the network’s strength in the US, which will lead to greater referral work for the firm.
“One of the main differences is Baker Tilly International is represented by some 13 members in the US, whereas RSM has a single, mid-tier member firm,” Longe says.
In reaching the agreement, RSM and Baker Tilly engaged in an “in-depth mutual due diligence process” that saw Stephens and Longe meeting member firms in Asia-Pacific, Latin America, Europe, Africa and the US so that they understood the culture of Baker Tilly and that both parties have “common aspirations”.
“It’s clear there is a strong cultural fit and alignment in vision and purpose,” Stephens says.
The tie-up between Baker Tilly UK and RSM Tenon created a firm of 3,500 partners and staff, at the time reporting a combined fee income of more than £300m. Although these figures are yet to be fully reflected in RSM International’s combined annual total income, which according to the latest Top 40 Networks survey stands at £4.2bn, Stephens expects the impact to be “significant” – though it may not be enough to leapfrog Grant Thornton into sixth place.
Nevertheless, Stephens is hopeful this will happen over the next 12 months. Indeed, the network, which is celebrating its 50th anniversary, has seen significant expansion in the past year with new member firms and correspondents in Brazil, Dominican Republic, Estonia, Finland, Ghana, Isle of Man, Japan, Qatar, Swaziland, Sweden and the UK.
Last year, the Chinese firms of RSM International and Crowe Howarth merged to create Ruihua China, the third-largest firm in the country with a combined revenue of £294m and 334 partners – although the practice remains tied to both networks. The network has also strengthened its presence in Africa with the admittance of SIAO Partners, Nigeria’s fifth-largest accounting firm by revenue.
“There is quite a bit of activity in Africa,” says Stephens, who adds there will be “more focus” on the region where RSM already has member firms in Botswana, Kenya, Mauritania, South Africa and Tanszania as well as its North African members.
RSM stretches across 106 countries and has added 14 new member firms and correspondents in the past year, but Stephens says it is “not about having dots on the map”.
“We go where our clients have the most need,” she says. “We recognise we need a view of the future. But, we’re building relationships and taking the time we need to look at five years, ten years out and how we can build sustainably.”
Jean Stephens CV
1990-1994 Auditor, Fleming Reiss & Company
1996 – 2004 Chief operating officer, RSM International
2005 – Present Chief executive office, RSM International
RSM International Facts & Figures
2014 Top 40 Networks ranking: 7
Combined annual total income: £4.2bn
Percentage change on 2013: 5.8%
No of firms: 85
No of countries: 107
No of partners: 2,781
The deadline for entries into the profession’s awards expires tomorrow, 29 July.
UHY Hacker Young, the national accountancy group, has named Chris Smith as a new partner in its London office
Sachin Ramaiya joined Jeffreys Henry as audit supervisor in 2007 having previously worked at PwC
Student numbers among the main professional bodies have declined over the past four years. Simon Wright at CareersinAudit.com looks at why this might be happening and the call to action for the profession