MENZIES’ STRATEGY of deepening its strength in London, as evidenced by the acquisition of TAL-London in August, has been in gestation for a long time.
Track back three years, and the acquisition of Morley Scott in 2009 signalled the firm’s intent, which was bolstered by its entry into HLB International a year later, following the collapse of Vantis and its subsequent omission from the international network.
Ostensibly, the Morley Scott deal was part of a strategy to focus on SMEs and smaller corporates by providing them with specialist accountancy and tax advice. However, the deal also gave Menzies its first office in the capital – but not to the size necessary to fulfil its ambitions.
“We had got to the size where we needed to have a London office. Morley Scott’s London office generated about £3m in fees. It was too small to fit our profile for London, but we acquired it as a step in a building our London presence. It was a good fit in other areas,” says Menzies managing partner Julie Adams.
In many ways, the Morley Scott deal was a precursor to Menzies’ latest acquisition. Similar to Reeves, which merged with City-based financial consulting group FW Stephens in June 2010, Adams says having critical mass in London has opened up a gateway to winning more international business.
The acquisition of TAL-London, previously the London operation of Target Consulting, has doubled Menzies’ presence in the capital, creating a £10m offering, and gave the offices’ customers access to international capabilities. The fact that a former Menzies manager was at TAL only helped to smooth the deal.
“We have been looking for a suitable partner to deepen our strength in London, so were very interested when one of our former managers, who is now a director in TAL-London, approached us to advise that their management team was considering a merger with another firm,” says Adams.
“Since it is so readily identifiable, we wanted to be in London to raise our profile with international clients.”
This is just one plank of the mid-tier firm’s growth strategy, which has included a series of acquisitions in the past year that have added new service lines and bolstered its consultancy capabilities.
September 2011 saw Menzies expand into business recovery when it picked up the London office of insolvency specialist Benedict McQueen, the London representative of accountant Benedict Mackenzie.
The start of 2012 had the firm dipping its toes into previously untested waters with the launch of its own HR consultancy service, led by its HR director Ed Hussey. Offered as part of a standalone service, Menzies had been testing it since the previous summer, before starting to openly promoting it.
A combination of demand for the service as well as awareness they could prepare it themselves was inherent in the launch.
“We have got an excellent HR department, so we said: ‘Why don’t we offer that service to our clients?'” says Adams.
In March, it announced a strategic partnership with Insight Management & Systems Consultants to increase its finance systems and accounting service lines. While each acquisition was done on its own merits, they are all linked by one common thread.
Menzies, ranked 23rd in the Accountancy Age Top 50, has been busy growing its consultancy practice through strategic partnerships and acquisition, although this has yet to come through in the firm’s figures, which showed a 5.4% decline in consultancy fee income over the past year.
“Consulting is something we will spend a lot of time on,” says Adams. “But we don’t want to go so far off the radar that we don’t sound like an accounting firm.”
Add the various ventures together and it is clear that Adams has taken the top job at a busy time. She replaced Mike Sands, who stepped down from his role as senior partner which he held for 18 years, in June and, by her own admission, Sands is “a hard act to follow”.
However, it is safe to say that Adams is up for the challenge, and has a wealth of experience to lean back on, having served as a partner at the firm since 1988. Last year she became more involved in the firm’s strategy, with its vision “getting into new service lines to provide an overall better service to our clients”.
“I helped put the current strategy in place so it would be strange for me to change it,” she says. However, there are things that Adams is looking to develop.
“You have to embrace changes and take things on board. I’d like to put more focus on employee engagement and drive the concept of empowering clients. We want our clients to be able to ring us up whenever they need to.”
Menzies in numbers
2012 Accountancy Age Top 50 rank: 23
UK fee income: £28.59m
UK partners: 34
Fee per partner: £0.84m
Offices: Blackwater Valley, East Surrey, Heathrow, London, Solent, Woking
We discuss the Accountancy Age Top 50+50 supported by Sage; growth at Menzies; and the provision of value-added services
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