JEAN STEPHENS, CEO of RSM International, may not be an avid player of Risk, the strategy board game of world domination, but she would likely be quite handy player if the international network’s growth is anything to go by.
The international network of independent accountancy firms has been busy planting flags around the world, appointing nine new member firms across four continents over the last year.
According to Stephens, that growth – which includes double digit improvements in all its main service lines and core markets – can be attributed to the network’s focus on strategies for continued consolidation.
“We are working with our firms to ensure we have one firm in every country and that those firms are growing,” Stephens tells Accountancy Age.
Represented in over 110 countries around the world, Stephens has a “strong preference” for RSM to achieve a truly international reach, but it still has some way to go. Nevertheless, in 2014 RSM appointed new member firms across Africa and the Middle East (Benin, Burkina Faso, Cameroon, Ghana and Uganda), Asia Pacific (Myanmar), Europe (Estonia and the UK) and Latin America (Panama).
RSM is now represented in 27 African countries and the continent remains a core “growth mission” for the network where it can support firms as they adopt international standards and policies.
“There are over 50 countries in Africa and we still have some gaps in that area,” Stephens says. “In that part of world we are preparing for the future as international business expands into Africa so we are best positioned.”
Most, if not all, of RSM’s expansion into new regions is driven by the needs of its clients, Stephens adds. “For instance, if there is a trend of our member firms’ clients looking to expand into a specific country, it makes sense for us to recruit there. However, the country must first be analysed by the RSM executive office for suitability, which we judge by looking at foreign direct investment levels, GDP growth, the Corruption Index, and the development of the profession in the country, among other indicators,” she says.
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RSM’s expanding reach is translating into strong numbers. For the financial year ending 31 December 2014, RSM International reported an 18% increase in global fee income, year-on-year, to $4.4bn (£2.9bn), with fee income up across all continents and all sectors in which the international network of independent accountancy firms operates.
Fee income was up 79% in Europe, 8% in North America, 22% in Latin America, 13% in Africa, 9% in Middle East and North Africa, and 2% in Asia Pacific. At the same time, audit and accountancy fees increased by 17% to $2.2bn, tax grew by 15% to more than $1.3bn, and consulting/advisory was up 57% to over $838m.
Stephens says that often “organic growth is not enough” so the network invests in supporting member firms as they do mergers and acquisitions.
As part of RSM’s strategy, it actively encourages member firms to look at all options for growth, whether organic or non-organic. “If one of our firms is going through a significant merger, following their own due diligence processes, we also conduct a due diligence to assess their admittance as a member firm,” Stephens explains. “In this process we look at the quality of the firm, its client base, size, as well as a number of other metrics such as the location of its offices.”
Significant mergers include in Brazil, where a merger of assurance practices created RSM Brasil – with a fee income of $20.5m (an increase of 35%), and in Norway, where RSM Hasner Kjelstrup & Wiggen now has a fee income of $28.9m – (an increase of 33%).
“That is not unique to RSM, it is happening throughout the profession,” explains Stephens. “We want to be the choice of those good firms as they look where to go, and in a network one of the main drivers is the business we can do together.”
As a result, the focus on growth by serving international clients is something Stephens “watches very carefully” while her team focuses on “what activities we can put in place, and what policies, procedures support that.”
“We continuously monitor cross-border referrals between our member firms. We do this to better understand the clients, services and industries our member firms are focusing on so we can ensure that we have the right infrastructure in place to support them when approaching new, internationally active clients,” she says.
“To ensure consistency internationally, we have also put in place policies and procedures that all member firms must adhere to, including quality, independence and ethics, audit methodology, and internal and global inspection programmes.”
Stephens says the network is “Quite well positioned in all key our markets”. Indeed, in the world’s key economies, RSM has had strong results. In April 2014, Baker Tilly UK became RSM’s UK member firm, which contributed to a 79% uptick in fee income.
Baker Tilly, the UK’s seventh-largest firm with around 3,500 partners and staff and a fee income of over £300m, has been working closely with RSM’s US member McGladrey – the fifth-largest provider of assurance, tax and consultancy services in the US – to deliver RSM’s broad strategy to provide a “seamless services across borders” to its international clients.
“[Baker Tilly] is working very closely with McGladrey to develop strong teams of people that are looking at US/UK business flows and how best to work together on that,” Stephens says. “Both sides coming together – seeing how we can best leverage our relationship and take to market in way business development.”
However, Stephens dismisses any suggestion of a tie-up between the two members. “I have been in this position a long time. I never say never, but don’t foresee that happening.”
More broadly, Stephens says Baker Tilly has integrated well into the European region and at board level. “All of our leadership committees organise themselves as such that it makes it easy for RSM members to get in there.”
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: 110
No of partners: 2,781
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