Listed accounting firms add to changes in sector

PKF has suffered a massive blow in Western Australia with the dissolution of its Perth partnership over the past month, but it’s not the first time a mid-tier accounting group has lost its Perth presence and it’s unlikely to be the last.

In fact, PKF has become the fifth mid-tier accounting group in five years – following Hall Chadwick, Horwath, Grant Thornton and Bentleys – that will be forced to establish new representation in WA to make up for the loss of its original practice (see table).

The changes at PKF, which have seen its partners move to three other firms – BDO, Deloitte and KPMG – add to numerous changes in the sector, with many changes driven by listed companies Count Financial and WHK Group.

Count Financial, through its wholly owned subsidiary Countplus, has in recent years acquired equity in two WA accounting firms, Bentleys and Lawrence Business Management, and they in turn have made four further acquisitions.

Count Financial chairman Barry Lambert said Countplus was being readied for a stockmarket listing by December this year, when it expects to have equity in 17 accounting firms and one dealer group across the country.

The listing will trigger Countplus moving to 100 per cent ownership of its investees.

WHK Group has also been active in WA.

Earlier this year its WA operation, WHK Horwath, bought Osborne Park firm Hayes Knight, and “we are now looking forward to the next acquisition”, principal Peter Fallon said.

Countplus and WHK have very different business models, adding to the wide range of choices open to accountants trying to find the ‘right’ commercial model.

Countplus operates as a holding company and allows investees like Bentleys to retain their own branding and operate with a high degree of autonomy, whereas WHK integrates all of its acquisitions under the one brand.

Bentleys Perth managing director Phillip Rix has first-hand experience of several business models.

He started at national group Hall Chadwick, left in 1999 to establish Rix Levy Fowler, and in 2008 joined the Bentleys network and sold equity to Countplus.

“I believe therefore that I can speak from experience of seeing a once very good firm implode, to the progression from my own firm as a sold trader to now a significant second-tier accounting firm,” Mr Rix told WA Business News.

Mr Rix said smaller practices that are run well do make a good living for the principals.

“It is only when you have the inefficient centralisation of functions that can provide the biggest de-motivator for staff in the larger firms.”

He said Bentleys Perth sees opportunities for a hybrid-listed model.

“By this I mean a model that allows local firms to maintain their own branding, manage their own business as well as develop new markets and opportunities.

“Essentially, maintenance of a firm’s autonomy and the entrepreneurial ‘spirit’ that has made the firm successful.

“The listing is simply ownership and provides access to capital to grow the business.

“It also provides liquidity and an ability for any staff member to acquire an ownership interest in the business they work for. Why should this be restricted to the principals?”

The biggest winner from the recent industry changes has been BDO, which will more than double the size of its corporate and international tax practice in Perth when five partners and 55 staff move from PKF on August 30.

BDO chief executive Vin Brown said this was a great development for the firm.

“BDO has been seeking to increase its capabilities and expertise in the taxation field for some time,” he said.

This move followed a decision by PKF’s three audit partners and 29 staff to shift across to Deloitte.

Deloitte’s Perth managing partner Keith Jones said a “large percentage” of PKF’s audit clients had agreed to move across to Deloitte.

PKF’s only female partner, Agnes Vacca, has taken a different path to her male colleagues, choosing to join KPMG.