24/11/2021 - 12:23

Accounting firms battle for talent

24/11/2021 - 12:23

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Two recent acquisitions have helped Deloitte extend its lead as WA’s largest accounting and consulting firm.

Accounting firms battle for talent
James Massie-Taylor takes in the view from BDO’s new office in the central business district. Photo: David Henry

Accounting firms in Western Australia are back on the growth path.

The total number of staff at the 20 largest firms in WA has increased by 6.5 per cent to 4,568, according to Business News’ Data & Insight.

That was after a 3 per cent fall in the prior year, when fears of a COVID-19-induced slowdown prompted many firms to cut staff.

The number of staff would have increased even more over the past year if employers could get their hands on the right people.

Instead, they are desperately trying to hang onto their existing staff, as competitors and other businesses offer increasingly attractive packages to potential recruits.

(view a PDF version of this special report)

The growth has been led by Deloitte, which has added nearly 100 people to its WA practice during the past year.

It now employs 768 professional accounting and consulting staff in WA (see list, page 41).

PwC has also expanded, with its professional staff numbers increasing to 660, making it number two in the local market.

Long-time industry leader EY has broadly plateaued over the past few years, with a total of 649 professional staff in the latest count.

It now ranks third in the WA market, followed by KPMG.

Among the mid-tier firms, RSM has recorded substantial growth in staff numbers over the past few years.

It has 337 professional staff on its books and is ranked fifth.

That put it ahead of BDO, which achieved modest growth over the past year to have 195 professional staff.

One firm moving steadily up the ranks is Moore Australia WA, which has grown to have 94 professional staff, making it the eighth largest firm in WA.

James Massie-Taylor, who was recently appointed BDO’s Perth managing partner, has taken the reins at a time of intense competition for talent.

“The business is going well,” Mr Massie-Taylor told Business News.

“We’ve seen a lot of improvement in performance over the past 12 months consistent with everybody else.

“We’re all experiencing the same people issues, there just doesn’t seem to be enough people to fill the roles.

“From what I see, that is common across all industries, not just accounting.”

Mr Massie-Taylor believes BDO has been helped by its decision to hold onto staff last year.

“We didn’t want to do what everyone else was doing, which was cutting back, making people redundant and putting them on reduced pay and reduced hours.

“Inevitably the partners were the ones who wore the hit.

“Through that process we have had the ability to retain a lot of people.”

It is hoped BDO’s move to a new head office in the city will boost staff retention.

“Part of that is linked into the move to the city and the new office and the opportunity that represents,” Mr Massie-Taylor said.

The firm is taking two floors in the 14-storey building in the Capital Square precinct, next to Woodside’s head office.

Its lease agreement includes signage atop the building.

“We wanted something that could be uniquely BDO, rather than just being another tenant in a multi-storey building,” he said.

Mr Massie-Taylor believes the new office and signage signifies the brand’s market profile and is more fitting with the company’s brand.

“It’s very much around repositioning our already strong brand into the market where we play,” he said.

He expects working in the city will help staff make connections and build relationships with both peers and clients.

Like most firms in the WA market, BDO has been experiencing strong demand for services across the board.

“The capital markets are driving a lot and that has a flow-on effect to basically all areas within the firm,” Mr Massie-Taylor said.

“There is consistent demand for most services.”

Nationally, BDO achieved revenue growth of 6.3 per cent over the past year.

Mr Massie-Taylor did not share WA data but indicated the local practice had done well.

“WA completed a number of good deals that pushed our target for the year higher,” he said.

With supply constrained by the lack of people, all firms are starting to push up their fees and most have started to turn work away.

“We won’t take on work if we can’t deliver to a high standard,” Mr Massie-Taylor said.

“There are situations where we are turning down work, but we are active with the client to help them find an alternative.”

“In general, pricing has increased.

“That’s because pricing of everything has increased, wages have increased.”

Corporate finance

Corporate finance has been a strong growth area for the sector.

That reflects the boom in capital raisings, and especially initial public offerings.

This has been good news for BDO, which has long been a market leader advising on such deals.

BDO has also benefited from the pick-up in mergers and acquisitions.

Its niche has been advising privately owned WA businesses seeking a change of ownership.

Notable deals over the past year include advising on the sale of Go West Tours, McKay Drilling, and Enerflow Mining Services.

Another firm targeting the same opportunity is RSM, which in July recruited Craig Amos to bolster its corporate finance practice.

Mr Amos brought more than 20 years’ experience to RSM, both as an adviser and as CFO at large public and private companies, including Decmil and Velrada.

His appointment means RSM has three partners in its corporate finance team, including Nadine Marke and Justin Audcent.

Mr Amos said RSM had the capacity to bring a wide range of services to clients, from corporate advisory through to due diligence, risk management, board governance, tax advice and audit.

“We can bring in a lot of areas that an investment bank can’t do,” he said.

RSM also offered an advisory capacity that was independent of the work undertaken by the stockbrokers that fill lead manager roles on capital raisings.

Another opportunity RSM is targeting is advising companies on the integration of mergers.

As well as Mr Amos, RSM has recently bolstered its partner ranks with the recruitment of tax specialist Carl Di Lorenzo.

Managing partner Con Paoliello said the new partners would help RSM maintain its strong growth.

Con Paoliello (centre) has been joined this year by new partners Craig Amos (left) and Carl Di Lorenzo. Photo: David Henry

A recent national survey showed RSM had achieved annual growth of 10.1 per cent, bigger than any other firm.

The Perth office had done even better, increasing net revenue by 15.5 per cent over the year to July 1 2021. 

Mr Paoliello said the growth was across all practice areas except for insolvency.

“It’s [growth] the traditional service lines as well as new service areas, such as cybersecurity, IT consulting and risk advisory,” he said.

“Some of that has been client led and some we have led with the chin.”

Mr Paoliello said the growth was part of a deliberate plan when RSM moved to new offices in the Exchange Tower building in the CBD just more than four years ago.

“We knew what the floor space was in the Perth office, and we needed to make sure we could fill that space, not just for growth’s sake but to grow the firm profitably and to create career paths and opportunities for people,” he said.

Mr Paoliello believes RSM’s culture has been a big factor in its capacity to attract new people.

“We’ve had a proactive focus on recruiting, but we haven’t engaged a headhunter to find those people,” he said.

“We’ve often found the new recruits reach out to their contacts who might be unhappy where they are.”

Mr Paoliello also considers RSM’s size has been a competitive advantage.

“We have the suite of services to look after large clients as well as being nimble enough to go down the SME food chain,” he said.

Mr Paoliello, who has been office managing partner in Perth for six years, will hand over that role to audit partner Alasdair Whyte at the end of 2021.

“Another generation needs to step up and drive the organisation forward,” he said.

Recruitment firm PageGroup has shed light on the people pressures in the sector.

A recent report confirmed the WA finance market had experienced significant shortages in available talent, especially in transactional finance roles such as payroll positions.

It has identified a 15 per cent increase in temporary labour within payroll departments.

PageGroup also reported a 25 per cent increase in demand for qualified management and financial accountants.

It said salaries had increased by at least 5 per cent since last year, a figure many industry players considered a conservative estimate.

Another area on the rise is the recruitment of chief financial officers, up 27 per cent compared to the market immediately before COVID-19.

PageGroup said that, after flat trading conditions in WA for several years, companies were now making faster recruitment decisions.

Grant Thornton partner David Hodgson is one of many grappling with this challenge.

“The major issue for the sector is resourcing,” Mr Hodgson told Business News.

“There is a war for talent.”

Mr Hodgson said there was plenty of work for Grant Thornton.

“Demand has never been higher,” he said.

“Our numbers would be higher if we could find the people.

“That’s the biggest risk for the business.”

Grant Thornton is ranked as the 10th largest accounting firm in WA, after a reduction in professional staff numbers to 89.

Mr Hodgson said the firm was anchored by its audit practice, which is one of the largest in WA outside the big four.

That flowed through to other practice areas, including tax.

He said the firm was making several changes to suit the current market circumstances.

Like many of its competitors, Grant Thornton has been reviewing its pricing.

It is investing more in technology, to make its systems more efficient.

“We have also decided to go in-depth in fewer industries,” Mr Hodgson said.

Areas where it is seeking to build expertise include retail, real estate and construction, and energy and resources.

Deloitte’s rapid expansion has been driven by acquisitions in its consulting practice.

The most notable from a WA perspective was Perth-based Oracle consultancy Magia Solutions.

Company founders Steve Solomon and Peter Crew, along with chief executive Surend Dayal and chief operating officer Chris Hinds, have all become Deloitte Consulting partners this month.

They have brought with them 60 staff in Perth, along with a further 15 interstate.

Mr Hinds said the combination would create one of the largest and broadest Oracle specialist teams in the WA market, with around 90 locally based Oracle experts.

Deloitte’s Perth office also gained a boost from the acquisition of Brisbane-based asset management consultancy Bluefield, which operates primarily in the resources sector.

The Bluefield acquisition added 100 people to Deloitte’s national consulting practice, including 15 in Perth.

Michael McNulty leads Perth’s largest accounting and consulting firm. Photo: Gabriel Oliveira

Perth managing partner Michael McNulty said the firm had completed five acquisitions since the start of June involving an additional 13 partners and more than 250 team members.

Helped by these acquisitions, its revenue is growing at more than 15 per cent.

The latest flurry of acquisitions continues a pattern over several years, with Deloitte adding specialist capability by buying smaller consultancies.

Notable deals have included Sydney-based consulting firm Presence of IT, which had about 600 people across Australia and overseas, and Perth-based The Terrace Initiative, which added two partners and 25 people to the WA practice. 

Mr McNulty said Deloitte was achieving strong growth in demand for all services.

“Pleasingly, we are seeing consistent client demand for our services and all of our businesses have grown at double-digit rates year-to-date,” he said.

“Highlights include very strong growth in our financial advisory [led by M&A activity] and risk advisory businesses.”

Mr McNulty acknowledged the acute pressure on the supply side, with lots of poaching by commerce and competitors.

Deloitte’s consulting division had been helped by the shift towards environmental, social, and corporate governance (ESG), especially decarbonisation, and digital transformation, including the migration to the cloud. 

Deloitte has the largest consulting practice of the big four firms in WA.

It accounts for 42 per cent of its WA revenue.

“That unique ability to integrate strategy, people, and technology continues to be one of our key differentiators,” Mr McNulty said.

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