Planning to Survive the New World; Now Is the Toughest Time for Financial Services Firms for Decades. Justin Hodgin, Head of the Finance Wing of Recruitment Firm Ortus Professional Search, Looks at Why Mergers Could Be on the Cards for Many Accountants. FINANCE

The Birmingham Post (England), February 25, 2009 | Go to article overview

Planning to Survive the New World; Now Is the Toughest Time for Financial Services Firms for Decades. Justin Hodgin, Head of the Finance Wing of Recruitment Firm Ortus Professional Search, Looks at Why Mergers Could Be on the Cards for Many Accountants. FINANCE


Byline: Justin Hodgin

The world has changed over the past 12 months and that has affected the Midlands on every level, including accountancy practices. It has been well publicised that the national practices have cut staff from top to bottom, with nearly ten per cent being made redundant.

Regional practices are alsomaking decisions that we would not have envisaged 12 months ago.

The challenge for thesmall practices in the region has changed but certain issues that needed to be addressed are still there; during these challenging times, they need addressing with more immediate urgency.

Having spoken to over half the sole practitioners in the region, it is surprising how many partners who think they will retire over the next five years have notmadeany solid plans about howthey will actually do this. Ironically, this is something they emphasise the importance of to their own clients.

Thereare about800practiceswithtwo partners or fewer in the region and this figure is estimated to fall to about 600 in the next three years.

Even before the changes in themarket place, with the banks not being as "open" as they were, these practices always had certainissues, with succession, staffing, marketing and IT costs beingamong the most commonplace.

This is not just a regional issue, it is a nationwide one and needs addressing over the next three years before we see a lot of skilled individuals and clients move to more cost-driven unregulated companies, such as book-keepers and other providers who outsource to India.

Wehave seen a number ofmergersand acquisitions in the region over the past couple of years but believe that this figure will treble over the next three years, in part due to some of the problems detailed above.

It is unrealistic to think that you can tackle one of these major issues without making reference to the others. The days when an accountancy practice could just be sold to a "junior" member of staff are numbered and with funding proving somuchmore difficult, notmany people want to take the risk of a second mortgage so succession problems are evident.

We have met with and spoken to, a number of partners in the region who are looking more closely at their exit strategies.

They have toiled over the past 15 or 20 years tobuild anamefor themselvesand to become someone who is respected within the community. Now they want to reap the benefit of all this hardwork, but this process is not always easy.

Their clients need the continuity of the partner and the staff need the confidence that the newleadership will work, otherwise theymay look foremployment elsewhere, so any deal needs careful planning and executing. …

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Planning to Survive the New World; Now Is the Toughest Time for Financial Services Firms for Decades. Justin Hodgin, Head of the Finance Wing of Recruitment Firm Ortus Professional Search, Looks at Why Mergers Could Be on the Cards for Many Accountants. FINANCE
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