As BDO releases its financial results for the year ending 30 September 2013, Martin reflects on this year’s figures: what they mean for the future of BDO and the wider profession.
Today we release our full year financial results for 2013. At this key moment in our milestone 50th anniversary year, I’d like to take the time to share my thoughts on the figures: what they mean for our network now and in years to come – and more importantly, what they mean for the future of our profession.
It’s been another strong year for our network and I’m pleased that we have delivered a 7.3% increase in revenues, resulting in a total combined fee income of $6.45 billion. This growth is attributable in part to a series of strategic mergers to augment organic growth. Having shared news on this blog of the many new firms to join our network this year, it is not surprising that these have already delivered significant impact.
Readers may recall that our UK member firm merged with PKF in March, resulting in a firm of 3,500 people with revenues approaching £400m. In the US we realised three mergers, resulting in the addition of more than 250 staff, including 24 partners, and in Australia we built on last year’s East Coast practice merger by merging with PKF Business Advisers Pty Ltd in Adelaide. BDO Denmark consolidated earlier merger activity in Scandinavia with four regional mergers, adding seven offices and over €11m in revenues. The list goes on.
In fact, in this landmark year we have seen more mergers than ever before – more than 20 – and I am proud to say that BDO firms are now serving clients in 144 countries around the world.
While I’m very pleased with our solid performance over the past twelve months, I don’t want to go over the figures in detail here* – instead, I want to look forward. These results mark the moment that we at BDO put our stake in the ground – our growth this year creates a platform for a future programme of mergers that I believe will lead the consolidation of the mid-tier of our profession.
*Please see the press release here
Within the next five years, I anticipate that the global consolidation of the accounting profession will gather pace, leaving only two or three substantial mid-tier networks globally. The decisions we have taken in 2013 have put us in a leading position to be among those remaining. Only those with financial reserves will break away – because only they will have the ability to invest in the necessary infrastructure and talent to meet the increasingly global demands of mid-market clients.
Our clients today are looking for more than numbers and standard service delivery - and that’s exactly why we are seeing consolidation. Small and medium-sized companies are increasingly seizing opportunities for international expansion and so require professional services firms with the ability to invest in expertise, global infrastructure and processes to help them navigate risk across global markets.
In addition, mid-sized companies have different needs – they expect a tailored approach in each market and aren’t always best served by the largest firms, whose focus is on the very largest companies. We firmly believe clients want relationships with advisers that add real value, and we’re passionate about being their partner and delivering exceptional client service for ambitious, growing businesses.
So today is a day to be pleased and proud of our strong performance over the past 12 months – a day where I thank again our dedicated and talented member firms around the world for their continued hard work on behalf of our clients. But it is also a day to look to the future – one of a consolidated mid-tier in our profession, led by BDO.
A frequent visitor to Australia, where the BDO firm has grown consistently, both organically and through mergers and acquisitions in the last few years, Martin van Roekel considers why the success of our firm might be a reflection of a booming economy as a whole – despite first appearances
Tony Abbott swept into power on his campaign of being ‘open for business’ in September 2013 and since then, the newly elected PM has been busily establishing the government and policies needed to deliver his election promises.
Things are going rather well:
- Last month trade minister Andrew Robb stated his desire to establish free trade agreements with China, Japan and South Korea by the end of the government’s first term
- Recent Australian IPOs have hit the mark, with the likes of Virtus Health, OzForex and Freelancer.com spiking after listing
- Last month, The Australian reported that the Blackstone fund management group plans to significantly increase its investment in Australia through real estate and private equity investments
Australia might be 9,400 miles from London and 10,500 miles from New York, but recent successes make it look like it’s in a prime position to do business... but why? Indeed, why exactly is it that the Australian economy constantly punches above its weight?
Most importantly, what do companies looking to invest abroad need to know about Australia? Perhaps some such companies aren’t thinking as far afield – Australia lagged behind France and Canada as most sought-after places to invest in according to our most recent Ambition Survey.
Seeing the economy flourish first hand on a recent visit got me thinking so I initiated a discussion with Tony Schiffmann, Managing Partner of our Brisbane practice and a new member of the Global Board, and Cameron MacMillan, the firm’s International Business Leader.
Together we narrowed down Australia’s success to the following factors:
1. Variety of opportunity
Australia presents a wide variety of expansion and investment opportunities for companies large and small – from natural resources to agriculture, from infrastructure to tourism. Meanwhile, despite some debate about whether opportunities in the mining industry are beginning to wane, we believe natural resources will continue to be profitable and are seeing plenty of activity in the energy, oil and gas markets. With the drive for industrialisation in key growth markets such as China, the long-term opportunities remain solid. Our focus on building relationships in the Asia Pacific region and in South Africa has been key to building our capability in this sector in Australia.
2. Strategic location
Advances in technology mean that distance should no longer be perceived as a barrier. Indeed, with many emerging economies located in Asia Pacific, far from making it feel like a distant outpost, as in the past, Australia’s location now means it is in an attractive position to do business with some of the world’s fastest growing countries.
3. Low risk
Perhaps most importantly, Australia offers foreign investors as secure an investment as possible. With a stable government, stringent governance policies and high quality management, the ease of investing or expanding into Australia is greater than elsewhere in the Asia Pacific region.
So there’s no doubt about it – the country’s importance is being cemented. I see it within our own network, I see it on the world stage. Australia deserves credit for being so focused on expanding its economy and for securing uninterrupted growth for the last 22 years.
However, having had many lengthy discussions with my Australian friends, I know that there’s one particular subject that might well now provide some sort of distraction: cricket. Yes, the Ashes cricket series against England starts this week and I understand Australia will be gripped over the next couple of months. Best of luck to both sides!
Following BDO’s Annual Conference, which took place in Hamburg last month, Martin reflects on what colleagues from around the world learnt and shared, and looks at what the coming twelve months may hold.
Last month, I was pleased to lead BDO’s Annual Conference in Hamburg – the Hanseatic city where our international network was first formed 50 years ago. Although it wasn’t the first conference I had hosted as CEO, it was a particularly significant meeting, primarily because it marked a real milestone in BDO’s development to date, and saw us set our international strategy for the next five years.
As ever, it was an excellent opportunity to gather BDO colleagues from across the network , with about 400 partners joining us from more than 120 countries, from Anguilla to Zimbabwe. We came together to celebrate and network with colleagues old and new – but there was also business to do. It enabled us to share our knowledge and best practice, and helped to discuss and formulate our ambitious plans for the years ahead. Reflecting on the conference in the weeks since, I am particularly proud of three core elements of the BDO culture that I believe will continue to set us apart in years to come:
Our network is one of equals, in which all member firms have a say in our future
Unlike many other large scale conferences, Hamburg was a truly interactive meeting. We ran four workshops and discussions which, in just 24 hours, produced over 2,000 worksheets of detailed feedback from our firms. This helped us to make sure that we continue to share and capitalise on the vast knowledge and expertise across our network, to benefit both our business and our clients. Perhaps more importantly, it reinforced our culture and values – that our network is one of equals, where everyone should and can have an opinion and a say in our future.
BDO Member Firms are independent and distinctive but share the same vision – to be the leader for exceptional client service
Looking around the main conference hall I was pleased to see the true variety of nationalities and cultures – at one point I saw colleagues from our new member firm in Mongolia sat side by side with new colleagues from Morocco and New Zealand, sharing the stories and successes from their practices. All of this a sign of how our network has grown extensively across the globe over the last 50 years.
Despite these distinctive nationalities and markets, our member firms are united by one vision – to be the leader for delivering exceptional service to our clients. We know that service expectations vary from market to market and that a tailored approach matters - that’s why ours is not off-the-peg. Unlike many of our competitors, our firms across the world have the freedom and flexibility to get service right for their own clients – and this will continue to be at the core of our strategy for years to come.
The mid-tier accountancy market will be significantly transformed over the next five years
Listening to the observations of my colleagues at the conference, I too have little doubt that the mid-tier will be transformed by 2018, with only two or three truly global networks remaining. I am equally as certain that BDO will continue to play a leading role in driving this consolidation as we welcome new firms to our network. In the last year alone, continuing merger activity has seen new firms from countries including China, Belgium, New Zealand and the USA join us, and I see no signs of this slowing. As mid-market clients pursue international ventures and pricing pressures increase, the firms in our profession will seek stronger networks, with the infrastructure and skills to survive – and the vision to make progress happen.
What’s important is that as we pursue our ambitious growth strategy, we continue to live up to our vision and values, and to maintain our unique BDO culture – these are the factors that have made us what we are today and that continue to set us apart from our competitors. I am proud of the huge amount BDO has achieved to date and feel privileged to be leading our global network forward as we embark on the next 50 years.
As BDO colleagues from around the world gather in Hamburg to celebrate the network’s 50th anniversary at its Annual Conference, Martin reflects on BDO’s rich heritage and looks ahead to what the next 50 years may bring.
2013 is a special year for the BDO network – this year, across the world, we are marking our international 50th anniversary and celebrating all that has been achieved in the 50 years since BDO was founded. As part of these celebrations, yesterday I was proud to lead BDO’s Annual Conference Hamburg 2013, bringing together more than 400 BDO partners from 120 countries across our network to share expertise, knowledge and best practice, and discuss together our ambitious plans for the years ahead.
Whenever our partners gather I am always impressed by their dedication, skill, enthusiasm and aspirations – all qualities that I’m sure our founders, who established the network in 1963, would have been proud to witness. This year, our conference is as ever a perfect networking opportunity, enabling our leading international partners to strengthen relations between our firms, but today, 16 October,our BDO 50 day is also providing the perfect opportunity to reflect on our heritage and to look ahead to what the next 50 years will bring. I’d like to share some of these with you now.
In the 50 years since BDO was founded, the operating environment for us and our clients has changed dramatically, shaped by forces including regulation and globalisation and changing client needs and expectations. At BDO, we’re proud that not only have we adapted to these changing needs and expectations, but that we have grown into a US$6billion business, operating in 145 countries. In the last 10 years alone, our revenues have almost tripled.
The changing environment has meant that our clients are looking for more than numbers and standard service delivery. Now, more than ever, trust is vital and companies are expected to grow and deliver commercial value in a way that delivers broader social benefit. We are fully aware that that doesn’t just apply to our clients... it most certainly applies to our firms too.
That’s why, to celebrate our 50th year, we have launched a brand new globally-run campaign; BDO 50 for 50. The campaign will see firms across our network providing free practical advice and assistance to charities and organisations within the communities they serve – each providing more than 50 hours of free support to charities or social enterprises. So far, almost 40 firms have signed up to the initiative, committing to give away more than 2,519 hours of support, with activities ranging from teaching children how to save in South Africa, through to providing investment advice to social enterprises in Belgium.
With participation from our firms as far-reaching as the Dominican Republic and Romania, and in larger markets such as USA and Germany, this initiative captures the three things that in my opinion distinguish BDO: relationships, culture and exceptional client service. These are the elements that have helped to create the BDO success story so far – and no doubt they will continue to drive our success long into the future.
From our foundations, built over the last 50 years, I believe BDO is well positioned to look ahead with confidence. As a network of strong firms, we are on course to strengthen our leading position within the mid-tier of our profession and I am convinced that our growth will continue apace. A large contribution to that growth will come from Asia Pacific region, especially China, and there is significant potential in Africa too.
I also have no doubt that we will see more changes within business and industry over the next 10 years: the mid market will continue to undergo significant change, presenting increasing opportunities for us to realise substantial growth.
But it’s not all about growth – it’s the quality of our service delivery that makes the real difference. What’s important is that, while we grow, we continue to live up to our vision, our values and maintain our unique BDO culture – these are the factors that have made us what we are today and what continue to set us apart from our competition. I am proud of the huge amount BDO has achieved so far and feel privileged to be leading our global network forward as we embark on the next 50 years.