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Deloitte sells small business unit Propel to Jeffreys Henry Group


Deloitte is the latest Big Four firm to pull its cloud-based small business offering after challenger firm Jeffreys Henry acquired Propel at the end of September. 

10th Oct 2022
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Deloitte confirmed the acquisition in a short message on its website. Visitors were informed that, “On 30 September 2022, Propel was acquired by Jeffreys Henry Business Services Limited, meaning Propel is now part of the Jeffreys Henry Group.”

Anyone wishing to explore the services provided by Propel were advised to contact Jeffreys Henry and with that Deloitte had pulled out from offering cloud-based bookkeeping services to small and mirco-businesses. 

Deloitte’s decision to sell its small business venture comes the same day as the Big Four firm reported that revenue for the year ended 31 May 2022 had increased by 10% to £4.9bn and partners banked £1,058,000 on average this year. Deloitte has attributed the growth to increased activity in the advisory and audit and assurance sectors. 

The rise of Jeffreys Henry Group

The acquisition is the latest move from entrepreneurial tech-based Jeffreys Henry Group to use technology to target the small business space. The Propel acquisition builds on the firm’s strategic merger with Arram Berlyn Gardner in March, and the arrival of the former CEO of Fluidly Caroline Plumb as the group’s new CEO has only bolstered its tech credentials. 

The London-based firm’s growth ambitions were turbo-charged by investment from private equity investors Tenzing, whose managing partner, Christian Hamilton, was attracted to the firm because its “model of leveraging technology to enhance the user experience gives it a unique proposition in the market”.   

Commenting on the acquisition, Plumb told AccountingWEB: “We are thrilled to welcome Propel to the JH Group. Propel is a natural and exciting addition to the group, given the businesses’ shared approach to using technology to meet evolving client, industry, and market demands.

“This is the Group's second strategic transaction this year, marking another significant investment in the firm’s strategy to transform how small and medium businesses receive accounting services.”

Big Four entering small business market

Deloitte follows KPMG shuttering its cloud-based bookkeeping offering for small businesses in 2019. The circle of Big Four firms courting small businesses is now almost complete. 

The majority of the Big Four firms have dipped their toes in the small business market to capitalise on the high-growth startups coming out of the rise of the Tech City. 

According to fintech watcher Nick Levine, the service was also positive in enabling Deloitte to nurture relationships with the startup market early so as these businesses grew, the Big Four firm could also be there to audit their accounts and provide taxation services – particularly if these businesses grow and they may then need help around their corporate structuring.

However, the Big Four firms attempted to service this fertile market as cheaply as possible, and while Propel wasn’t as cheap as KPMG’s offering, commentators could see the price factor becoming a contentious point within the firms. 

“For the Big Four, the brand is everything,” commented Levine. “So in reality, I don’t think any of the Big Four could really provide that high level of service at the very low price point they’re going to market within.”

Levine added, “All businesses are price sensitive and despite what people say, most businesses will be shopping around for the cheapest price. What we then had was some startup companies shopping around for the best price to have their accounts signed off by the Big Four.”

Commoditised tech

Now the CEO of Factotum, Bobby Lane was one of the early entrants in offering outsourced services to SMEs in 2003 before “everyone touted advisory services and five years before cloud came into the equation”.  

Watching as the Big Four entered the market, Lane said: “A lot of big firms entered the market thinking that if they offered services to these SMEs they could grow their clients for the future. The mistake a lot of the businesses made is they focused purely on tech.” 

But Lane commented that where the Big Four firms went wrong was in focusing purely on tech they forgot the strategic support. “If you’re the owner of an SME you’re not having a panic between 9-5. It’s at 10pm when you’re worried and this is the relationship we’ve built with our clients. They want to have a coffee with you or a chat about the business when they have some downtime. That can’t be replaced with technology.” 

A win-win for both

Jeffreys Henry, meanwhile, is a natural fit for Propel, sharing the same tech-focused DNA and target client base. Similar to the beginnings of the Big Four’s small business offering, the acquisition could also boost the audit side of the business too. The mid-tier firm picked up the specialist firm of the year award at the 2021 Accounting Excellence awards for the work of the audit team and how they’ve broken into and grown their share of small-cap listed companies. 

Alastair Barlow, the co-founder of flinder, knows all too well the inner workings of the small business offering from a Big Four firm, having led PwC’s My Financepartner in London and South East England. 

Barlow called the acquisition a win-win for both parties. “I think it’s a great acquisition for Jeffreys Henry to bolster growth. I would expect they probably picked it up at a great price as I would hypothesise Deloitte, like the other Big Four, ultimately decided to get out of the market. However, where the others have shut up shop at least Deloitte has a win through an exit here.”

What’s next for Propel?

Like with any acquisition though, a lot of the value of Propel was always in the association with Deloitte. So the acquisition does raise questions over what the brand will mean to Jeffreys Henry in the long term. 

“You go onto Companies House and their clients’ annual accounts are not signed off by Propel, they are signed off by Deloitte LLP,” said Levine. “For the earliest stage tech-led companies that want to go out and raise finance, by showing that their accounts had been signed off by a Big Four, so much was invested in the value of that brand association. 

“What I’m struggling with is that next year, all of those client accounts are going to be signed off as Jeffreys Henry LLP, not Deloitte. So if you take away Deloitte, will Jeffreys Henry struggle to retain those client numbers?” 

However,  the acquisition means Propel clients will be open to a more rounded option of services to grow their businesses. Now part of the Jeffreys Henry Group, these clients will have easy access to full-service finance, compliance, and specialist advisory offerings under one roof without having to find alternative advisers.

Caroline Plumb added, “All Propel clients are continuing to benefit from a full suite of core accounting and tax services, and the delivery of all existing services is continuing uninterrupted. JH Group provides a full range of advice and services such as audit, R&D and specialist tax.”


Replies (6)

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By James Green
13th Oct 2022 15:51

Always interesting when an accountants firm are in the media for the development of their business and their own accounts are significantly late :-)

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Replying to James Green:
By Paul Crowley
13th Oct 2022 16:53

They changed the date by a day as well
And three of the members each have the power to appoint and remove members

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By listerramjet
14th Oct 2022 10:06

You can understand the attraction of getting involved with small businesses likely to grow, but it is a flawed strategy. There is not enough bunce in it to keep the partners happy, and in any case those with such ambitions are likely to already be building key relationships elsewhere. What many need is practical advice and a good bookkeeper, and plenty of patience.

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Replying to listerramjet:
By Nick Graves
14th Oct 2022 12:09

I think their idea of a small business differs from mine somewhat.

From reading the above, the whole thing smacks of financialisation to me - use cheap credit to package up some Baldrickesque idea and then flog it off to the next bag-holder.

Just in time before interest rates rocket as the whole credit-farce comes crashing down.

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15th Oct 2022 08:31

I’m always astonished by the comment that people want their Accounts signed off by a big 4 firm to add credibility to them. I can’t remember seeing any articles about the JH Group ever being sued for negligence but have seen loads about the big 4.

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Replying to HLB:
paddle steamer
18th Oct 2022 16:50

Maybe that is down to the relative numbers done by each firm. The firm I was with in the 9os never got sued but we maybe only did 100-200 audits a year (back when audits were still compulsory for Limited companies and more clients were partnerships and sole traders), the big firms keep getting outed but they perform far more audits than smaller firms so that should be expected.

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