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Jeffreys Henry takes tech-driven tilt at challenger firms with merger

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While Jeffreys Henry’s ‘strategic merger’ with fellow mid-tier firm Arram Berlyn Gardner rockets the group up the practice league tables, it has wider ambitions for technology-driven growth. But what lessons can they take from previous tech-based challenges to accountancy’s establishment?

22nd Mar 2022
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Welcoming Arram Berlyn Gardner to the Jeffreys Henry group, new CEO Caroline Plumb said that with a wave of consolidators entering the market, rising client expectations and an incredibly competitve recruitment market, the accountancy industry was in for a spell of sustained change. 

Plumb joined the London-based firm in February after five years as CEO of Fluidly with an aim to use her experience in the technology industry to establish Jeffreys Henry as the UK’s leading tech-first practice focussed on SMEs. Backed by private equity investors Tenzing, Jeffreys Henry has ambitions to grow both organically and through further acquisitions.

“There’s a broad set of needs that large practices aren’t hitting,” Plumb told AccountingWEB. Drawing parallels between consumer-facing industries such as banking and the changing demands of accountancy clients, she flagged increasing business owner expectations around issues such as responsiveness, service levels or data security as major challenges for large and mid-tier firms over the coming years.

Jeffreys Henry won last year’s specialist firm of the year at the Accounting Excellence awards predominantly due to their work on the audit side of the business, expanding into an area where others in the market have stagnated or struggled. Specialising in auditing small-cap listed companies, Jeffreys Henry estimates that around 80% of their audits are now remote, with the firm utilsing third-party audit tools to streamline its work.

New wave of consolidation

Following a brief post-Brexit lull in acquisition activity, a new wave of consolidation appears to have hit accountancy. With private equity houses sitting on a hefty volume of ‘dry powder’ cash reserves and limited investment opportunities elsewhere, the profession seems to have appeared on investors’ radars.

European technology investor Tenzing first backed Jeffreys Henry in February 2021 in the investment house’s first foray into professional services, while Hg Capital-backed firm Azets has acquired around 60 firms over a three-year period - the group also recently added Accounting Excellence award-winner Inspire Accountants to its roster.

While demand for firms to acquire is picking up pace, a supply factor to add into the mix is the Making Tax Digital effect. For several years, accountancy forums have been awash with practitioner promises to retire if MTD ITSA becomes a reality, and if the brokers are to be believed then this is leading to firms becoming available at relatively reasonable prices.

Heeding the ghosts of small business accounting past

While using technology to boost efficiency in the small business space is somewhat of a given in 2022, firms seeking to leverage software in this area would do well to heed past lessons in the field - in particular the KPMG Small Business Accounting unit. 

It’s by no means an exact comparison, but back in 2014, KPMG launched a brash marketing campaign claiming to have used technology to ‘rip up and re-engineer’ the small business accounting model, only to exit the market some five years later at a reported loss of £40m.

Those close to the KPMG project felt the Big Four outfit had overestimated what could be delivered by asking clients to self-serve with cloud bookkeeping software and that the processes, pricing and staffing were significantly underpowered.  

Plumb acknowledged that in the pursuit of her new firm’s ambitious goals, technology will only get them a certain way along the track.

“It’s not just about software - you need to get 1,000 little things right,” she said. “It’s about using the right tech, integrating it well and making it work from a client's perspective. While we’re keen to adopt new technology, and demonstrate its value to small businesses, we need to make sure what we’re promising is deliverable.”

Entries are now open for the 2022 Accounting Excellence Awards - enter now

Accounting Excellence

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