Firm focus - Champing at the bit
1 Jan 2008
Around a decade ago, a leading media commentator on all things accountancy-related predicted the demise of the mid tier. He couldn't have been more wrong. Today mid-tier firms are thriving and Saffery Champness, which features in 16th place in Accountancy's most recent Top 60 league table, is proof that the model in no way faces extinction.
Retaining a position in the top 20 British accountancy firms is important to Safferys for market perception in terms of client work and recruitment; it is not, however, a holy grail. Nonetheless, around three years ago managing partner Rob Elliott, together with the firm's senior partners, sat down to extrapolate on the outcome of potential external events that could catapult the firm out of the top 20.
Consolidation, Big Four fragmentation and/or a takeover between mid-tier firms could all potentially combine to push Safferys down the league table. It was a worry to the partners.
As it turns out, only one of those three events occurred, and instead of forcing Safferys down the league table, the merger between Grant Thornton and Robson Rhodes ended up pushing the firm up a position from 17th to 16th place.
Today, although events can change quickly in the profession, Elliott comes across as a comfortable and contented managing partner with a rosy future on the horizon. 'I've been in this job for six years and since then we have grown by 65%; that's around 10% a year. The growth has happened anyway. During that time some firms were shrinking so we have done quite well given that it wasn't a key objective.'
The firm expects to report around 16% annual growth for the year to March 2008 - no small feat for a firm that only has around 10 audit clients.
'We're happy for BDO and Grant Thornton to cling on to the coat-tails of the Big Four because as long as they are focusing on that sector, it's less competition in our area'.
This is where Elliott says the firm is able to differentiate itself from competitors by ensuring its ability to focus on its strengths and not get sidetracked by trends of the moment. 'We don't get distracted. We concentrate on what we're good at.'IT blip
That particular lesson was learned the hard way when Safferys succumbed to the fashion for accountancy firms to spread their wings into IT consultancy and financial services when the stock markets were flourishing in the 1990s, only to be forced to hive off both businesses several years later. It's worth noting, however, that the financial services business the firm sold around 10 years ago is still performing well independently of Safferys.
After the blip in the 1990s, Safferys returned to its traditional strategy of focusing on its strengths and took a strategic decision which it continues to follow single-mindedly today, in strengthening the firm's regional focus in order to better service its client base - that of landed estates and entrepreneurs.
Up until the 1990s, Elliott explains, the firm was content to have offices dotted around the country with either one or two partners. 'But then we realised that there were big opportunities and we have concentrated on that since the turn of the century'.
Now the firm has 10 offices around the country in places like Edinburgh, Bristol, Harrogate and Bournemouth, each with on average three to four partners, with London as the headquarters.
'We have been concentrating on growing those businesses. That's an ongoing challenge,' explains Elliott. To speed up growth in the firm's chosen locations and specialisms, Elliott says they have considered taking over practices but have so far ruled it out as an option as 'that's not what we're about. We would prefer to grow our business rather than take over one.'
Like all accountancy firms the test of strength at present isn't about gaining work but about hiring the right people to fit with the firm's culture and carry out the work to the firm's standards.
'One of the challenges is that there's less of an expectation that trainees might stay with a firm after qualifying', says Elliott. With the competition from investment banks and the lucrative salaries on offer there, Elliott says it's been a tough few years. So instead the firm has focused its efforts on nurturing employees and cherry picking with the help of headhunters.
The recruitment market has been so competitive, particularly in London, in recent years due to a rise in work as a result of the collapse of Enron and the ensuing Sarbanes-Oxley Act that Safferys has had to enlist headhunters to recruit at manager level, whereas three years ago headhunters were only employed for hiring partners.
Safferys' specialism in landed estates means that the firm has to recruit carefully in order to get people with the right skills and mindset. It's not just about having the technical knowledge but the right bedside manner, Elliott explains. Dealing with directors of public companies is vastly different from dealing with owners of landed estates who aren't just concerned about their businesses but also heritage, inheritance and succession.
'As clients they're not typical in many ways. It's a private client situation. You're acting for the owners as well as the businesses on the estate, but a lot of the focus is with the owner and what their aspirations and intentions are. So as well as worrying about the compliance work for the entities you're also worrying about how to protect the wealth and the assets.
'That background leads to the key strengths that we have. We come at clients from a different angle from most other firms,' Elliott explains.Three-year cycle
Safferys runs on a three-year plan, which is due to start a new cycle in 2008. The firm's strategy for the next three years is to ensure it retains its leadership position in landed estates and charities work and to develop its position in private client work particularly dealing with entrepreneurs.
'That takes us into new areas such as AIM listings, which fits into our private client side as it's about succession too,' Elliott says.
A key strategy in the three-year plan is to remain independent. Of course if the right fit arises, Elliott says it's not a case that it won't be considered seriously. However, for now they have no plans to merge or be taken over.
As long as Saffreys under the leadership of Elliott retains its focus on its strengths it is certain to be enjoying further substantial growth in years to come and may well be celebrating another 150 years in practice. Of course we won't be around to join in those celebrations.
Fee income: £44.7m
Female partners: 11
Number of offices: 10 (including Guernsey)
Prof staff: 398
Network: Nexia International (as of December 2007)FIRM HISTORY
1855: Joseph John Saffery starts practice, soon joined in partnership by William Palmer
1865: Partnership with H Croysdill, under the name of Croysdill & Saffery Champness
1868: Champness & Maclerie founded by J H Champness and Mr Maclerie
1869: Armitage & Norton founded by Charles Payne
1885: Francis Joseph Saffery joins his father in the partnership. The firm name changes to Saffery, Son and Company
1886: J H Champness goes into partnership with J Corderoy and firm's name changes to J H Champness & Co
1889: Harold Edgar Saffery joins his father and brother; firm name changes to Saffery, Sons and Co
1908: John Skinner enters partnership; firm name changes to Saffery, Sons and Skinner
1914: John Skinner retires. Cecil Francis Saffery joins partnership; and firm's name reverts to Saffery, Sons & Co
1921: Saffery, Sons & Co Margate office opens
1928: Thomas Holme Nicholson enters the Saffrey partnership, beginning a family tradition that will see both his son (Dennis Thomas Holme Nicholson - 1951) and grandson (Clive Anthony Holme Nicholson - 1975) become partners in the firm
1935: William Stanley Wise Fone enters the partnership, to be followed in 1973 by his son William John Fone
1945: J H Champness Corderoy & Co changes to J H Champness Corderoy Beesly & Co
1972: Newman Ogle, Bevan & Co amalgamates with Saffery Sons & Co
1973: Saffery, Sons & Co changes name to Safferys
1974: C McDonald and Co amalgamates with Safferys. J H Champness, Corderoy, Beesly & Co amalgamates with Somerset Cowper & Co to become Champness Cowper & Co
1977: Safferys' Guernsey practice opens
1980: Inverness office opens
1982: Safferys and Champness Cowper & Co merge on 1 July, from which date the firm practises as Saffery Champness
1985: Bournemouth and Edinburgh offices open
1987: London, Edinburgh and High Wycombe office of Armitage & Norton amalgamate with Saffery Champness. March office opens
1992: Yorkshire office opens
1994: Saffery Champness begins practice in the North West, moving to Manchester in 1999
1995: March office moves to Peterborough
1998: Bristol office opens
2005: 150th anniversaryRESULTS AT A GLANCE
Audit and accountancy £14m
Corporate finance £1.9m
Other (including fiduciary services) £16.8m