In a recently published article, ICAEW (Institute of Chartered Accountants in England and Wales) writes about ownership structures that might offer better options for firms in the future. In the article, COO Nigel Bennett is interviewed. Xeinadin itself is a limited company. Bennett explains the advantages for Xeinadin and individual accountancy firms who would like to join.
ICAEW names Xeinadin as one of the new breed, where the ownership structure isn’t the partnership model. Xeinadin is a limited company, operates like a network of firm, but with a wholly corporate structure. Xeinadin has acquired practices throughout the UK and Ireland. The firm is currently self-funded, with close to nil debt.
In the article of ICAEW Chief Operating Officer Nigel Bennett says: “The advantages of consolidation are pretty well documented, with economy of scale, partnerships and the ability to better serve larger clients with the resources of a firm that can challenge the Big Four. We’re able to share best practice throughout the firm, with Xeinadin having a particular focus on technology and innovation.” Further consolidation, he says, will be targeted to improve geographical coverage and to strengthen the firm as a whole with businesses that have complementary skills.
Alternative to the partnership model
For a vast majority of accountancy firms, the partnership model is the preferred choice. Some firms though are questioning this business ownership model. Alternative structures might offer better options for firms of the future. One of the reasons to question the partnership model consists of disincentives to retain profits for investment in the business at a time of huge upheaval.
“The partnership model doesn’t work for all businesses in this industry,” Matthew Rourke, former Managing Partner with private equity house HgCapital, says to ICAEW. “The opportunity for expansion is limited. Value creation is more straightforward in a corporate model.”
Read the full article of ICAEW on business ownership in accountancy here.
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