Crowe Singapore sees opportunities in uncertainty

Singapore

ECONOMIC uncertainty is probably the bane of most companies. But for accounting and advisory services firm Crowe Singapore, it offers a silver lining.

In recent months, it has received more enquiries from companies seeking advice on restructuring and liquidation, said Tan Kuang Hui, Crowe's Singapore chief executive and managing partner, without revealing the extent of increase.

"I think this (restructuring) is the phase that we have a lot of enquiries on," he told The Business Times in an interview.

Before liquidating, companies want to see how they can restructure to become leaner and better able to weather the economic uncertainty. But Crowe also fields more enquiries on liquidation and business recovery matters, said Mr Tan.

In addition, companies have expressed interest in cross-border tax and transfer pricing solutions, he added. "People are looking in terms of which are the loss-making companies and which are the profit-making jurisdictions. Can they shift their profits from the profit-making jurisdiction to the loss-making?"

Hence, while next year will be difficult, challenging times could be "opportune times" as well, he said.

The focus on advisory also comes as those services and others are expected to gradually overtake audit - traditionally a mainstay of accountancy firms - as revenue drivers.

Audit contributes 50 per cent to Crowe's revenue today, down from 80 per cent when the firm started in 2002, reflecting what Mr Tan said is a trend among most major accounting networks.

Audit's share of Crowe's revenue is set to shrink further to 30 to 40 per cent, he added. The rest will be generated from other services such as advisory, tax and outsourcing, which are also of higher value.

"Unfortunately, our auditor trade is going to be one of the most at-risk because of emerging technology," said Mr Tan, who cut his teeth at the now-defunct Arthur Andersen, formerly one of the "Big Five" accounting firms globally.

To keep up, the firm launched new business lines such as digital advisory services, corporate finance and valuation services in the last few years.

For example, in 2017, it acquired Partners Capital Singapore, which is fully accredited by the Singapore Exchange (SGX) as an issue manager for initial public offerings and reverse takeovers on the mainboard, and other corporate advisory services. Crowe is now in the process of applying to be a Catalist sponsor.

The firm may be on the right track. Between 2015 and 2018, its revenue grew about 9 per cent year-on-year on average, although this could also be due in part to a 17 per cent revenue jump for 2018. The firm's revenue exceeded S$10 million in 2013.

"We have moved on from being a traditional audit firm to being an adviser to our clients," Mr Tan said.

First known as TKH & Co, the firm was set up by Mr Tan and an Andersen colleague, Alfred Cheong, in the wake of Andersen's collapse.

In 2002, Andersen voluntarily surrendered its accounting licence following charges of fraud in connection with the Enron scandal.

When Andersen in Singapore merged with Ernst & Young, the partners decided to start their own accountancy firm instead.

Opportunities soon emerged with the introduction of the Code of Corporate Governance. Chinese companies were also looking to list on SGX.

TKH & Co went to China to seek clients, persisting even when the Sars epidemic hit and other accountancy firms paused travel to the country.

On whether the firm was caught in the S-chips fallout - one client, China Minzhong, had its accounting integrity questioned by a shortseller in 2013 - Mr Tan said: "Touch wood and pray hard, I think we were very lucky."

China Minzhong later refuted all the allegations with evidence to support it.

Meanwhile, the accountancy firm grew and eventually joined Horwath International in 2006. The group rebranded as Crowe Global and is today the eighth-largest global accounting network by revenue.

Today, Crowe Singapore employs about 220 people. This still puts it behind other local mid-tier accountancies like RSM Chio Lim and Foo Kon Tan, based on Singapore Business Review's rankings.

Mr Tan said he disagrees with the comparison.

"I think we are the youngest of the top-10 lot, so you can't compare that." Rather, making it to the top 10 despite the firm's relative youth "ought to show our achievement", he said.