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Accounting Big Four gear up to support family businesses
IN THE increasingly competitive arena of support services aimed at small and medium enterprises (SMEs), the Big Four accounting firms here are flexing their muscles, with dedicated teams and expanded services. Just this month, PwC beefed up its firepower with the acquisition of homegrown brand strategy consultancy StrategiCom, which will make it the biggest practice in the field.
"We have almost 10 partners in six specialist areas . . . so the amalgamation, I believe, makes us the largest practice," says Wilson Chew, who was the group principal consultant & CEO of StrategiCom. Dr Chew joins PwC as a partner in the Entrepreneurial and Private Clients (EPC) division. All the consultants and research analysts of StrategiCom have also joined PwC's EPC division. Over the last three years, the average staff strength at StrategiCom was between 20 and 30.
The deal, which market watchers value at between S$10 million and S$20 million - both parties declined to comment on the value of the deal due to non-disclosure agreements - has given PwC the ammunition it believes it needs to fully support the needs of family businesses.
"In terms of focusing on family business and entrepreneurs, it is something we started maybe six, seven years ago," says Ng Siew Quan, PwC's Asia-Pacific EPC leader. But while the firm had the competencies to take care of the particular needs of family businesses, its strategy practice was focused on servicing bigger players. This spurred the search for a suitable partner, which they eventually found in StrategiCom.
It is not surprising that the focus is on this sector. Dr Chew notes that more than half of the small to mid-cap companies listed on SGX are family businesses. Indeed, a significant proportion of Singapore's total SME population are either entrepreneurs or family businesses.
Looking ahead, KPMG's Enterprise Services team also intends to have a sharper focus on family businesses, as well as innovative startups and high-growth companies.
"Apart from the potential that we see in each segment, much synergy can be harnessed by working across these three groups," says Chiu Wu Hong, head of enterprise at KPMG in Singapore.
"KPMG can help to match their needs, for instance, by aiding in a merger and acquisition deal for an innovative startup looking to sell its business to a high-growth company looking to expand. It's all part of the innovative approach in helping our SME clients to grow. As a co-organiser of the Enterprise 50 awards, we assist to identify established SMEs that have contributed significantly to the economic growth of Singapore."
PwC's Mr Ng notes that it is important to have dedicated professionals servicing this market segment. He says: "You need people to understand the challenges of a family business or a FGME. And you need to also be patient because they cannot be transformed overnight. And so there is an element of co-investment in their growth in terms of our time and resources. PwC is probably the only Big Four that has a dedicated practice globally focusing on entrepreneurs and private clients."
Deloitte meanwhile has been working with the Business Families Institute at Singapore Management University. They have co-authored two thought leadership reports thus far, on business succession and corporate governance. A third report is targeted to come out later this year.
Says Philip Yuen, CEO, Deloitte Singapore: "A significant percentage of our clients are SMEs and we have an established mid-market programme led by a team of SME services specialists across the firm that offers tailored services specific to the unique nature of our clients' businesses. Our areas of specialisation for SMEs include helping them develop business processes and advising on their growth strategy."
Meanwhile, EY is investing in learning specifically aimed at professionals serving this client segment so they can have strategic discussions focused on issues that SMEs typically face.
Says Max Loh, Asean and Singapore managing partner at EY: "From our experience, SME or middle market companies face one issue in common - accelerating growth - so we are innovating and evolving our insights and solutions to help them achieve that."
There are various trends affecting family businesses at the moment. On the one hand, many entrepreneur-led family-owned enterprises in the region are transitioning to the next generation of management.
Says PwC's Dr Chew: "In our experience, the next generation of management usually focuses on two things - one, modernisation of the company's capabilities; and two, growing the business through innovation and the development of a stronger corporate brand."
On the other hand, macro-economic factors also play a key role. A slower marketplace, for instance, is typically when SMEs beef up their capabilities and prepare for growth.
Says Dr Chew: "In the last two economic downturns, we saw a significant proportion of companies increasingly taking the quieter periods to beef up capabilities . . . For example, in the area of intellectual property - there's a huge movement in that area now. Areas that cover attraction of talent, retention of talent. Capabilities that go out to develop distinctive competencies, systems, processes, and technologies to develop stickiness towards market and clients. These are things that companies are now looking at and I think PwC is in a formidable position to deal with and meet this growing market need."