The merger of two proud audit and advisory firms is not an easy process, but Grant Thornton Johannesburg CEO Andrew Hannington feels his company is in a strong position to face the competition. “We still have two buildings but we have moved half of our people across to promote integration. We are looking at new premises so we can all be under one roof. It hasn't been easy, but tax and audit departments are already working very well together.”
Hannington made a career for himself a PKF, the last 6 years as CEO. With the Grant Thornton CEO David Campbell leaving for the UK, “there was no challenge for the CEO position” of the merged firm, he says. “Grant Thornton was 90 years old and PKF 70 years old. During that period they have operated alongside each other, but this was a logical merger that could have been done 30 or 35 years ago,” says Hannington. He says the naming of the merged firm was a ‘no-brainer’, because “Grant Thornton is a much stronger brand”.
Now the new firm is in operation for about 14 months, everything is coming together slowly. “We set our strategy during a breakaway for the management: grow the topline, grow the bottom line, transform and be an employer of choice. It is nothing earth shattering.” Hannington says the merger has meant his work-life balance “has gone out of the window” and he treats his position as a completely new job. “I am 1 year into it and it is tiring but mentally stimulating. It has given me a new lease on life. The biggest challenge is that this is a people's business. We need to get 60 directors to work harmoniously, whether they are male or female, young or old, black or white.”
Behind the Big 4 the new Grant Thornton is vying for 5th spot with black-owned SizweNtsalubaGobodo (SNG). “The competition is tough,” says Hannington. “With the rise of SNG, the Big 4 is losing work. That is why they come into our space more and more. The King III report has also given a swirl in the market, with the prescribed rotation of auditors. One of our sweet spots is the medium sized listed companies. We can't handle something like Standard Bank. Hotel and tourism is big for us, but we also want to grow in the public sector space.”
Grant Thornton now has 500 staff members in Johannesburg and 1,000 nationally. “We are auditors of 45 listed companies. We differentiate ourselves by being a trusted advisor. We offer personalized in your face service and we also assist with things like personal tax affairs. The forced rotation breaks that personal relationship a bit, but it is a threat and an opportunity. People reluctantly change doctor, dentist and accountant. A lot of the CFOs don't want to go with something other than the Big 4 and often it is not a price issue. There is a fair bit of undercutting going on, but that is also healthy in a market environment.”
Hannington says his firm deals with CFOs extensively. “Around 50 percent of what we do is external audit. South African CFOs are very sharp and hardworking. They are sought after worldwide. The changes and the pace of business are phenomenal. The demands are much higher than even a decade ago. CFOs need to keep up with that, but use service providers like us as well. Clients demand availability at all times.”
Although he has extensive audit experience, Andrew’s greatest joy is listing clients or being involved in business transactions in the corporate finance arena. He has signed off on hundreds of fair and reasonable opinions, valuations and pro forma financial information. “Listing is something I wake up for in the morning. Right now we are consulting with 6 companies that want to get listed in 2014. It is a good way to get access to money. The JSE is cheaper than debt.”
If you also would like to share your ideas with the CFO community, you want to be part of the leading CFO South Africa Community or you want to know more about hosting a CFO South Africa event, you are most welcome to get in touch with CFO SA. Please contact Jurriën Morsch at [email protected]
Stay connected, up to date and in the loop on what is happening in the world of finance by becoming an online member to receive ournewsletter and following us on Twitter. Also to keep track of newly published interviews with CFOs and CEOs.
