Q&A: Azets CFO on the importance of financial strategy in accountancy

The UK accountancy M&A market has gathered significant pace of late. Azets, an SME advisory group spanning the UK and Nordics, has been a key driver of deal activity, having recently acquired four smaller practices in the space of just six months.

But while emphasis is often placed on the deals themselves, the integration of teams and systems during the M&A process tends to be overlooked. This is highlighted by Beth Crosier, Azets’ newly appointed group CFO, who stresses the importance of financial prudence in driving sustainable growth.

During a conversation with Accountancy Age, Crosier outlines the firm’s ambitious five-year plan, and why the preservation of talent is a critical component of its buy and build strategy.

I understand you have a background in this industry. Can you tell me more about your experiences and how you think they’ll translate into your new role with Azets?

I joined PwC straight out of industry and spent about seven years in their audit practice in Newcastle. I was then fortunate enough to spend about two years in the States as part of their audit transformation programme, and I was part of the team that designed and built the next generation of audit software. I think they still use it these days, and it’s essentially the software that replaced Lotus Notes.

At that point I felt like my eyes had been opened and I’d discovered my love of tech, so I decided to move into industry at that point. So I went and did the typical thing which was go to my biggest audit client from my time in practice, which was Sage. And this was at the time where all accounting software was moving from on-premise to the cloud, and we were moving away from things like one-off licence fees to recurring revenue models. And of course, Sage was and still is a massively acquisitive company, so every few months we were buying a business and entering new territory.

So it was just a brilliant education in what it was like to be in a business. And when it comes to the new role at Azets, there’s very few businesses that me or any other CFO could work in where you’ve previously been at the coalface doing what the majority of the people are doing, and where you’ve been a customer as well. So I think that puts me in a really good position.

And I can say a similar thing for the experience I’ve had in tech and the importance of that to Azets. I have no doubt that Azets is one of the most forward-thinking accounting businesses when it comes to technology, and I feel I can help in that kind of environment. Embracing technology to do the more straightforward things is absolutely core to what I believe in, and making sure we’ve got the investment for those things going forward is really important to me.

What do you see as being the biggest challenges for the industry right now, and how can you help Azets to navigate them with financial strategy?

I’m going to be a very untypical CFO here, but I actually think the industry is in a really good position. It might not apply to every single firm, but I believe that Azets is pretty well-placed. We’re not immune by any stretch, but if we were to find ourselves in a recessionary environment, I think we’d find that we’ve almost built in a natural level of hedging because of the scale we’ve managed to amass. There’s a huge amount of diversification, because we’re fairly evenly spread between the UK and the Nordics. And we’ve also got no reliance on a major customer, a major service line, or a major industry.

I think the other thing is that the majority of our client base is SMEs. And actually, in an economic downturn, we typically see SMEs being more resilient than larger businesses, mainly because they have fewer processes and less infrastructure which allows them to pivot more easily. And on top of that, because of what businesses go through in these scenarios, we find it opens the door for the advisor relationship more. But that only works if you haven’t got just the year-end conversation about filing accounts and returns, and I think we’ve been really good at developing a more tailored and collaborative approach over the past few years.

I think the other thing is, if you think about technological disruption and the move to digital, I see a lot of firms in our industry being interested in what will happen and how they can help, but not really knowing where to invest. And I think we are so far ahead on that journey because of the investments we started making two or three years ago. You may have seen the strategic partnership that we’ve signed with Xero, for instance.

So with that, combined with things like Making Tax Digital picking up pace in the UK, we see a really big opportunity not just for growth, but for changing the dynamic of the relationship we’ve got with some of our client base.

I think if there’s anything that we are more worried about, it’s, it’s the ability to attract and retain talent. That’s not unique for us, and actually, every other business in our industry is probably in a similar position. But I think what sets us apart is that we are now in a very different phase of the maturity of our business. We’ve now rolled out a five-year strategy, and we’ve been really clear about what our goals are during that time and how we see the business achieving them. And I think we can now do a better job of articulating that to both current and future Azets staff.

Can you elaborate on that talent point and outline what initiatives Azets has in place to address this?

Looking back on my career, the experiences I’ve enjoyed most are the ones that provided wonderful career opportunities but balanced them with doing really meaningful work. And I believe that our businesses is one of the few that can achieve both of those things. So we’re now much more deliberate about talent development, investing in our people and moving people around, but they still get the ability to have a relationship with business owners and you can make a huge difference to someone’s life.

The other thing is, if you think about when the business was first established, so from 2016 to 2019, a lot of people joined from the companies that were acquired, so the extent of their career development entirely hinged on what happened in their office. So we’re now investing in getting a really clear picture about where our people are in their journeys and what they want out of their careers.

One example is a people system we recently put in place called PeopleXD, which allows us to see what objectives people are setting themselves and to then work out how we can make sure that works outside of the confines of their own office. The audit practice is also in the process of putting a tool in place to they can see where there’s capacity across the UK so we can dynamically allocate resources and match people to what they want to do.

But ultimately, I think we aren’t unlike a Big Four firm in that we’ve got geographical scale and an ambition to expand that further. So we do have the capacity to offer things like secondments, and I’d like to see us do much more on that front.

I understand that Azets has been highly active in the M&A market in recent times. What’s the outlook on that front, and how will the finance function play a role?

So I mentioned our five-year strategy, and the second pillar of that is growth, of which organic and inorganic is equally as important. So, do we want to be out there acquiring more businesses? Absolutely. And we’ve got a detailed M&A strategy to go along with that ambition, so there’s certainly more on the cards, and the pipeline is looking healthier than it ever has done.

We’re also buying different kinds of businesses that we perhaps did a few years ago. We’re looking to fill in geographical gaps where we’ve got them in the UK, and we’re looking to add advisory businesses across the Nordics which is a key element of our growth in that region.

So that will be a really key feature of our growth as a business going forward, and my role is to work with the head of M&A to make sure we’ve got the funding to do it, and that we’ve got the right capital structure in place to not only support it, but to accelerate it.

And then of course, it’s about the integration of those businesses into our business. All of us who sit in the group function play a part in developing that strategy. So Chris [Horne, CEO], Jeremy [Fearnley, head of M&A] and I will meet prospective businesses and we’ll make sure that the two firms are a really good fit in terms of both people and culture.

How does the finance function play a role in that integration piece specifically?

So from 2016 to 2019, the priority for Azets was building scale, so buying lots and lots of businesses and bringing them under the Azets umbrella. 2019 onwards has been about integrating those businesses. So in 2019, we were lots of little businesses under the Azets brand, but we are now, generally, one business, one way of working, one set of systems, one set of processes.

We’ve worked really hard to integrate those businesses, and that can be anything from how we remunerate and incentivise people, right the way through to the data points that we used to track the performance of the business. So getting people on the same practice management system, getting people on the same financial reporting system, these are all things that are baked into a 100-day plan.

We have a blueprint that we use for businesses that we acquire, but there’s always flexibility around that blueprint, depending on things like the culture and maturity of the business. So we’re flexible around the edges if you like. But absolutely, a business joins Azets, they join our practice management system, they come on to our financial reporting system, they use the same kind of metrics to run their business as we do.

But the important thing for us is making sure that people feel like they’re part of something bigger and better than they were previously. We’ve talked a lot about technology and the opportunity that gives us, but ultimately we’re a people business, and so our number one priority is always making sure that our people understand what they’re part of, that they’re excited to part of that, and feel like they have a role to play. So that will always be number one for us.

How significant is financial strategy for a mid-tier accounting firm?

As you can imagine, I’m pretty biased about the importance of financial strategy. But yes, it’s of course critically important for every area of the business. We very much believe in the difference that our financial advisers can make to SMEs, and so we live and breathe that internally, and we think finance can make a massive difference to how the business is run.

We’ve now got our five-year strategy rolled out across the organisation for the first time, we’ve got key people in the centre who are responsible for making sure that strategy is landing and that we’re sharing best practice and supporting our teams to deliver. But it’s our team’s job to support that and make sure that we’ve got a financial plan that aligns with that strategy. That’s number one.

Number two is making sure that we’re there to manage trade-offs. As we’ve touched on, I think there’s a massive amount of opportunity out there at the moment, but we can’t do it all and we can’t do it all at the same time. So making sure we’re prioritising the right areas of investment is really important to the role that my team plays.

And then I think the third element is just helping the organisation to pivot. We are in uncertain times, and I’m sure that’s going to continue for a while yet, so living and breathing what our businesses do and being able to change direction in order to support them is a really important element of what finance does.