William Buck, Kelly Partners Group, & Australian Accounting Roll-Ups | In Practise

William Buck, Kelly Partners Group, & Australian Accounting Roll-Ups

Managing Director at William Buck

Kelly Partners Group

Why is this company interesting?

Kelly Partners Group (KPG) is based in Sydney, Australia. KPG does tax accounting for private companies and their owners. The firm was founded 15 years ago by Brett Kelly and went public in mid-2017. It consists of 26 operating units. 49% of each unit is owned by the partner and 51% by the parent. With around 9,500 customers, KPG has a total turnover of A$48.9 million and an EBITDA margin of 33%.

Since its foundation, the company has grown revenues by 30% per year. KPG systematically acquires smaller tax firms. The purchase price multiple is usually six times the cash flow post implementation of KPG best practices. Banks finance about two-thirds of the full price and the rest is financed by a vendor loan. As a result, KPG can grow through acquisitions without having to reinvest its equity. This creates a fabulous compounding engine.

Brett Kelly, the CEO of KPG, owns 50% of the company. There may be an element of key man risk as the firm appears to be reliant on Brett for upholding the culture and driving the vision for the firm.


Executive Bio

Lindsay Holloway

Managing Director at William Buck

Lindsay has over 38 years experience in accountancy and is a Current Managing Director at William Buck, a leading mid-market Australian accountancy firm. He is currently responsible for running the Victoria business which accounts for over 25% of William Buck’s total revenue. Lindsay is responsible for delivering performance of the business and setting the long-term strategic strategy for the company.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Lindsay,what are your role and responsibilities at William Buck?

I am Lindsay Holloway, the managing director of William Buck in Victoria, Australia and also the deputy chair of the William Buck Group. My role is largely based on delivering the performance of the business, which encompasses a broad range, from people and finance to the operational perspective. This also takes a short and a long-term view from both a strategic and a cultural development perspective.

Can you describe the size, structure and philosophy of William Buck?

William Buck is a consolidated group of six firms with a turnover of $130 million and 1,000 people, with 120 partners across six jurisdictions in Australia and New Zealand. Our business in Victoria has a turnover of $35 million and 200 people with 25 partners. Our clients generally need a range of services and we have a hub and spoke model. We have the clients and propose running accounting services, tax accounting, audit, corporate advisory, tax consulting, insolvency and wealth advisory.

We have also recently taken several investments to expand our services beyond the traditional model by pushing into digital marketing and HR. Whilst it differs to the broader big four model, we see opportunity in whatever we can find to leverage off our clients.

What is the revenue split by service line?

Historically, the firm was a larger business advisory, which is the accounting tax to the SME level. That has moved to 50% in what we call BA, 25% in audit and the allied specialist services make up 5% to 10% of each of the remaining 25%. Our goal is to squash the business advisory down and open up more traditional or specialist services.

Do those specialist services include wealth advisory?

Yes, and tax consulting, corporate advisory, mergers and acquisitions, valuations and more advisory services into HR. We had a number of roles in staff engagement surveys, so it is opening up those more specialist roles and the opportunity for us is quite significant.

How do you define the mid-market, where William Buck seems to operate?

The SME market is our broad church in Australia, but the goal of our firm is to be more in the M, not the S. What we are doing is moving away from the smaller mum-and-dad corner shop type businesses to what we call mid-market businesses with more complexity. They should have more than one owner and revenue of between $5 million and $300 million. We have larger retail businesses as customers which turnover $1 billion, but by and large, the market is around the $50 to 100 million mark, with 500 staff. Beyond accounting and tax, they have complexities which will need solving that our business can help them with.

Why do you prefer to work in the mid-market rather than the smaller side?

Not many businesses will try to service the mid-market. The big four aim for large international listed businesses who need that capability. Some larger mid-tier firms try to be that alternative, then you have the smaller rung where there are accountants on every corner, doing compliance-based work. The mid-market allows us to be able to differentiate ourselves by having commercial advice and to be a partner in business. From that perspective we can get a higher rate because it is not so commoditized down in the lower level. We cannot take on the big four; it is about knowing your market, becoming experts and looking after your clients.

So you avoid the small end which is typically compliance accounting, do not compete with the big four who do much more complex deals with public companies, and instead focus on the middle area?

We are very comfortable in that market and designed our business model on it. We have taken many years to develop and scale, so that we have a brand which services that and is known for it, but it is not for everyone because it needs a strong relationship-based style. Being a commodity with a get them in, get them out strategy will not work for mid-market, nor will a larger business whose brand is attached rather than its people, as the client will get lost. We are very much about that person-to-person style business which we drive really hard.

How do you differ from a accounting firm with $1 million revenue, in terms of structure, service lines and complexity?

The fundamental difference is our clients are predominantly at $5 million to $500 million revenue businesses and many of them require services which our specialists can provide. Those with a turnover of $1 million probably only have two or three, and the clients want advice quickly. They could be in a complex tax position. We have been at that smaller end without in-house tax capabilities. That requires other accounting firms or lawyers, which then becomes a disjointed process. We see no limits to how big we can get. If the basic relationship processes are in place, it is leverageable across everything we do.

Can small accountancy firms not serve the needs of those clients?

They cannot service them due to the complexity of tax laws and the requirements of our institute. You can do specific things but not be the generalist all things to all people. Practices have to decide whether they offer specialist services and if so, they need genuine people who can do evaluation and tax advice, otherwise they are left with compliance tax which most people can do. It is hard for smaller practices to offer those services, and a client worth their salt will need that, even if they have $5 million turnover. They will still run into problems where they will need us for the things we can do.

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William Buck, Kelly Partners Group, & Australian Accounting Roll-Ups

October 5, 2021

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