On Friday, December 16, 2016, around 100 people entered the empty Apollo House on Poolbeg Street in Dublin’s city centre. The aim was to provide accommodation for homeless people, while also shining a light on the growing number of rough sleepers on the streets of Dublin.

The protest captured the public mood, receiving significant support from a population both saddened and appalled at the escalating housing crisis. There were celebrity visits and impromptu concerts. The campaign, comprising housing activists, artists and trade unionists, named itself Home Sweet Home.

For Tom O’Brien, however, the protest was one of the most intense and pressurised times of his career. A partner with the accountancy firm Mazars, O’Brien was receiver over Apollo House. So, over those frantic weeks, he was in daily dialogue with representatives of the protestors and with Dublin City Council trying to devise a solution.

“You’re trying to balance your obvious understanding and sympathy with the homeless issue that the occupiers were highlighting. On the other hand, you had your statutory responsibility and your legal responsibility as a receiver to make sure that anybody who ended up in the building was safe,” he told The Currency.

The building was unfit for occupation, had significant health and safety issues, and had no insurance. “It was a hugely pressurised and tense scenario. Ourselves and government and Dublin City Council and indeed the occupier representatives, we were all concerned that there could be an issue within the building. We just did not want, obviously, that to happen.”

The people eventually moved out safely, but the memories from Apollo House remain. Even now, almost six years later, the phrase Apollo House remains synonymous with Ireland’s housing crisis and city-centre homelessness.

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At the beginning of this year, Tom O’Brien began his latest role: managing partner at Mazars. He joined the firm in 2000 and had been head of advisory services since 2014. Like with other large partnerships, there was an election for the role, but O’Brien is keen to emphasise that it was a friendly process.

When the former managing partner Mark Kennedy decided to step back, O’Brien said he was approached by a cohort of partners asking him to put his name forward.

“I thought about it long and hard, because I do enjoy that advisory side of work. And I still work in the advisory area. But when I looked at the partnership, we’ve really young partners with an average age of 44. And it’s young relative to our peers,” he said. “It’s a dynamic partnership with a lot of young, energetic and ambitious partners. When I look at where the firm has evolved over the last five years, both in terms of the depth of service that we offer, and the clients that we’re working with, it really did appeal to me to be at the forefront of spearheading our strategy and future growth.”

He takes over a growing firm during a time of change. Turnover has increased by 75 per cent at Mazars since 2015 while staff numbers have increased to 550. Meanwhile, the wider accountancy industry has been marked by pressure on the Big Four accountancy firms – KPMG, PwC, Deloitte and EY – to split out their audit and advisory work.

O’Brien describes Mazars as a challenger to the established order, looking to take business from the incumbents.

“We are chasing that same work,” he says. “We are a multidisciplinary firm in that we offer all the same services. People always assume that if we’re outside of the Big Four, we are possibly different to the Big Four. But if you look at Mazars, and if you look at the work we’re doing right across the firm, we’re already competing with the Big Four.”

According to O’Brien, the firm is now being invited to pitch for work that was traditionally the preserve of the Big Four.  

“It’s very evident to me that the market has accepted Mazars now and see Mazars as that genuine, credible challenger firm,” he says, adding that companies like Bank of America, Wells Fargo, MetLife and Elavon have become clients in the last four to five years.

“They’re a huge vote of confidence in the market in Mazars. If we look at our strategy and our plans, they give us a really good platform to further grow that base.”

O’Brien says about 40 per cent of the company’s income comes from recurring revenue such as audit, leaving 60 per cent as non-recurring revenue. As such, he says there is a huge advisory component to what Mazars does.

“But we’ve structured ourselves internally in a way that accommodates both that large audit portfolio, listed, PIE [public interest entities] space, and also then that entrepreneurial, mid-cap, privately owned business,” he says.

“And that’s something that’s hugely important to us, because we’ve always had a foothold in our business sector. If you look at the likes of Easons, Insomnia – fantastic Irish businesses, great success stories and something that we’re very proud to be associated with. That OMB [owner-managed business] sector is a really important space for the firm, and we see a real opportunity to grow our footprint in that space, not just by the traditional route of an audit focus, but by providing what I’d say is value-added, cutting-edge advisory services that give you a foothold and a bridge into those clients.”

An industry in flux

The accountancy market in a state of flux. In the UK, regulators have been pressing the big accountancy practices to split consulting and auditing practices to avoid potential conflicts. It was a trigger for the Teneo and Interpath acquisitions of the restructuring practices of Deloitte and KPMG. The regulators here have not been so aggressive, but change is coming. Having made a string of high-profile hires, Interpath is entering the market here, while rumours have been swirling that Alvarez & Marsal, the international consulting firm, is actively looking to acquire an insolvency practice here.

Meanwhile, according to reports in The Wall Street Journal and The Financial Times, a break-up plan for EY is currently under consideration that would involve an initial public offering of shares in the consulting business, with the audit side of the house remaining as a network of partnerships after the break-up. Such a move would have major implications for EY here.

O’Brien accepts change is coming, but argues that as a smaller player in the market, Mazars will not be under the same regulatory pressure to split operations.

“Interpath, Teneo, there is talk about what might happen in EY. That hasn’t been on our radar, for two reasons. One, we’re not at that level of the Big Four in terms of number of conflicts that come across your desk. We don’t experience that. Obviously, if you’re growing at the rate we’re growing, that could be a feature down the line,” he says.

“But also we do have a belief on two particular issues. One is that it is important, given the diversity of clients that we service, that we have a skill set quite outside of that audit focus, and that these clients that we work with will have a requirement for advice, whether it’s on an audit issue or another area that requires a skill set outside of that narrow focus. And secondly, our staff joined the firm on a training contract with Mazars and there’s an expectation that they work with Mazars, which is a multidisciplinary firm.”

If anything, he expects the shake-up to create opportunities for firms such as Mazars. “Audit reform created a market opportunity for Mazars to get into that large PIE and listed audit space. But I think the work we’ve done in that area demonstrates that we can operate very effectively at that level, and we can step into the shoes of those long-standing Big Four relationships,” he said.

The insolvency years

Having joined Mazars in 2000, Tom O’Brien was made partner by 2007. His experience was in mergers and acquisitions, conducting due diligence for Mazars’s acquisitive client base. A year later, however, the economy was in crisis, and O’Brien transitioned to insolvency.

“It was obvious to me in 2008 insolvency was going to be the thing to be in for some time. So, I invested heavily in terms of getting into that space. And thankfully that worked out, it was an area of work that I really enjoyed,” he says.

“On one hand, we were very busy, but you’re dealing in an environment which was just really struggling. Property was the main focus and source of work. We were taking hundreds of appointments on a monthly basis. We will never see the likes of it again. We had 55 people employed in our department. There was a huge human side to it as well.

“When I looked at the people we were meeting, you were meeting people that perhaps had lost their life’s work, and in many cases through no fault of their own. The economy just crumbled, and the tide went out and they were caught. Having empathy and good people skills was important, because it was hard not to be sympathetic with these people, and very important to be able to relate to their situation and work with them as you restructured and got through that process.”

Inflation and uncertainty

Despite the multiple economic headwinds, the number of corporate failures remains at pre-pandemic levels. According to Deloitte, there were 253 corporate insolvencies in the first half of 2022, an increase of 50 per cent from the same period in 2021, when a total of 169 insolvencies were recorded. According to Deloitte, there were 253 corporate insolvencies in the first half of 2022, an increase of 50 per cent from the same period in 2021, when a total of 169 insolvencies were recorded.

As managing partners of a major accountancy practice with experience in insolvency, O’Brien has been considering the outlook more than most – and what it means for the level of business failures.

“The wave of insolvencies that I think everybody predicted, including myself, hasn’t come to pass. Indeed, when we came into 2022, there was an era of optimism. But boy can things change in a short space of time,” he said.

“We’ve had Ukraine, there’s no doubt that Ukraine has led to the inflationary cycle that we’re experiencing at the moment. That in turn, has led to an imminent rise in interest rates; it’s coming at the end of July, the markets are pricing in a one and a half per cent increase, possibly by the year-end. And then we have the ongoing issue with the Protocol. So we’re in a very uncertain period of time at the moment.”

When I ask what sectors he is most worried about, he answers that any business that is exposed to fixed-price contracts is at risk. “If you look at a contracting sector, we’ve there’s been a couple of high-profile failures – Roadbridge, Sonica that was in examinership and now in liquidation in that contracting business,” he says.

“That contracting business will come under pressure, there is an inflationary spike in terms of building materials, but more so where disputes arise in relation to contract receivables, and businesses operating at low margins can’t carry that delay in cash. Outside of that, contract manufacturing has been impacted. There are supply chain issues affecting all businesses, but also input prices are rising. And to my mind, you will see more restructures in our space.”

He adds: “I think everybody recognises we’re entering a period of uncertainty. It’s whether the various winds that are blowing are all significant enough in total, to bring a slowdown or ultimately recession. I think at this stage people are feeling a slowdown. But if you look at growth statistics for the economy, they’re predicting a 7 per cent increase this year.

“If you look at inflation and interest rate rises, my gut tells me it will be difficult for wages to keep pace with those cost increases. So, in reality, the real spending power of the consumer sector will decrease, which would mean that you would expect a slowdown. Now, whether that slowdown is enough to become a recession is another day’s work, but certainly at this stage, the ECB is expecting a slowdown rather than a recession. And I think we all hope that will be the case.”

In his own words: Tom O’Brien’s road to managing partner at Mazars

“My initial interest in accountancy dates right back to when I was in school. I was very fortunate to have an excellent accountancy teacher. He just made accountancy interesting, if it’s possible. And he made it very logical and easy to follow. I’m a firm believer in life that, whether it’s sports or your career, or business, if you are interested in something and enjoy it, it’s very easy to be good at it. I was lucky as well that I had an older sister. She was four years older than me; she had been through the trainee accountancy route. So, she understood the background to training contracts and what was involved in terms of the commencement course. When I was doing my leaving cert, it was the early 1990s and the economy wasn’t what it is today. My father was self-employed as well. And he always had the view that accountancy was the business to be in that it was bulletproof.

“If I look back to that time it was actually really difficult to get a training contract. It’s not like it is now. Now it is a major sales job, and all of the big firms have got to position themselves ahead of the competition. That takes a lot of our HR department’s time. When I got the opportunity to take an interview, in what was a very small firm, I grabbed it with both hands.

“The commencement course was the route that many people took. It was the second last year of that route. If you look at the pros and cons of it, I was qualified at 20 or 21. But the downside was I missed all the fun of being in college.

“I went through my training contract with that firm, a small, traditional accountancy firm where you’ve got a mix of everything. So you were doing accounts, audit, tax, CoSec, making tea, you name it – a fantastic, all-round experience and something that really grounded you in the fundamentals of accountancy. 

“I moved on to KPMG. I was working in the financial services department at KPMG. But I always had a grá for that mid-cap entrepreneurial world and when a position came up as a business advisory manager within Mazars, I went for that. I quickly morphed into a transaction services role within Mazars. That was in the early noughties when M&A was flying. I was doing due diligence on behalf of Mazars – we had a very acquisitive group of clients that were buying businesses at a rate of knots. I was doing DD on that and then that led into being promoted to partner.”

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