Aside from the pandemic, what prompted Deloitte to shift toward a hybrid work model?

We believe the future of work will be more productive and provide an enhanced experience for our people and our clients. We expect most of our workforce will follow a hybrid working model, being more flexible about where work is done at client sites, Deloitte offices, and virtually. 

The hybrid work model is just one part of our larger flexible/agile working strategy, which Deloitte first began implementing formally and informally well before the pandemic with an eye toward talent retention and enabling the wellbeing of our professionals. 

For us, flexible working can be defined in multiple ways. It can include working remotely or in a hybrid fashion; adjusting schedules to accommodate team, home, and client situations; adopting technology solutions to enable seamless collaboration; and adapting to meet fluctuating business needs. It also may encompass other approaches, such as abbreviated or flexible work hours or working longer, but fewer days each week.

The Deloitte approach to flexible working puts trust in our people to manage the actual day-to-day balance of where work is done while ensuring quality and meeting clients’ needs. We understand that in-person connections are important in building long-term relationships with our people and our clients. So, we are intentional about how we meet to accelerate personal growth, development, and wellbeing, build our culture, and allow us to harness the power of collaboration. We will also continue to leverage our diverse workspaces and investment in world-class Deloitte University campuses to facilitate in-person moments that matter.

What benefits has Deloitte seen since making the change?

We’ve seen many benefits to our flexible working approach, including a positive impact on the attraction, retention, and advancement of women and also, more widely, parents and caregivers of all genders; it also includes a positive impact on the well-being of our professionals, better enabling them to balance priorities inside and outside work.    

But we know that the benefits of getting flexible working right go beyond this. Over the past few years, our Millennial and Gen Z Survey has shown that younger generations are overwhelmingly in favour of having more flexibility. And the pandemic has only accelerated this trend—a quarter of millennials and 22% of Gen Zs said they would like to work in the office “a little to a lot less often” than they did pre-pandemic. 

Flexible work can also help advance progress toward Deloitte’s environmental sustainability ambitions at a very critical time. When employees work from home part- or full-time rather than commute, they help, in a small but meaningful way, reduce Deloitte’s carbon footprint. 

A successful approach to flexible working requires support from leaders. The sudden shift to working fully remote during the pandemic was an equaliser – everyone was online and leaders needed to learn how to engage and lead through this medium. Hybrid introduces a new layer of complexity – some will be “in the room” and some won’t. For hybrid working to work, leaders need to adapt their leadership style to accommodate the different needs of their teams.  Encouraging this flexibility and agility has been a focus for us. 

We also know that part of this is about making in-person connections more meaningful. These in-person “moments” that matter need to build and enhance connectivity to our colleagues and Deloitte.

Would you say a hybrid work model allows your employees to have a better work-life balance?

Yes, as long as leaders lead in an inclusive and boundary-enabling way; we need to remember that being located at home for the majority of one’s working week can result in a blurring of boundaries. For example, in Deloitte’s recent Women @ Work survey, many of the respondents reported a blurring of boundaries during the pandemic, feeling overwhelmed and judged on the hours spent online rather than work output. “Lack of work-life balance” was the top reason women gave for considering leaving their employer, and they cited “providing flexible working options that do not hinder my career progression” as one of the top three most important ways that organisations can support the retention of women. 

Thus, to make flexible working succeed, organisations must make sure they’re fostering a workplace culture that recognises and rewards productivity and performance over presenteeism; one that enables clear boundaries and balance between work and life without fear of adverse career impact. This will come down to policies but it will also come down to how leaders include and manage everyone, regardless of location. 

What tools/technologies have aided Deloitte's shift toward a hybrid work model the most?

People need the right technologies to help them work together, even when they’re physically together. Deloitte uses a variety of tools that contribute to our culture of collaboration, including cloud-based tools and platforms, teleconferencing capabilities, and cybersecurity controls, which have become all the more important in a flexible environment.

Our 2020 Resilience Report found that organisations that had invested in technologies and systems that support remote working prior to 2020 were also more likely to successfully pivot and adapt in response to disruptive events—a strong indicator of the relationship between technology, collaboration and resilience. Going forward, tools and technologies that enable seamless collaboration and communication will be increasingly important. Early adopters of new technology will not only have the digital‑first infrastructure in place to continue to support flexible working, but they will also have a digital‑first workplace culture and capabilities.

Recent consultation papers have included a number of key measures in order to diversify the UK professional services sector for audits to improve standards and offer viable alternatives to the Big Four. There have been three independent reviews so far and major failings are still happening due, in many cases, to the Big Four’s monopoly. As such, the consultation papers include provisions that challenger firms will be required to conduct a meaningful portion of the audit for the UK’s large companies, namely through shared audits, a proposal that has sparked significant controversy in recent weeks.

The Big Four have stated they will not be supporting proposals for shared audits, citing the potential doubling down on work, that they see no evidence the measure would improve the quality of audits and fears that not enough smaller firms would be interested in taking part. These firms audit 97% of the FTSE350 and also compete for hugely more lucrative ‘other professional services’ with the same client. As such, the introduction of these proposals will have huge knock-on impacts on the choice, quality, and availability of audit services in the market, meaning positive collaboration with the Big Four and alignment in assessments for how to effectively transform the sector will be near essential.

The Big Four’s reluctance to enter into shared audit seems to predominantly boil down to a risk issue; albeit a combined or shared audit, the Big Four will undoubtedly be in the firing line for the overall quality of the audits by virtue of their status, who they are as a company, and their having the ‘deepest pockets’.

The public must perceive audits as independent at all times in order to avoid their losing faith in the market, making these diversification processes more essential than ever.

The Big Four have already made clear that their appetite for shared audits is next to none due to the additional costs incurred in order to ensure the quality of these audits throughout are at the standard required to avoid the aforementioned ‘firing line’.

What’s more, concerns from the Big Four surrounding how the riskier areas of these shared audits will be managed would not be misplaced. Will it be expected that one firm will cover these more risky areas? Or will these areas remain combined? If the latter, this runs the risk of the audit and its riskier areas becoming ever more complex, running increased risks of shared audits failing to meet the standards required.

Due to the monopoly of the Big Four in the audits of these companies, smaller firms often also have less expertise and significantly less experience with the audits of these major UK companies. Thus, both these smaller firms as well as the Big Four firms managing these shared audits in collaboration may not have the confidence in the quality of certain areas of the audits they are undertaking.

It seems, therefore, that while these shared audits have been proposed with the best of intentions for a highly anticipated diversification of the sector, improving standards in the process, there are some growing pains left to work out. Indeed, some of the smaller or ‘challenger’ audit firms have expressed the view that the shared audit requirement falls some distance short of the Competition and Market Authority’s (CMA) envisaged joint audit approach.

The proposed time period (5-9 years) over which the progress of market capture by these challenger firms would be monitored may also potentially prove to be far too long, with the approach appearing to be incremental in nature as opposed to more immediately transformative.

However, the initial response of many ‘challenger’ audit firms to proposals for a diversification and transformation of the sector have been encouraging. Firms are keen to see diversification, providing for a much-needed revamp and improvement of standards following scandals surrounding Pâtisserie Valerie, Carillion, Thomas Cook and more.

Before some of these challenger firms can take on large and complex audits, they will naturally need to invest in their audit capabilities in order to give confidence in their ability to audit some of the most complex businesses. Such investments may not be financially feasible for firms of a certain size, meaning we could therefore see fewer challengers entering the space, this is an excellent opportunity for professional service firms that have grown and significantly increased their experience here.

This is an excellent opportunity for many firms to expand their experience, taking on the audits of larger companies. Nevertheless, some challengers may not want to enter such a high risk space, especially if they perceive proposed shared audit structures to mean these increased risks will not be matched by the rewards. Additionally, some other firms may instead wish to focus on non-audit services, resulting in less choice for businesses, proving counterintuitive to the intended outcome of the proposals – an impact that could become even starker when, in due time, the elements of the operational separation requirements are also applied to these smaller, challenger firms.

It will therefore be essential for challenger audit firms to evaluate the investment needed to be able to take on more complex and demanding audits and start to plan how to position themselves in the future. While they naturally carry increased risks, the potential long-term rewards are great not only for individual challenger firms but for wider industry health and staying ahead of the curb, as the UK professional services sector has done so successfully for years.

Independence of the Big Four’s audit and consultancy services is crucial. While we are seeing a number of challenges with shared audits, other methods to diversify the sector also offer significant potential and must be explored as professional services seek to diversify and seek to stay ahead of the curb. We cannot risk jeopardising the independence of audits for UK firms because of lucrative consultancy services provided by the same client, as much as we cannot risk the quality of audits due to lack of experience.

Almost as important is the issue of ‘perception’. The public must perceive audits as independent at all times in order to avoid their losing faith in the market, making these diversification processes more essential than ever.

At Theta Global Advisors, we do not audit and hence, we are one of the few truly independent accounting advisory firms for non-audit professional services. Mid-sized firms such as ours that are disrupting the industry in a truly unprecedented manner are seeing great success having worked on major accounts this year. Kwasi Kwarteng’s proposals for shared audits working with the Big Four is just one way we can attempt to seamlessly diversify the sector, with mid-sized firms having shown they can take on previously inaccessible, large clients already without necessarily the need for shared accounts with larger, Big Four firms. For London to continue as a top choice globally for professional services, it is essential to stay ahead of the curb moving forwards, be that through shared audits or caps on the Big Four’s existing monopoly.

Nonetheless, last month high street retailer Sports Direct pleaded with the Big Four to take over their auditing process, which it said a smaller firm would not be able to handle. Sky News reported that the Shirebrook company, the firm heading up Sports Direct’s insolvency, approached Deloitte, EY, PwC and KPMG to ask them to take on one of the toughest jobs in the profession. But is it actually true that any of these Big Four firms would do a better and more thorough job than a smaller firm?

Challenges faced by Big Four

Following the demise of Carillion and BHS, the Competition and Markets Authority (CMA) recently entertained the possibility of the Big Four being split up, forcing them to work with smaller rivals. However, it instead recommended that government officials hold the Big Four accountable when it comes to the close relationship between their auditing divisions and more lucrative consulting services, in order to avoid a conflict of interest. It also stated that it is open to revisiting the prospect of a breakup in five years if the performance of these firms does not improve.

Splitting up the Big Four would certainly change the dynamic completely, and allow smaller firms to show their worth when it comes to larger Sports Direct level ordeals, but it would also create a much more competitive playing field for smaller firms, leaving large organisations without a go-to solution.

Another challenge the Big Four currently face is the rise in new technologies, especially on the back of digitisation and increased regulation. According to a survey from the Chartered Institute of Internal Auditors (IIA), just under 60% of auditing firms believed these factors to be significant problems ahead in 2019.

According to Christian Wolfe, a regular reporter on the Big Four firms, machine learning, artificial intelligence and blockchain accounting solutions are fair game for all smaller firms, and the way it currently works is that “if you want public financial statements that investors trust, you must use a Big Four accounting firm.” However, he points out that once you’ve eliminated the margin for human error, recording and verifying transactions will be equally as trustworthy regardless of which firm you approach for the job.

That sounds a lot like a level playing field when it comes to accounting and auditing performance.

Spread of audit work

This leads me to discuss why in fact it is not an actual level playing field in the auditing profession. Simply put, the spread of work when it comes to the larger Carillion or BHS situations is too much for a smaller company to handle. In this regard, Sports Direct are correct. The Big Four, individually, never mind put together, have the manpower and resources, on a global level, to confront the largest tasks.

The spread of work when it comes to the larger Carillion or BHS situations is too much for a smaller company to handle.

Economia reports that the amount of FTSE 100 clients on retainer between the Big Four has never been closer. In 2005, EY held the least, at 19 FTSE 100 clients, while PwC held the most at 41 FTSE 100 clients. In Q3 2019 the numbers are much closer. EY now holds the least at 22 FTSE clients, while PwC still holds the most at 27 FTSE clients. Clearly, the spread between the Big Four has become more even over the past 15 years, however 100% of FTSE 100 companies are now on the books of a Big Four auditing firm. In September, Steve Smith, research manager at Adviser Rankings Ltd told Bloomberg that “the Big Four have cornered the FTSE 100 market.” And he’s not wrong.

This is not yet the case with FTSE 250, but it’s not far off. According to the figures from Adviser Rankings, the Big Four currently control 95% of the FTSE 250 market in terms of number of clients, and 96% in terms of market capitalisation. The parity between the Big Four and all other auditing firms, based on the number of the UK’s largest companies that contract them, is worrying. The other two firms that control a small share of the auditing of FTSE 250 companies are BDO LLP and Grant Thornton LLP.

These numbers are the real figures on client retention, and should essentially serve as proof that the Big Four are in fact still the best, otherwise, surely the FTSE 100 or 250 would seek auditing services elsewhere?

How much they are paid

As the Big Four are by default considered the best, they of course also cost the most, and partners in these firms are earning figures you can only write on paper. Recent reports indicate Deloitte Partners are due their biggest payday in a decade; the average pay for 699 of Deloitte’s equity partners is $882,000 in 2019, moving up an average of $50,000 from last year.

In addition, Deloitte’s combined member firm revenue has risen a chunky 9.4% to $46.2 billion (£37.4 billion) since last year, and in 2018 this number had already grown 11.3% on the previous year. The growth is volatile, but it is significant growth for the company’s bottom line.

Based on the above, you would figure Deloitte, the largest of the Big Four, is charging its worth in gold, but are the companies that are paying these huge firms getting a fair deal in return?

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Quality Ranking

In terms of quality standards, the Big Four auditing firms are assessed and regulated, often by each other, which in a market of fierce competition between them, is a fair and appropriate method of benchmarking standards. There aren’t rankings available per se, but each of the Big Four has its own strengths and weaknesses; EY, for example, is more Europe centred and therefore by default performs better for European based firms.

On the topic of performance quality, Gennaro Senatore, former Transaction Services AM at KPMG, said on a Quora forum: “…with IFRS and Generally Accepted Audit Standards I can tell you the differences are getting less and less noticeable.” He mentions PwC having an edge, or “at least perceived.” While he says that in terms of advisory, in Europe PwC has the most successful treasury practice, EY is stronger on internal audit and Risk Services, and Deloitte in implementation and IT projects. He concludes that KPMG is very good all-round and has a very strong tax practice. However, the performing results will be different for each client, for each auditing firm, so these opinions are after all highly subjective.

More recently, the UK Financial Reporting Council issued a serious warning about the quality of audits of financial statements in the UK. The watchdog stated that the Big Four have YoY failed to meet the benchmark 90% target of large company audits requiring no more than limited improvements. In 2019, of all auditing firms, 75% of audits reached that level of quality. The consequence was £32 million ($39.5 million) in fines (see above for Deloitte’s bottom line and then think about how this could possibly disincentivize poor performance).

Sir Winfried Bischoff, the outgoing chairman of the FRC, said in the watchdog’s report: “We are not seeing more immediate improvements from the [audit] firms and there is undesirable inconsistency across the market.”

The Big Four have YoY failed to meet the benchmark 90% target of large company audits requiring no more than limited improvements. In 2019, of all auditing firms, 75% of audits reached that level of quality.

Clients Dissatisfied

Despite not improving their performance, the Big Four are set to maintain the top tier stranglehold in the auditing sector, which is strange because a study by Source Global Research found that although over two-thirds (68%) of audit clients still rank a Big Four firm as their go-to external auditor, over half (58%) do not name their current auditor as their first choice.

In the US, there are reports of the Big Four bungling 31% of their most recent audits, as analysed by the Public Company Accounting Oversight Board (PCAOB). The data shows that in 2019, Deloitte bungled 20% of audits examined, PwC bungled 23.6%, EY bungled 27.3%, and KPMG bungled 50%. For what is expected of the Big Four, falling short of near-perfect is a bad image, so missing the mark on 31% of audits could be considered poor performance for the top firms; firms which are paid and are growing as if they were truly the best of the best.

(Source: www.pogo.org/investigation/2019/09/botched-audits-big-four-accounting-firms-fail-many-inspections/)

According to The Independent, Stephen Haddrill, the FRC’s chief executive, said: “At a time when the future of the audit sector is under the microscope, the latest audit quality results are not acceptable.

“Audit firms must identify the causes of their audit shortcomings and take rapid and appropriate action to improve quality. Our latest results suggest that they have failed to achieve this in recent years.”

So are the audits that were surveyed by both the UK and US watchdogs actually botched or bungled, or are the firms simply not as good as everyone thinks they are? Are the Big Four really still the best?

Based on what we’ve looked at, it is apparent that action should be taken, and further regulation implemented, while large companies should start considering the auditing and accounting services of smaller consultancy firms and perhaps then the status quo on the Big Four will change. What are your thoughts?

Foresight Group LLP (“Foresight”) announced the acquisition of 100% of the equity of Simple Power Limited (“SPL”) for an undisclosed sum, comprising a portfolio of 52 onshore sub-250kW single wind turbines located across Northern Ireland.

SPL has the largest distributed wind portfolio in Northern Ireland, with a total output in excess of 12MW across all the turbine sites, which benefit from some of the highest wind speeds in Europe.

The 52 wind turbines are fully operational and OFGEM accredited. The portfolio qualifies for participation in the recently launched I-SEM market in Ireland. Each turbine benefits from a standardised lease, grid connection and PPA, with long-term fixed price O&M agreements in place with a number of experienced third-party contractors.

In the past five years, Foresight has mobilised investment of more than £200 million into the Renewable Energy sector in Northern Ireland building a portfolio of 12 Bioenergy and Waste projects alongside this wind portfolio. Together, these projects generate enough clean energy to power the equivalent of some 66,000 homes, and Foresight has a strong pipeline of opportunities in Northern Ireland for future deployment.

Deloitte’s role covered financial DD, tax DD, tax advisory and transaction structuring; all led from their Belfast office.

With businesses embracing big data, new tech and digital media, the role of traditional CFO is evolving from financial expert to strategic partner, data analyst, talent curator and more. With the support of several data streams, James Booth, Chief Financial Officer at Instant Offices explains for Finance Monthly what this new era of the multidiscipline strategist means and how there is more potential than ever for CFOs to be the architects of change within business.

Five Factors Keeping CFOs Up at Night

1. Brexit

Around 75% of CFOs worry Brexit could have a negative impact on business in the long-term, compared to just 9% who don’t, according to Deloitte. Along with Brexit risks, weak demand and the prospect of tighter monetary policies are ranked as the top worries for CFOs in 2018. Despite high levels of uncertainty across the board, research shows CFOs are still highly focused on growth plans, and the level of desire to expand business over the next year is at its highest since 2009.

2. Skills Shortages

According to research, 44% of CFOs have reported recruitment difficulties and skills shortages in 2018. To add to the challenge, The Open University Business Barometer revealed a massive 91% of UK organisations say they have had difficulties hiring skilled employees in the last 12 months.

3. Rising Stress Levels

78% of UK CFOs believe stress levels are set to rise in the next two years as workloads increase, business expectations grow, and companies face a lack of staff, according to Robert Half. Research also shows CFOs expect their finance teams’ workloads to increase, while 52% are planning to hire interim staff as a short-term solution.

4. Big Data

Research firm IDC predicts that by 2025, we’ll see 163 trillion gigabytes of data output every year. And a recent study by Accenture suggests that by 2020, 90% of a CFO’s time and efforts will be spent on working with data scientists to turn data into actionable insights that organisations can use for strategic decision-making.

5. Increased Cyber Security Threats

Studies from Verizon show that 59% of cybercriminals are motivated by financial gain and are likely to target finance and HR – areas which fall into the CFO realm – suggesting CFOs are going to be expected to take a proactive approach to cybersecurity.

Top Five CFO Priorities for the Upcoming Year

In Q2 of 2018, CFOs listed the following as strong priorities for business in the following 12 months:

1. 49% say increasing cash flow is the top priority
2. 47% say reducing costs
3. 37% say introducing new products and services and expanding into new markets
4. 18% say expanding by acquisition is a priority
5. 14% say raising dividend or share buybacks

What Skills will CFOs Need by 2020?

The CFO Must Become a Leader of Innovation: New tech, including AI, will become a core part of the innovation strategy within businesses looking to remain competitive, and CFOs will be required to understand the opportunities presented by new tech to drive growth. By 2020, 48% of CFOs are set to be using AI to improve performance.

CFOs Must Embrace Big Data: According to a report by the ACCA and IMA, the CFO and finance team is set to be at the heart of the data revolution. In order to make sense of the large volumes of data the world will be generating by 2020, CFOs will need to be able to accurately interpret data to generate quality, actionable insights for CEOs and board-level decisions.

The CFO Must Manage Risk Under Scrutiny: As tech grows and presents more complex risks to business, expectations on the CFO will be high. They’ll be required to implement and manage cutting-edge risk management processes within the finance department and business as a whole. A proactive approach towards threats will be key. One report by NJAMHA showed four in ten finance chiefs currently own or co-own cybersecurity responsibility within their organisations.

The CFO Must Prepare Talent for the Future: Prepping talent for a finance role was once the domain of HR, but in order to prepare new employees for the future of finance, CFOs are going to be required to increase involvement to ensure new employees can multitask, show technical competence and handle business strategy. Around 42% of CFOs are also prioritising soft skills as a key element for future hires.

The CFO Must Be a Leader in a Rapidly Changing Workplace: With the consumerisation of real estate becoming a global trend, more businesses are choosing an agile approach to office space to expand into new markets, reduce costs, increase networking opportunities and improve staff happiness. Tied into this, the modern CFO will need to develop leadership skills to not only manage talent but also implement development strategies that work across remote teams with geographic and language differences.

Today, the role of the CFO has evolved from financial expert to a multidiscipline strategist. In addition to traditional accounting and finance responsibilities, by 2020 research shows the top priority for CFOs will be keeping pace with technology and harnessing big data.

Nowadays, CEOs expect CFOs to have an impact on business direction and strategy more than ever before. And while the question of who owns analytics is still an open question across sectors, according to a report by Deloitte, finance is the area most often found to invest in analytics at 79%, and CFOs can use it to bridge the gap between strategic and operational decision-making.

Ramphastos Investments is a venture capital and private equity firm focused on driving top-line growth in enterprises in all stages of their evolution: from start-ups to scale-ups to high-growth medium-sized companies and mature enterprises.

The firm was founded in 1994 by Marcel Boekhoorn, who left a career in accountancy at Deloitte after becoming the Netherlands’ youngest Partner to pursue his passion for entrepreneurship. Within a few years, Marcel had grown the firm’s portfolio and invested capital exponentially after realising spectacular returns through several high-profile exits. In this period, he also laid the foundations for the approach toward building businesses that the firm pursues today: a focus on driving growth on the revenue side of the equation through buy-and-build strategies, marketplace innovation, internationalisation, management empowerment and strategic partnerships.

Today, Marcel is joined by a team of seven partners who share his passion for and hands-on approach to business building as well as his upbeat, solutions-focused and status quo-challenging mindset. As founders, builders, operators and investors in businesses of all sizes and in all phases in their evolution across multiple sectors and geographies, Ramphastos’ partners have successfully turned around businesses, created and sold start-ups, launched IPOs and completed de-listings, achieving outsized average returns on investment throughout the firm’s growth.

The firm currently holds interests in more than 20 companies with a cumulative revenue above 3.5€ billion and more than 8,000 people employed across a range of sectors from financial services, gaming, new materials and advanced manufacturing and energy and across all continents. Ramphastos is focused primarily on acquiring majority stakes in companies that meet three criteria: a unique competitive position (through a patent, brand or operational efficiency), strong intrinsic growth potential and favorable underlying trends in the industry or marketplace. As an investor of its own capital, the firm has the financial independence and appetite to take on complex transactions and special situations.

This month, Finance Monthly had the privilege to catch up with Marcel Boekhoorn and hear about the exciting journey that founding and running Ramphastos Investments has been to date.

What was setting up your own investment company in the Netherlands back in 1994 like? What were some of the hurdles that you were faced with?

When I left my job as a Partner and M&A Expert at Deloitte & Touche, I had no money of my own to invest, so my first step was to set up shop as an independent M&A consultant. That work brought in enough money, and when one of my clients was unable to pay for my invoices, I decided to take a stake in his business. I made just about all the mistakes you can make, starting with taking a minority stake and having no control over the direction of the business. I also witnessed first- hand that a Founder’s entrepreneurial creativity doesn’t necessarily translate into day-to-daymanagement or leadership skills.

Within eight months, the company had folded, and I was on the verge of bankruptcy. But poverty breeds creativity, and within a year, I had earned enough to try it again, this time taking control of a struggling wood box maker and turning it around by focusing production on cigar boxes. We produced boxes for Davidoff, Tabacalera and other global brands, and I sold my shares for a good profit – enough to branch out into more investments.

My strategy from the start was to focus on unconventional companies that no one was interested in, like small wheelbarrow or spray can manufacturers, and to build them into market leaders through buy-and-build strategies. By realising significantly higher margins as market leaders through premium pricing strategies, these companies were able to accelerate outsized growth in their sectors. By purchasing them when they were small and selling them quickly as market leaders, I was able to realise outsized returns in the process.

Now, almost 25 years later, we’ve moved on to larger, different and more complex investments, but our fundamental emphasis on top-line growth, as well as our preference for taking a majority stake in our investments and our interest in companies, markets or complex transactions and special situations that others shy away from, are still our main priorities.

A key component of any successful PE investment is to turn the business around; what are the considerations in terms of operational integration? What are the typical challenges you face?

When we consider investing in a business to turn it around, we look to see how we can add value on the revenue side of the equation – through a buy- and-build strategy or by challenging the status quo with the introduction of a new channel strategy, internationalisation, or a new product portfolio or pricing strategy. We have seen that it’s on this side of the equation that we can make the biggest difference and add the most value. It’s also where we’re most at home. We are entrepreneurs and business builders first and foremost.

This sets apart from much of the private equity world, with its emphasis on the cost side of the business. Don’t get me wrong: all of the revenue- driving strategies I just mentioned will only succeed if the organisation and operations are structured effectively to deliver on them. And any successful turnaround includes robust cost control and simplified, streamlined operations. Getting that right will always be part of our turnaround strategy, but we are fundamentally more about catalysing growth through entrepreneurial innovation and management support on the revenue side rather than driving profit by slashing on the cost side of the equation.

A hallmark of our approach to turning businesses around is to focus on company leadership. The company’s management and its employees – the people – are the ones who will make or break the business. Our work starts at the top, getting the leadership bought into and aligned on the new direction, ensuring that they embrace the same vision of the future, the same sense of who we are today and where we are headed. We make it a point to be there for leadership teams and help them work through such processes. We’re hands-on builders, and this is a role we love to play. Getting a turnaround right throughout the organisation – not just among leadership’s direct reports but company-wide – hinges on consistent, well-aligned communication. We find time and again that executing consistent communication – from instilling an understanding of strategy to fostering a growth-focused culture among employees. This is one of the most important operational KPIs for a successful turnaround.

You ask about typical challenges. Well, for starters, most people aren’t hardwired for change, and if the change isn’t something that they introduced themselves, it scares them. They don’t like it – until they see that it works and benefits them, of course. Take the example of introducing a channel strategy to move a retail business entirely online – or vice-versa. We’ve done both in different sectors, geographies and cultures, and we have found that three things help mitigate resistance and galvanise employees to deliver on the new strategy: first, a clear and consistent communication about the strategy and its benefits, second, creating and showing progress against a roadmap with compelling short- and mid-term milestones and third, cultivating a culture of listening and dialogue among employees.

What is the state of the market in relation to venture capital right now? What challenges are faced by businesses looking for funding?

Looking at the markets for venture capital and private equity, we see that increased competition has driven up valuation multiples up consistently.

From 2009 to today, sustained low interest rates have made debt cheap and have driven investors’ money toward VC and PE in their search for higher returns. Strategic buyers with strong balance sheets and big cash reserves are competing with one another, driving prices up.

In spite of this overall pattern, there are plenty of businesses who struggle to find funding. In the VC space in particular, we see that geography plays a role. If you’re a start-up based in the States looking for, say, two-to-five-million dollars, you’ll be well served by the market. If you’re a European company looking for the same investment in

Europe, you’ll struggle. The VC market is far less developed than the market in the States, with investment concentrated around a handful of potential unicorns.

At Ramphastos, we have always focused as much as we can on companies in underserved markets and in investments that others avoid. Conversely, we’ve always stayed as far away as we can from competition with other investors. Our point of view is that if you have to compete in an auction with

20 or 25 other players, then you’ll always end up paying too much and struggle to reach your target IRR.

We build businesses with our own capital, and in doing so, we pursue the high-risk, high-return opportunities that others avoid. We’re currently focused on turning around larger enterprises that face complex challenges. Unlike typical private equity firms that are happy with 25 or 30% IRRs, we are looking for driving significantly higher returns. So far, our approach – which plays to our strengths as creative thinkers and hands-on business builders – has paid off. In our 24 years as a firm, we’ve realised average multiples of money invested above ten.

How are most of your investments structured? To what level do you, as the investor, want a say in the day-to-day running of the business?

We do the majority of our investments on our own.

We invest our own capital and value our financial independence. This keeps us flexible and agile as investors. We usually take majority stakes to allow us to do what we do best – roll up our sleeves to help company leadership hands-on as they build their business. As founders, builders and leaders of businesses of all sizes and in all phases in their evolution, our partners have first-hand experience with just about anything you can encounter as an entrepreneur. We usually take a board position in our portfolio companies working side-by-side with company leadership to shape strategy and – if needed – give them tactical counsel, talent, tools and innovations to deliver on their plans.

Whereas we’ve been successful to date in the VC space across multiple sectors from flight simulators (Sim-Industries) to online brokerage (TradeKing) to flooring technologies (Innovations4Flooring) and open to opportunities, we are increasingly focused with our investments in larger, more mature companies, particularly ones with three qualities: one, a unique competitive position through a patent, brand or operational efficiency; two, strong intrinsic growth potential; and three, strong underlying trends in the industry or marketplace. We also love helping companies tackle tough, complex problems and turn themselves around. We’re actively looking at opportunities in that space, particularly among larger enterprises.

How are exit strategies agreed and structured? What are typically the common areas of disagreement regarding exit timing and strategy between the business owner and Ramphastos Investments?

We don’t have a predefined exit strategy, but we never buy into an enterprise without having a good idea about whom we’re going to sell it to. If we don’t know our exit, we won’t buy it – it’s as simple as that. And because we invest our own money, we have no pressure or obligation to sell. Our capital is patient: we’re in no hurry. Rather than working towards a specific exit, we focus on the execution of a predefined strategic value creation plan. When companies continue to grow, they will sooner or later attract buyers. We are all about value creation, and that can take time. We exit when the time is right.

To date, we have never had disagreements with the management teams on timing or nature of the exit strategy. The social dimension is important to us. With a good deal, everyone should be happy: buyer, seller, management, employees, partners – everyone. When the ABN AMRO bank dared to support us with 200€ million on our first really big deal, we rewarded them with a discretionary 10€

-million premium at exit, without any contractual obligation to do so. They had never experienced anything like that before. We don’t do deals where we can’t make such things happen.

Out of all of Ramphastos Investments’ success stories, what would you say are your three biggest achievements?

The first is without a doubt Telfort, a Dutch mobile telecom provider, which we acquired as majority shareholder, grew exponentially and sold within nine months to market leader KPN for more than a billion € in 2005. That deal was a milestone for Ramphastos, because it earned us our first half billion. It’s also a good example of the success of a robust top-line strategy. While part of our success involved getting the costs under control, we grew the company’s value explosively by swiftly migrating the business from an online- only platform to the high street retail channel, through creative retail and consumer incentives, and we raised the consumer price sharply while remaining the market’s price leader, driving profits from 50€ million to 150€ million in just eight months. We also capitalised on excess network capacity by opening our network to mobile virtual network operators, and we closed a unique deal with Huawei, as the company’s European launch customer.

A VC success story that we’re super proud of involves Sim-Industries, a developer of flight simulators that we launched in 2004 and sold to Lockheed Martin in 2011. The story is a good one, because it shows how being flexible and thinking out-of-the-box can steer a start-up to success. Sim started out in the software business, developing software for flight simulators. When the market leader in that space stood in our way, we asked ourselves: Why not go further and build simulators too? We fought hard to gain a place in an oligopolistic market, with incumbents poaching our employees and trying to scare away our suppliers, clients and us. In the meantime, by taking a fresh look at design, we built a superior product, overcame legacy issues, installed a senior management team, focused on execution excellence and became market leader in civil aviation simulators for leading aircraft types.

A third story I’d like to share has less to do with business, but everything to do with deal-making. It’s a deal that centres on an issue that is close to my heart: the preservation of species; and it’s a deal that fulfils a dream that I worked personally, persistently and patiently to fulfil over 17 years – making a home for two giant pandas in the Netherlands. That dream began when I bought a zoo located to the east of Utrecht and returned it to profitability. After hundreds of hours’ worth trips back and forth to China, education, complex relationship building with the Dutch and Chinese governments - across three Dutch prime ministers and three Chinese presidents, the dream became a reality in October 2015, when I travelled with a trade delegation and our King to the Great Hall of the People in Beijing to sign a ten-year agreement in the presence of Xi Jinping. The agreement includes an annual contribution of one million dollars to the preservation of the panda and the conservation of its natural habitat in China. The pandas arrived almost exactly a year ago at the zoo and are thriving in their new home, which was voted this year as the world’s most beautiful panda enclosure.

Over the years, what has kept the company moving forward? What sets you apart from the competition?

What’s kept us moving forward first and foremost is that we absolutely love what we do. We love building businesses. We love wrestling with thorny challenges and innovating our way with management teams toward successful turnarounds and outsized growth. We love closing deals that make everyone a winner.

It hasn’t been smooth sailing every year. I founded the company with plenty of fits and starts, as you heard, and when the Great Recession hit, it didn’t look at us and say: They’re a nice bunch of people, let’s give them a break. I’m happy to report that all of the companies in which we hold a majority of shares are turning a profit today.

What’s gotten us through the tough times is a combination of our unbreakable optimism and solutions-mindedness, our deep respect for one another and our collective creativity.

There’s also the fact that that we nurture close, trusting relationships with the management of our portfolio companies. We’re open with one another, and all of us here are ready and willing to jump in and contribute. We’re able to anticipate problems before they surface or tackle them quickly before they spin out of hand.

To put your finger on what makes us different, add to that our resourcefulness, boundless energy and appetite for challenging the status quo. We thrive on pushing ourselves and our companies to innovate and adapt constantly to drive revenue and margin growth, and in today’s world, if you don’t have the mindset and wherewithal to be agile and adapt, you’re in serious trouble. As a financially independent investor, we are free to take risks, tackle problems that others avoid and make the kinds of bold moves that catalyse truly breakthrough growth.

What do you hope to accomplish in the near future? Are there any exciting new projects that you can share with us?

I have an important role to play as the chief motivator, inspiration and driver of creativity within our team, and I hope to continue to do so for many years. Entrepreneurship is what fires my heart and gives all of us here energy, inspiration and strength. And all of us at Ramphastos see the kind of creativity-driven value that we’ve been creating here pays itself forward to beyond Ramphastos to the management teams and employees and suppliers of our companies and markets they serve. We have been doing well for almost a quarter of a century and aim to continue to steer this course.

As for projects on the horizon, we have some really exciting deals on the way. I wish I could tell you more, but I can’t. Stay tuned - there are more chapters to come.

Website: http://www.ramphastosinvestments.com/

Deloitte appears to be the latest in a series of large multi-national companies becoming the victim of serious cyber breaches.

A report by the Guardian newspaper has revealed that the accountancy giant computers were discovered to have been hacked in March this year, although there are suggestions that the hack could have occurred as long ago as October 2016.

The news comes as several US companies are reporting large scales cyber security issues. Equifax and the SEC have both recently suffered embarrassing and potentially devastating hacks which have resulted in huge amounts of company data being compromised.

While the scale of the Deloitte hack is not yet known, the accountancy firm works for a vast amount of companies and governments around the world, providing tax consultancy and audits, all who have vital and confidential data held by the company. It appears that the main attack has been focused on the US arm of Deloitte, although there have been indications that it may affect companies in other countries.

The leak is said to have stemmed from the use of the company’s cloud storage system, where they store nearly 250,000 client emails. The hackers entered through an administrator password and reports suggest that this could have allowed them full access to all the information stored in the cloud.

Deloitte have sought to play down the hack in a statement which cited that there have been “very few impacted clients”. A spokesman is quoted as saying: “In response to a cyber incident, Deloitte implemented its comprehensive security protocol and began an intensive and thorough review including mobilising a team of cybersecurity and confidentiality experts inside and outside of Deloitte.”

Deloitte have taken steps to not only plug the leak, but to locate the source of the hack and earlier this year employed top US law firm Hogan Lovells to launch a special investigation on their behalf.

The hack will also serve as an embarrassment to a company who were voted Best Cybersecurity Consultants in the World in 2012.

While the full scale of the attack is not yet known, Deloitte will hope that they will not suffer the same fate as Equifax, whose share price fell 32% during the fallout of their cyber breach.

Deloitte recently announced its alliance with Thomson Reuters to combine Thomson Reuters' global tax technology and intelligence with Deloitte's direct and indirect tax services to help companies address dynamic tax regulatory and compliance challenges.

"Technology is the centerpiece of the transformation taking place at many tax departments today," said Steve Kimble, chairman and CEO, Deloitte Tax LLP. "The emergence of new technologies allows tax departments to more effectively make use of data to develop insights for their businesses. Our alliance with Thomson Reuters will strengthen the link between tax and the broader organization, allowing the tax function to make an even greater strategic contribution to the business."

The ONESOURCE corporate tax technology platform is a critical component of the tax ecosystem, enabling tax compliance and reporting in 180 countries. Deloitte's integration of this market-leading technology platform with its tax consultancy insights will provide businesses with solutions to enhance their specific tax lifecycles. Enhancement areas include global compliance, reporting and risk management for corporate taxes, sales tax and other indirect taxes.

"In today's complex regulatory environment, tax technology enables businesses to simplify their tax processes, drive down operating costs, while simultaneously ensuring accurate and transparent global tax compliance," said Joe Harpaz, SVP and managing director, corporate segment for the tax and accounting business of Thomson Reuters. "We have joined Deloitte's alliance program to bring to market joint solutions that leverage our ONESOURCE global tax technology and applications with Deloitte's tax services to help businesses meet the current and pending challenges of multijurisdictional tax operations."

The alliance expands a longstanding relationship between Thomson Reuters and Deloitte. Deloitte is part of the Tax & Accounting Certified Implementer Program at Thomson Reuters, a training and support service for leading accounting and consulting organizations to provide implementation assistance for Thomson Reuters software products. Deloitte is certified in all of the Thomson Reuters ONESOURCE tax solutions.

Deloitte professionals have also won Thomson Reuters' annual "Taxologist of the Year – Certified Implementer" award the past two years for being the top certified implementer. Deloitte's clients have also won other categories of the Taxologist Awards through their demonstrated ability to increase tax department effectiveness using ONESOURCE.

(Source: Deloitte)

According to a new whitepaper from asset management strategy consultancy Casey Quirk, a practice of Deloitte Consulting LLP, the industry is likely to experience "the largest competitive re-alignment in asset management history" through merger and acquisition activity from 2017 to 2020.

According to its new Investment Management M&A Outlook, "Skill Through Scale? The Role of M&A in a Consolidating Industry," Casey Quirk expects strong merger and acquisition activity in 2017 with a continued historic pace of deals through 2020.

Among the factors driving this brisk activity in 2017 and beyond are an aging population, affecting industry asset levels and flows, as well as a broad shift to passive management that has created pressure on industry fees and placed greater value on firms with valuable distribution platforms and those investing in technology. Forty-four deals took place in the first quarter of 2017, and Casey Quirk expects 2017's volume to likely outpace the last two years.

"Investment management has become a fiercely competitive industry, increasingly shaped by the same winner-take-all dynamics influencing other maturing financial services sectors," said Ben Phillips, a principal and investment management lead strategist with Casey Quirk and one of the authors. "Amid this challenged marketplace, the gap is widening between leading and lagging asset and wealth management firms. Unlike deals of the past, consolidation pressures, with a focus on scale, will likely drive the next round of M&A activity to position firms for growth."

According to Casey Quirk, most of the investment management merger and acquisition deals in 2017 and in the next few years should fall in the following categories:

• Transformative scale acquisitions driven by the quest for revenue and cost synergies. These deals should be larger than in the past several years and should include more global mergers of equals.
• Capability-based transactions, mostly representing additions of innovative investment products and technology needs.
• Shifting value chain deals, with many asset managers acquiring firms that help them extend their capabilities in such areas as distribution, wealth management or advice.
• Pure consolidation deals structured to spread costs over a larger client asset base; several may take place in the US mutual fund marketplace.

"Economic pressure, distributor consolidation, the need for new capabilities, and a shifting value chain are the catalysts that are fueling M&A activity," said Masaki Noda, Deloitte Risk and Financial Advisory managing director, Deloitte & Touche LLP, and co-author of the paper. "Asset managers are feeling pressure from many corners and are looking for ways to secure a competitive advantage. Strategic deals may be the answer."

In 2016, 133 mergers and acquisitions occurred in the asset management and wealth management industries, down slightly from 145 in 2015, but with a higher average deal value, up from $240.9 million in 2015 to $536.4 million last year. In investment management, about half of the deals rose from the need to add capabilities such as innovative investment strategies or access to new market segments. In wealth management, the vast majority of transactions—64 out of 78—resulted from consolidation, as various smaller wealth managers sought to improve profitability through economies of scale. Merger and acquisition deal volume by category is from SNL Financial, Pionline.com, Casey Quirk analysis and Deloitte analysis.

(Source: Casey Quirk)

Against the backdrop of evolving business demands and rapid technological disruption, the Robert M. Trueblood Seminars for Professors enhance accounting and auditing education to build the next generation of accountants and auditors to meet the needs of today's capital markets. For more than 50 years, the annual seminars, hosted by the Deloitte Foundation and the American Accounting Association, have provided cutting-edge resources and hundreds of case studies that keep university faculty and their students connected to the real-world issues and challenges currently facing the audit and accounting professions.

"The auditors of the future are not siloed to financial reporting," said Tonie Leatherberry, principal, Deloitte Consulting LLP and president of the Deloitte Foundation. "Future auditors will need up-to-date technical and data science skills to go along with their deep industry and cross-functional expertise. Moreover, they will need to sharpen their analytical skills and ability to interpret data, and demonstrate strong business acumen, superior communication skills and leadership. The Trueblood Seminars continue a long-standing tradition of assisting those charged with developing curricula that is futuristic and embodies the spirit of innovation."

This year's seminars marked a continued focus on audit innovation as technology continues to change the face of the profession. The proliferation of data analytics and artificial intelligence has enhanced the audit process and has helped open the door to transforming the manner in which an audit is conducted. The result is a new type of auditor and deeper insights that can benefit companies being audited and provide value to capital market participants. Additionally, there is an appreciation among business leaders for the opportunities audits can provide to help companies improve business performance.

Participants analyzed case studies on leasing arrangements, accounting for cross-hedging instruments, business combinations, revenue recognition, and understanding and evaluating control deficiencies during an audit, among others.

"Case-based discussions are a critical component of the seminars because they present realistic, complex, and contextually rich situations that encourage critical thinking and professional judgment," said Michael Iselin, 2017 Trueblood co-chair and accounting professor at the University of Minnesota. "Faculty are able to return to their universities and use Trueblood case studies as an excellent tool to foster critical thinking skills in the classroom."

More than 2,100 professors from across the country are registered users of the Trueblood case studies.

The 2017 Trueblood Seminars were held at Deloitte University in Westlake, Texas. More than 60 leading accounting and auditing educators and professionals attended the February and March sessions. The program featured guest speakers from the Financial Accounting Standards Board, accounting professors from several colleges and universities, plus Deloitte subject matter leaders. Deloitte professionals also discussed innovative audit technology and approaches, and shared their experiences through the case studies to illustrate the evolving skillsets needed in the field.

"The skills required to complete a high-quality audit five to 10 years ago are not the same as the skills you need today," says Leatherberry. "It's an exciting time for educators to encourage tech-savvy audit professionals to join the wave of innovation as 'big picture' thinkers."

Through this lens, the Trueblood Seminars continue to give accounting and auditing professors curriculum resources they need to educate the auditors today's business world demands.

The Robert M. Trueblood Seminars have been held annually since 1966 under the auspices of the Deloitte Foundation. In 1975, the American Accounting Association joined the Deloitte Foundation in administering the seminars. Through the years, more than 2,400 professors have attended the program.

(Source: Deloitte)

Deloitte's Tax Policy Leader Jon Traub, principal, Deloitte Tax LLP, offered the following statement in response to the tax reform outlook provided during President Trump's address to Congress on February 28^th 2017:

"It's an exciting yet uncertain time for tax reform, with prospects rising for Congressional action and talks of revenue raisers to pay for it swirling around the Capitol and in corporate boardrooms. What is certain is that difficult choices face Congress if they intend to enact tax reform this year. We are in the very early stages of a very long game, so twists and turns are more likely than not.

"There is much uncertainty in all of this, but it is possible we will emerge from the debate with an entirely new way of taxing businesses in the US Companies are rightly eager to understand the potential impact of these proposals on their tax burden and supply chains. To be prepared in this uncertain tax environment, companies can consider situational modeling that weigh proposals against one another, scenario plan, and create customized alternatives in order to analyze the effects of various tax reform proposals."

(Source: Deloitte Tax LLP)

Deloitte explores the rapid evolution of business technology in its eighth annual technology report, "Tech Trends 2017: The Kinetic Enterprise." Released last week, the report describes how companies presently must sift through the promotional noise and hyperbole surrounding emerging technologies to find those solutions offering real potential. To realize that potential, they should become "kinetic" organizations — companies with the dexterity and vision required to thrive amid ongoing technology-fueled disruption.

Tech Trends 2017 examines seven key trends that will likely revolutionize enterprise technology in the next 18 to 24 months. Among the trends discussed are machine intelligence, dark analytics and mixed reality, which is a blend of augmented reality, Internet-of-Things and virtual reality. The report also covers innovations in analytics, digital and cloud that are transforming the way organizations engage with customers and citizens; and reimagine products, services and business models.

"Kinetic enterprises are fluid and their leaders understand that to remain relevant, they will need to develop a deliberate innovation response to these disruptive forces," said Bill Briggs, chief technology officer and managing director, Deloitte Consulting LLP. "It's not about chasing every shiny new object; it's about translating the raw potential of emerging technology into a focused set of priorities with measurable, tangible business impact."

According to the report, some of the key trends that will transform the business landscape in 2017 and beyond include:

• Dark Analytics: Advances in computer vision and pattern recognition allow companies to plumb the recesses of unstructured data, which may include images, audio, video and information residing in the "deep web." These tools can unlock powerful strategic and operational insights for businesses in the next level of technology-driven enlightenment.
• Everything-as-a-Service: Services-based ecosystems are becoming increasingly common in business. This model requires open and agile systems, which could provide a business rationale for modernizing legacy core systems. From next-generation ERP to "replatforming" custom back-office applications, everything-as-a-service (XaaS) can help information technology achieve greater efficiencies and lay a foundation for business innovation and growth.
• Machine Intelligence: Artificial intelligence and machine learning are doing more than providing insights and recommendations. Increasingly they are augmenting and automating more complex, mission-critical tasks. This continuum covers cognitive and predictive analytics, bots and robotics process automation — related but distinct disciplines delivering on the broader promise of machine intelligence.

"This goes beyond the CIOs and IT department. There are factors changing every element of business," said Briggs. "Machine intelligence, blockchain and other technologies will have huge implications for talent, operations, and for the enterprise as a whole. Developing a strategy for prioritizing investments and harnessing these emerging technologies has become a boardroom directive."

The report's "Exponentials" chapter identifies four key areas blending science and applied technologies — nanotechnology, advanced energy storage, synthetic biology and quantum computing. Business leaders across industries should be aware of the looming potential these technological advances hold and begin exploring ways to harness exponentials within their organizations.

In addition, each chapter features a "Cyber Implications" section, which helps CIOs balance potential with responsibility around security, privacy and compliance. For the kinetic enterprise, striking this balance is necessity, and reflects a shift toward viewing risk strategically as a core discipline. The report also includes case studies, perspectives from industry luminaries, and experience from Deloitte practitioners that crosses government, business and society.

(Source: Deloitte)