Insights from the sharp end. An interview with FRP Advisory…

At the BDLN we love insight. It’s gold dust. We spend much of our time sieving for it and when we strike, we sprinkle it liberally over our website.

With that in mind, we were excited to meet Jeremy French and Geoff Rowley, two of the driving forces behind business advisory firm, FRP Advisory. Why? Well, because this pair is uniquely experienced. Not only do they get under the skins of businesses in complex and difficult situations on a daily basis, gaining invaluable intelligence on what makes things go wrong, but they also understand the best ways to salvage, rebuild and grow.

And there can be no greater evidence for this than the success of FRP Advisory itself. In 2010 the duo led the MBO partnership team which acquired the insolvency and restructuring arm of Vantis plc – their then employer – for £11m so they know a little bit about risk and opportunity, too.

Geoff kicked things off by telling us about the birth of FRP Advisory.

“FRP came about primarily due to opportune timing,” he told us. “The organisation we were working for at the time was failing, but we recognised that our division – the insolvency and recovery arm – was successful. It had achieved critical mass and was run by a group of really good people. We saw the opportunity to take that forward and, most importantly, to ensure that our 200 colleagues would not be made redundant.”

Geoff and Jeremy started to create the new firm in their own image, based on past experiences. “We’d had the benefit of seeing how not to do some things,” said Jeremy. “I believe you should spend time looking at what goes wrong as well as what goes right. We’d come from a plc background, where information is only shared up to a certain level. That shaped our formulation of FRP Advisory because it made us realise the importance of transparency. What we came up with was a partnership owned by all of its 31 partners – not just a few – right from the beginning. But we needed to be agile. We didn’t want an organisation where 31 people had to be consulted on everything. So we created a management board comprising two non-execs, an FD who’s not a partner, and the two of us. That allowed us to be more fleet of foot.” Too many firms get bogged down in committees and the need to get 20, 30 or 40 people on exactly the same page, before any decisions can be made. This invariably makes firms slow, frustrating and the exact opposite of entrepreneurial! FRP’s strategic approach and its commercial and entrepreneurial structure reinforce the message that the partners understand how successful businesses remain dynamic and flexible and how they can ultimately stay one step ahead.

“It’s also important to note,” added Geoff, “that our non-execs are not there just for governance and risk management. They need to open doors and be advocates for the business, too. Yes, they bring discipline, but from day one they have also been asked to make creative contributions.”

The birth of FRP saw a fundamental shift as the team jumped from employees to part-owners and partners. This created a new energy and mindset, which have been instrumental in the firm’s success. Geoff explained: “One of the most interesting things that happened was that the partners – who were previously employees – gained extra positivity and motivation. That’s exactly what we needed at the time – for the team to live and breathe the firm.”

The transparency introduced by Geoff and Jeremy further intensified this new energy. “We were clear from the beginning that information would be shared in a timely fashion and that every partner would see everything. That’s because we wanted each partner to think like owners: it’s your business now so this information is for you,” Geoff explained. At some firms, where many partners ‘own’ the business, they still need to be told what they can and cannot do, as they don’t have the full information they need to make informed business decisions. So they escalate problems up to the managing partner to solve. This removal of the “comfort blanket” as Geoff and Jeremy describe it, and the positive reaction that followed, has been a big factor in the continued success of FRP Advisory. All partners now take on all the benefits and risks of owning and running a business.

Alongside these changes, came a fundamental shift in remuneration strategy. “The partners are only paid if FRP Advisory is profitable – there is no such thing as salary,” explained Jeremy. “This means that the team need an in-built trust in their own ability. We have interviewed some pretty senior professionals along the way who don’t back themselves – they don’t have enough self-belief to take the leap of faith required.” This pay structure helps to keep FRP’s entrepreneurial mind-set well and truly alive. It also means that all partners are very well placed to understand their clients’ way of thinking.

“We chose not to go down the route of rewarding individual partner performance – as we think that’s destructive – but we do look at office-by-office performance. Our budgets are not ridiculously ambitious – we set a sensible budget for a sensible profit. We think blue-sky budgeting can be hugely demotivating,” added Geoff.

The business has grown substantially since Geoff and Jeremy led its acquisition six years ago and created this new transparent, ownership structure. This has been accompanied by a substantial change in the partner base, which has undoubtedly helped them to fuel the growth of the business. Since the MBO, approximately half of the original partners have departed, which has allowed FRP Advisory to keep its partner numbers at a consistent level since 2010, whilst also being able to attract and select new individuals who truly fit the FRP way of working. These partners back themselves; they take ownership and they are all experienced in their chosen field. This strategic shift has enabled the business to expand its service areas for its clients and to operate in new regions.”

When the business was acquired it focused extensively on the South East, with only a limited presence North of Birmingham. Now with 13 offices in the UK, including: Manchester, Leeds, Aberdeen, Edinburgh and another recently opened in Preston, FRP Advisory is a national business, with each of its UK regions being in charge of its own destiny. The pair recognise the power of regional-office autonomy: “We are keen for the team in Manchester, for example, to tell us what works best in Manchester. And for the team in Birmingham to decide on what works best in Birmingham. While you want some standardization, we are also clear that we desire flexibility too. The way business and relationships work in one place is quite different from the way it works in another. We are careful not to issue edicts saying: ‘Do it this way’. We embrace regional differences; we try to get people to buy into what they need to do rather than telling people what we think they should do.” It is quite simply down to the partners who best understand their market, their clients and the nuances of their geography to make their own decisions for their patch. Furthermore, FRP Advisory has a growing international presence, recently boosted by its membership of Prime Global. This international association of independent accounting firms has increased the firm’s ability to work with its clients on international and cross-border matters.

Time and again during our meeting, Jeremy and Geoff referred to the importance of quick decision- making, emphasising how crucial they believe it is in today’s rapidly evolving market. “We deliberately have short decision-making lines,” said Geoff. “If we want to do something, we don’t want to get caught up in unnecessary bureaucracy. Partners will say: ‘We’d like to do this. Should I or shouldn’t I?’ We will of course engage with them as to whether we think it’s a good idea but we’ll often reply with: ‘Will it benefit your office?’ And if the answer is yes then we tell them to go for it. Similarly, lateral hires will come in and say: ‘I’d like to recruit someone – where are all the forms I need to fill in?’ The answer is that we don’t have any. We also don’t set spurious limits on marketing budgets, either. It’s their budget. It’s their office; their P&L. If they think that’s what should happen then it’s not for us to say it can’t. If you create a mindset where as many people as possible think like owners then they will make good, fast decisions.”

Geoff and Jeremy finally spoke about the dramatic changes that both FRP Advisory and the industry have witnessed over the last 10 years. With the recession, structural reorganization in the banking sector and a shift in attitudes towards supporting businesses, FRP has had to continually evolve to remain relevant in the market. “In part, the firm’s success can be attributed to our ability to respond to rapidly changing market dynamics and the fact that we have diversified the services we offer,” added Geoff. FRP now specialize in five core service areas: forensic services, corporate finance, debt advisory – helped by the recent purchase of Litmus Debt Advisory, restructuring advisory and pensions advisory.

As our conversation drew to a close, Geoff reinforced exactly what it is that he thinks has enabled FRP Advisory to navigate so effectively through the market at such an uncertain time. “Since the launch of FRP, the market has declined. But we’ve been able to stay on top of things because our partners take ownership of the business, because of our quick decision-making, and because of our regional focus. It’s often the case that firms think bigger is better all the time – they want bigger clients, bigger turnover – bigger everything. We don’t think like that. For us quality and focus are more important and doing the right thing will always be our priority. We think that this approach – together with the fact that we own our business – means that we have the insight, ability and empathy to sit opposite a director who’s going through difficult times and offer him/her exceptional assistance.”

So there you have it – the story of FRP Advisory and insight by the bucket load, from the two leaders who have always operated at the sharp end of accountancy.