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Buzzacott LLP Carving out a niche JASPER JOLLY


W


ithin a single office at the heart of the City of London, Buzzacott’s accountancy practice has an intriguing range of


services. “From nuns to hedge funds” acts as a kind of unofficial slogan, reflecting the diversity of Buzzacott clients. Buzzacott practices for some religious orders, and has an important specialism in accounting for not-for-profit charities and foundations. These are not, it is safe to say, standard sectors, and so it is possible to begin to see how a practice in hedge funds – so contrasting in so many ways – fits in to the overall Buzzacott offering. Finding niche specialisms and then trying to excel in them is integral to the Buzzacott business model, building around the experience of their key people.


The origins of the firm are venerable, stretching back almost 100 years to a Mr Fred Buzzacott, a munitions accountant who set up his City practice after the First World War. Accountancy has changed beyond recognition since then, but Buzzacott is still situated in the shadow of St Paul’s Cathedral (albeit after several office moves around London over the years) and has not gone down the path of mergers and multinational expansion, save for a small office in Hong Kong to service expatriate tax clients. David Jarman, a partner and the head of the practice for FCA-regulated firms, describes them as “the largest single-office accounting firm in the UK.” This is not to say that Buzzacott has not grown, or that its services remain the same as they did even 10 years ago, but rather that the firm targets specific sectors in which it can point to unique expertise. Jarman describes the way in which Buzzacott has changed as one of positioning rather than of growth: “Whilst a lot of the mid-tier accounting firms took a while to specialize, we have always been a niche practice, and therefore our focus is developing niches,” he says.


Niches In the last 10 years the hedge fund practice has become an important example of this niche focus, developed, as Jarman says, “on the back of key individuals who want to develop the business.” It was Jarman himself who spurred the hedge fund specialism, bringing with him his contacts from a career spent in the financial services sector. He trained at Rees Pollock, helping to set up the hedge fund team, before moving to Moore Stephens and doing the same again. In 2003 Jarman joined Buzzacott, and in the 11 years since then he has helped to make the hedge fund business an important part of the firm’s offering. Buzzacott was well suited to a move into hedge funds because of its long-standing expertise in advising US citizens based in the UK, many of whom worked in the banking or fund management sectors. “A lot of the initial growth,” Jarman says, “was building on existing contacts, as well as targeting many of the US hedge funds setting up offices in London. They


have always been a constant supply of business, even in the early days.”


The constant supply of business had been based, Jarman says, on “our US tax expertise.” US firms wanting to set up UK subsidiary LLPs obviously face a huge amount of structuring issues, on both corporate and personal levels. Buzzacott’s US expatriate tax practice thus provides a useful complement to the hedge fund business. Even after the inevitable slowdown with the global financial crisis, US firms looking to set up in the UK are still “an important source of business.” Jarman is confident enough in their offering to describe the firm as “the leading providers of accounting and audit services to subsidiaries of US hedge funds,” advising some of the biggest names in the US hedge fund industry in the process.


Start-ups This is not to say that US inbounds are the only source of business for Buzzacott. They aim to be a “full service, one-stop shop for smaller FCA-regulated businesses,” including private equity funds, brokers, and corporate finance firms along with hedge. Alongside the audit business, run by Peter Chapman, Buzzacott has a team of 40 people providing a long list of back-office services which these firms don’t want to deal with: the bookkeeping, payroll, VAT, HR consulting, benefits support and regulatory reporting – the latter of especial importance in the last few years. Jarman’s day-to-day role consists of coordinating all of these separate services so that they work seamlessly in the background. Jarman notes that, “It’s great to be a one-stop shop, but if all the parts aren’t working together and there isn’t a sharing of information there’s no huge benefit in being a one-stop shop. It’s quite challenging, making sure you’re on the ball all the time. You’re taking a lot of information and it’s all being shared.”


Setting up the back office for smaller firms is “bread and butter to us,” says Jarman. More than a decade into Buzzacott’s hedge fund practice, the simple assurance of a reputation for reliability has become an important part of the offering. Jarman says, “The biggest thing for us is making sure that they trust us to basically hand-hold them through the process, and they take assurance from the fact that we’ve done it hundreds of times before. It’s being there and understanding what they need and understanding that they need to get assurance and trust in us to be able to outsource and say, ‘You get on with that. I’ll focus on getting this up and running.’”


Buzzacott offer the full accounting service from start- up to wind-down, but can offer a “bespoke” service if desired to those firms that only want advice on the start-up structures. Often though, relationships that were envisaged as temporary stretch on beyond that.


The outsourcing model is well established because of the difficulty and spending required in setting up all back-office functions in-house, and Buzzacott is prepared to take “a long-term view” on prospective clients. And, of course, Buzzacott can offer their experience as well as accounting services. Jarman is clear that he views Buzzacott’s offering as much more than a simple accounting service for hedge funds, increasing the value for money of their services: “We’re part of their business for a lot of them. A lot of them see us being there as being their finance team or being their CFO. It’s a connection that means that we are often a sounding board for proposals on change and development, whether they be regulatory, taxation or strategic.”


Being available as the first point of contact on any issue can be demanding, particularly when clients are working in different time zones, but for Buzzacott it is an important selling point, differentiating them from some of the bigger accountants. Having a huge multinational operation can obviously have advantages, but it can also lead to frustrations. Clients in need of advice are often priced out of talking to partners because their time is so much more expensive, and there can also be frustrations in being passed around various people who are unfamiliar with the client’s business. The single-office set-up obviously obviates the bureaucratic complexities of bigger firms, and Buzzacott prides itself on the availability of partners to advise clients. This might be seen as a problem with the aforementioned time differences, with West Coast private equity and hedge fund managers who might need to pick up the phone at the end of their working day, but some of the Buzzacott managers work US hours to get around this.


For the moment opening another office is not on the agenda, although “It has certainly crossed our minds.” The Hong Kong office is small, but opening in the US would be another proposition entirely. Jarman and others regularly travel to meet clients, but they don’t feel the need for a permanent presence, as the businesses Buzzacott is advising are all UK- based, even if the finance teams are on the other side of the Atlantic. On the odd occasion that more specialist knowledge is required, Buzzacott can turn to PrimeGlobal, the worldwide association of firms who share the same standards. Growth is still an aim, however. Recently a growth area in Buzzacott’s hedge fund practice has been in consultancy and benefit support for larger managers. As they gain a reputation in specific services through work with smaller managers, some of these services are scalable to the larger firms.


Regulatory reporting The consultancy services that Buzzacott provides are wide-ranging, covering the normal accounting areas, but for hedge funds and other regulated entities,


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