Everyone has a China angle these days… and if you don't, you had better get one. For Baker Tilly PurserBlade, the Hong Kong office of the international accountancy network Baker Tilly, having a successful regional restructuring and insolvency practice was not enough. The firm decided that it needed the depth offered by an on-the-ground tax and audit capability in the Middle Kingdom.
The merger announced yesterday with Glass Radcliffe Chan will bring just such an angle. Glass Radcliffe Chan operates through eleven offices in China under the name of Zheng Feng and has been around since 1976.
The deal will see Baker Tilly's two equity partners, Rupert Purser and Simon Blade, merge their firm with the three equity partners of Glass Radcliffe Chan, Robin Radcliffe, Andrew Ross and Paul Chan. Robin Radcliffe will become the senior partner of the new firm, which will be called Baker Tilly Hong Kong.
According to Purser, the deal is essentially about filling in the gaps in each firm's practice areas. The rationale is that Baker Tilly will bring its international restructuring and insolvency practice skills to bear with the local audit and tax work of Glass Radcliffe Chan. This will generate more holistic work for each other's clients as a merged firm. "Having this China network will be hugely valuable to us," says Purser. "Since we finalized this deal earlier this week, I have already got four referrals from China, deals we would not have got before when we were on our own."
The merged entity will have 150 staff as well as the five equity partners. Unusually for a merger of professional services firms, there will be no redundancies. Indeed Purser claims the deal will see the merged firm hiring more staff.
Key to the strategy will be the changing rules governing restructuring, bankruptcy and insolvency that are being promulgated in Hong Kong and in China. These laws will also encompass those mainland companies that are seeking to raise money through overseas listings.
"Every mainland company that wants to list needs to restructure to some degree in order to make their companies something that investors feel comfortable investing in," says Purser. "Our restructuring work will help those mainland companies take on international participation. We are already doing this type of deal for two mainland companies seeking to list in Hong Kong and one looking to list in London."
The merger comes shortly after it was announced that last week the three partners of Australian insolvency firm Ferrier Hodgson in Thailand had bought themselves out of their practice and joined Baker Tilly. These three - Yundyong Thantiviramanon, John Ginnane and Warwick Kneale - had achieved notoriety by being the court appointed liquidators of TPI, which at $3.7 billion, is one of the largest bankruptcies ever in Asia.