Seventeen years after the collapse of accounting giant Arthur Andersen, a group of its former partners are aggressively expanding the resurrected Andersen name internationally into legal and tax advising.
“We want to revive some of the old magic,” Mark Vorsatz, CEO of Andersen Global, said in a phone call.
Since 2013, Andersen has grown from 16 offices in the U.S. to 19 and to144 offices worldwide. The pace of expansion has been picking up recently, with 46 offices opened in 2018 and 19 so far in 2019.
Revenue was around $500 million in 2018, with 2019 revenue expected to hit $600 million, according to figures from Andersen. “That could hit $1 billion under my tenure,” the 64-year-old Vorsatz said.
“It’s reasonable to add another 25 locations a year,” Vorsatz said. “We don’t compare to the Big Four but Andersen always believed in quality, not quantity.”
The largest of the Big Four firms, Deloitte LLP, had 2018 revenues of $43 billion, according to figures from Andersen. Vorsatz said that the old Arthur Andersen didn’t chase revenues for their own sake.
Joshua Ronen, professor of accounting at New York University Stern School of Business, doesn’t buy the assertion about the old Andersen’s priority list. Revenues were always at the top.
“Andersen’s culture had changed long before Enron,” Ronen said in a phone call. “There had been other scandals such as WorldCom, and the Andersen culture had changed to chasing revenue. I don’t think the name would be a positive today.”
Vorsatz was one of 23 former Arthur Andersen partners that set up a firm of U.S. tax consultants, called Wealth & Tax Advisory Services LLP (WTAS), after the original Andersen collapsed in 2002.
WTAS launched a program in 2013 to expand internationally through alliances with foreign firms. It bought the rights to use the Andersen name the following year. Now called Andersen Tax in its U.S. home market and Andersen Global internationally, it has launched a rapid foreign expansion so it can offer global tax and advisory services, primarily for clients in its home U.S. market.
“They can choose whether to use the Andersen name or not,” Vorsatz said of the foreign partner firms, “and most choose to do so—it’s a powerful name in export markets.”
The original Andersen failed after being found guilty of obstructing justice during an investigation into its auditing of failed energy company Enron Corporation. It audited telecom company WorldCom Inc, which also failed in 2002.
“The Supreme Court overturned the verdict three years later,” Vorsatz said, referring to Andersen’s conviction for obstruction of justice in the Enron case.
Audit, Consulting Don’t Mix
Vorsatz admitted that “the Andersen name may have some negative connotations in audit.”
The new firm doesn’t do auditing, which Vorsatz said was to avoid any possible conflicts of interest. “I believe audit and consulting work should be completely separate.”
Andersen is expanding globally to offer a one-stop tax and legal service to multinational clients.
“Mid-sized firms generate the most legal business,” Vorsatz said. “But we also have some multinational clients in the U.S. Some of these use six or seven different legal firms globally, and so we’re building up a global network to take over all of their work.”
The firm has a solid framework for an international network, Vorsatz said, but needs to plug gaps.
Filling Holes in Asia
The biggest gap is in Asia, Vorsatz said. “We finally formed an alliance in India, after three years of looking,” he said. “It will take the same amount of time to find a partner in China.”
Andersen Global announced an alliance in May 2018 with Indian tax lawyers Nangia Advisors LLP, which has offices in four cities including New Delhi and Mumbai.
“In Europe, we have a presence in all of the countries except Scandinavia and the Baltics,” Vorsatz said. “But we still have work to do in the major countries such as the U.K. and Germany—in Germany we have 80 staff, which needs to build up to 300-500.”
Andersen announced June 6 a tie up with Kolaschnik Partner Rechtsanwälte, a corporate law firm in Hamburg. It opened a new office in Manchester, England, the previous month.
The firm now has 53 European offices, up from 42 in June 2018, along with about 20 in Latin America. It has 18 in the Middle East and 12 in Africa after opening its first African office in Nigeria in 2017.
The focus for the rest of 2019 is expanding in Africa, rounding out its Latin American presence by opening offices in Chile and Colombia, and entering Central European countries such as the Czech Republic and Poland, Vorsatz said.
Vorsatz acknowledged that his firm’s fees aren’t low, but if they provide quality services, “then business will follow.”
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