“We are well down the road in terms of committing our €40m investment”

Barry McCall speaks to Xeinadin Area Managing Partner Paul O’Connell about the firm’s rapid growth in Ireland, multi-million euro investment programme and the outlook for the Irish economy 

Formed just five years ago in the UK, Xeinadin has grown at pace and now has over 135 offices, more than 2,000 professional advisors and 80,000 clients across Ireland and Britain.
 
“We are ranked eighth in Ireland in terms of turnover,” notes Area Managing Partner Paul O’Connell whose own firm, Cork-based Quintas, joined Xeinadin in late 2023. 

Looking back on the history of Xeinadin, O’Connell explains that it was established in 2019 when some 100 accountancy practices came together to collaborate and share resources. 

“At the start, it was a group of independent firms agreeing to collaborate, but they worked together to build a core structure to bring the different offices together,” he says.

“They set up shared IT systems and HR, compliance, training, business development, marketing and finance functions and, today, we are one ‘Xeinadin’ – one firm with one structure and common systems and policies. It’s not a franchise or a network model. We are one firm with everyone in it collaborating together as colleagues.”

Growth ambitions

The firm’s growth ambitions received a significant boost when private equity investor Exponent bought into it two years ago. “Xeinadin has been on the acquisition trail ever since,” says O’Connell. 

“Thirty offices joined the firm in the last two years, and we see significant further consolidation in the accountancy sector over the next two or three years. 

“Exponent has been a brilliant partner to work with and have been hugely supportive. They have really got involved in a positive way to drive the growth and development of the business.”

Six months ago, Xeinadin announced a €40 million investment in the Irish market with the aim of further expanding its footprint here with a core focus on taxation, business advisory and audit services for SMEs across the country.

“We have already pretty much committed 40 percent of that,” O’Connell says. “We are at the advanced stages of legals and due diligence with five firms and we hope to complete those deals over the coming months. We are well down the road in terms of committing the €40 million.”

The business has a strong regional focus, he adds. 

“We are already in Dublin, Kildare, Kilkenny, Wexford, Cork, Limerick, Galway and Belfast and we are now focusing on areas like the Midlands, Waterford, Kerry and Mayo. We already have an office in Galway, but we want to expand there. We still have an eye on Cork, Limerick and Dublin as well, of course. 

“Other firms looking at consolidation tend to focus on the major cities. We have a different focus because our client base is mainly made up of SMEs and having a local presence is really important to them and to us. We want to be close to them to build lasting relationships.”

Location isn’t the only determining factor and Xeinadin is highly selective in the firms it wants to acquire, O’Connell points out. 

“We are targeting high quality firms with ambitious partners who want to join us on a journey to drive the business on and avail of the growth opportunities being part of Xeinadin can bring.”

The backing of Xeinadin is important in a number of ways.

“Most smaller firms aren’t in a position to offer speciality services to their clients. They can offer those services through collaboration with other offices in the group,” O’Connell says. 

“That will enable them to become the firm of choice in their locality helping to drive growth. My own office here in Cork has seen its headcount grow by 20 per cent since we joined Xeinadin.”

Consolidation in accountancy

The trend towards consolidation is by no means limited to the accountancy sector. “We are seeing it across every sector and in our own client base where the volume of transactions has been increasing steadily in recent years. The reasons vary but there are a number of core drivers. Succession planning is one.”

As O’Connell sees it, the old model among accountancy practices – whereby a new partner would borrow to fund their way in to replacing a retiring partner – doesn’t really work anymore. 

“Socio-economic changes mean that people are buying homes and starting families later in life. They don’t have the access to finance they did in the past. There has to be a different way of accommodating generational change.”

He also notes other challenges facing small practices with one or two partners, including the necessity to meet the fast-changing and more complex needs of business clients. 

“As part of Xeinadin, firms have access to the resources of the whole group when meeting those needs. With artificial intelligence coming down the line and the requirement to keep pace with issues like sustainability, this is very important.”

Recruiting and retaining good employees is equally important says O’Connell, pointing to an example where one of the firm’s offices in a regional location was experiencing difficulties recruiting a Tax Partner. 

“They were struggling due to their location,” he says. “We were able to recruit the partner here in Cork and they can now work in a Cork city location for that office. That would not have been possible in a standalone situation.”

Similarly, when the Dublin office needed assistance with a large audit job, the Cork office was able to send a team to help out.

The firm also offers good opportunities for young accountants, O’Connell says. 

“Xeinadin can offer better training programmes and structured graduate programmes small offices just can’t provide. There is also the opportunity to move to other offices, both in Ireland and the UK, where they can gain experience working with a much wider variety of clients.”

Economic outlook

Turning to the economy and the recent budget, O’Connell is somewhat disappointed with the lack of business supports provided. “There was little or nothing in the budget for business,” he says. “It was very much focused on individuals.”

The lack of movement on the hospitality VAT rate was especially disappointing. “I strongly believe the VAT rate should come down to nine percent, particularly for food. This is an absolute necessity. The 13.5 percent rate could be retained for accommodation. We have seen a large number of closures in the industry over the past 12 months and there are many more coming down the track.”

Outlining some of the cost challenges facing the industry, he says: “The minimum wage has gone up by 38 percent since just before Covid, for example. Even people working in the industry don’t fully appreciate the cost challenge. 

“I visited a restaurant client recently and I went through the costs involved in producing one of their best-selling brunch menu items. By the time I had gone through everything from the raw material and labour and the costs of napkins and energy to the share of overheads, they were left with a profit of 20 cent from the €13 charged to their customers. I hope the new government addresses the VAT rate as a matter of urgency.”

He is more optimistic about the outlook for the wider business community in Ireland. “There is real positivity out there in terms of the economy. Cork is flying, but we do need further investment in transport and infrastructure.”

Returning to Xeinadin and its future plans, conversations are already underway with other potential targets for acquisition with the remainder of the €40 million. 

“Firms are aware of what we’re doing, our approach and the value we bring. It’s not about growth for the sake of growth. It’s about targeted growth in the regions and other specific areas. And firms joining Xeinadin have to align with our values, culture and long-term vision for the business.”