The demand for tax and legal advice, audit or consultancy in periods of financial crisis seems to grow like a cake in the oven, say consultancy market players.
“When some sectors of the financial business are in crisis, others seems to operate much better than before. For instance, the international financial crisis is, perhaps, the best motivation to improve turnover and profit in financial consultancy, fiscal planning, audit, evaluation and investment advice,” says Marius Stancescu, president of Riff Holding International. And his company numbers follow this trend. In the first half of this year, Riff Holding, which has affiliated to the Moore Stephens network, reported a 35 percent increase in company business compared with the same period of last year, surpassing EUR 1 million.
Similarly, local final consultancy firm TaxHouse, which is affiliated to the international network Taxand, expects an increase in turnover of 40 percent, compared with the EUR 1 million reported last year. “We estimate a growth of consultancy services for taxes and imposts, which is why we are even considering expanding our services in these fields by hiring new specialist,” said Emilia Dragu, TaxHouse partner.
International crisis, local effects
But there is an Achilles' heel regarding the impact of the current financial crisis on the consultancy market. Players believe that the turmoil will leave its mark on the financial results of those companies which provide mainly services related to transactions or due diligence.
“Everyone is in a little dilemma. While last year, Immoeast, for instance, bought a project every month, this year no major transaction has been announced on the market. This situation is having an impact on consultants, especially real estate ones, who live from transaction fees, and is also having an impact on lawyers and accounting firms which depend on transactions,” Jan Glas, managing partner at TPA Horwath, told Business Review.
He said that real estate-related businesses, including due diligence, takeover and transactions, make up around 50 percent of his company's total activities, while the rest consists of assisting production and service oriented companies.
“For us it matters less because just 10 percent of our services are in real estate, oriented towards transactions or due diligence. We live from ongoing business, including tax advice and VAT declarations. But even though we do not live only from transactions, if this situation continues, on the long term the growth rate will decrease in the coming years,” said Glas. He estimated that this year, TPA Horwath will have a sales growth of over 50 percent and up its number of staff from 45 employees to 65.
“It is a growing market,” confirms Glas, adding that “We are considering opening a second office in Romania. It's on the agenda for 2009 but I need to find the right people for this project. The new office will probably be either in Brasov, Sibiu or Cluj.”
New fields of profit
Market specialists expect that the main trend in consultancy, tax and legal advice will be anything which is energy related. “We have certain clients in the energy field. At our Bulgarian office, 50 percent of their business is energy or energy related. Our office in Croatia is more specialized in wind energy. As we speak we have certain clients that are looking at wind energy investments,” said Glas.
Market players are prospecting new business areas which are likely to assure significant profit growth in the next years. For instance, apart from the existing ongoing services that TPA Horwath provides, the company is focusing more on EU funding consultancy oriented towards companies interested in obtaining grants for investments and also towards city halls, in search of EU funds for infrastructure development.
“In Romania, quite often, this was done in an unprofessional way. Someone knew someone, the old way. Now, more and more, we're seeing EU funds being obtained through real projects which can be submitted and get approved, more than the old approach,” said Glas.
Consultants expect that the market will continue to increase for at last another 10 to 15 years, when it is estimated to reach a constant growth level y-o-y.
By Dana Ciuraru