Johnston Carmichael chief executive Sandy Manson
Johnston Carmichael chief executive Sandy Manson and his team have built their firm into one of the 20 largest in the UK while retaining its entrepreneurial spirit, as BQ Scotland editor Peter Ranscombe reports.
Entrepreneurial is a word that’s seldom used to describe accountants. With nicknames like “bean counters” or “number crunchers”, these professional advisors have a reputation for being dull and dependable – but stuck in a rut.
Sandy Manson has a different idea. As he celebrates his tenth year as chief executive of Johnston Carmichael, Scotland’s largest indigenous accountancy firm, Manson wants to fan the entrepreneurial spirit that he believes has seen the business weather the past 80 years.
By the time Manson joined the firm in 1991 from Arthur Andersen, Johnston Carmichael had already grown from its origins in Elgin to open branches in Aberdeen, Banff, Buckie, Huntly, Inverurie, Nairn and Turriff, expanding from its native Moray into neighbouring Nairnshire and Aberdeenshire. As North Sea oil boomed, the firm grew to encompass offices in Fraserburgh, Inverness and Peterhead, cementing its position across the North of Scotland.
The new millennium brought branches in Edinburgh, Forfar, Glasgow and Perth, pushing the firm into the Central Belt for the first time. When Manson took over the hot seat in 2007, the business had 350 staff and revenues of £20 million. In December, the firm revealed that its turnover had passed the £40m mark for the first time, with revenues edging up by 3% in the year to 31 May to £40.8m and pre-tax profits rising by 5% to £11.6m. Following the takeovers of Duncan Young & Co in Edinburgh in 2009 and Ritson Smith in Aberdeen in 2012, along with the opening of an office in Stirling, the company now has almost 650 staff and 55 partners spread across 11 branches, making it one of the 20 largest accountancy practices in the UK.
“In years gone by, you could fit all the partners into a single car – now we’d need a double-decker bus,” laughs Manson, who was born and bred in Aberdeenshire and who studied accountancy and economics at the University of Edinburgh. “But we’re not finished yet. This is a £40m business, but I’d like to see it grow into a £100m business.”
The practice now has 14,000 clients ranging from FTSE250 infrastructure firm Galliford Try and property developer Chris Stewart Group, all the way through to Edinburgh-based Stewart Brewing and educational charity Inspire. With so many staff working for so many clients in so many offices, how does Manson try to keep the firm’s long-standing entrepreneurial spirit alive?
“We want clients to get the same quality of experience whether they’re in Huntly or Inverness or Stirling,” he says. “When Bill Johnston and John Carmichael founded the practice in 1936 they had a vision for the firm, and myself and my predecessors have inherited that vision.
“We want a quality business that we can pass on to the next generation. There are two deal breakers for us when members join the partnership – they need to know that we will invest a large chunk of our profits every year in our staff and offices and technology, and they need to be prepared to be managed rather than doing their own thing.
“We want to offer clients that consistency in our services. If people want to act like sole traders then that’s perfectly fine, but Johnston Carmichael isn’t the place to do it.”
Keeping that entrepreneurial spirit alive also takes on a personal dimension for Manson. As the eighth generation of his family to have farmed at Old Meldrum in Aberdeenshire, he admits to feeling a responsibility to make the most out of his career.
“My father had inherited the farm after his brother had been killed when he was a fighter pilot during the Second World War,” Manson explains. “My father wasn’t given a choice – he needed to take over the family farm – but he wanted me to have that choice and so I feel that was a great privilege and I need to make the most of it.”
Manson still lives on the farm and works with a contractor to manage the growing of barley, oil seed rape and wheat. While the business genes needed for farming are alive and well and coursing through Manson’s veins, there is also some other entrepreneurial nowse in his genetic makeup. His great uncle, Sir Patrick Manson, not only founded the London School of Hygiene & Tropical Medicine and was hailed as the ‘father of tropical medicine’ for theorising the connection between mosquitos and malaria, but also launched the company Dairy Farm in Hong Kong in 1886, importing cows from his native Scotland to ensure a supply of healthy milk – the business is now owned by the Jardine Matheson Group and has annual sales exceeding US$17 bn (£14bn).
In Manson’s native village of Oldmeldrum sits Glen Garioch distillery, founded in 1797 by his ancestors, John and Alexander Manson, and now owned by Japanese drinks giant Suntory. Even closer to home, Manson’s own father pioneered the indoor feeding of barley to cattle in the 1960s. As a farmer’s son, Manson could have been expected to follow in his father’s welly-clad footsteps, but instead he ploughed a different furrow. “I went through school without falling in love with any of the subjects until my sixth year when I studied accountancy for the first time,” he remembers.
“I was hooked. I really enjoyed how accountancy allows you to measure the success of a business and gives you a real insight into how a business works.
“I started out as an auditor, but the more and more I learned about businesses and entrepreneurs, the more and more I became fascinated by how accountants could help entrepreneurs to run their companies.”
It’s become something of a cliché for every accountancy firm to describe itself as ‘accountants and business advisors’, but Manson is proud to wave the flag for the broad range of services that his practice offers to its clients. Among the nine ‘business lines’ that the firm offers, more unusual and exotic services like corporate finance and wealth management sit alongside the predictable auditing and tax advice.
“When we sit down with a client to offer them business advice then the first thing we ask them is about their own personal aims,” Manson explains. “There’s no point in having a business if it’s not going to help you to fulfil the goals in your personal life.”
That theory led to Manson writing a book with American management consultant Jay Nisberg and Gary Shamis, managing director of United States accountancy firm SS&G. Stratagem was published by Smart Business Network in 2013, laying out details of business and life planning.
While Johnston Carmichael has its roots in the service of agricultural businesses in Moray and Aberdeenshire, the firm has gone from being a generalist to a specialist across 14 niches, ranging from food and drink through tourism to oil and gas and renewable energy. Its geographical and sectoral spread has allowed it to reduce its reliance on the North Sea and weather the drop in the price of oil over the past two years. Even choppier waters lie ahead though – not just for Johnston Carmichael but for all accountancy firms. The march of digital technology – and financial technology or ‘fintech’ in particular – is poised to further revolutionise the accountancy profession.
“The way to face up to the challenge of new technology is to embrace it and form partnerships with fintech companies,” counters Manson. “That’s what we’ve done with Xero, which offers cloud computing-based accountancy software for our clients to use.
“When Bill Johnston, one of our founders, retired in 1977, he said ‘The future is computers – and I want nothing to do with them’. But, fortunately, not everyone shared his view.”
With a smile and a twinkle in his eye, Manson says he wouldn’t rule out opening an office south of the Border if there was enough demand from clients. Johnston Carmichael is a member of the PKF network of independent firms, allowing it to tap into the expertise of more than 400 offices in 150 countries, but he similarly “wouldn’t rule out” setting up an overseas branch.
It’s rare to find someone who speaks with such passion about accountancy – Manson and his managing partner and chairman, Andrew Shepherd, were recently invited to enthuse the post-graduate accountancy students at the University of Edinburgh about the Johnston Carmichael story. His enthusiasm also extends to his work with the Institute of Chartered Accountants of Scotland, for which he currently serves as vice president and – if elections continue to follow the current pattern – is poised to serve as president in 2018-19.
Away from work, he speaks with a similar passion for his service as a deputy lieutenant of Aberdeenshire, chair of the University of Aberdeen Development Trust and honorary Dutch consul in Aberdeen. But there’s perhaps one passion that’s fallen by the wayside.
Having stood for the Conservatives against former Scottish National Party leader Alex Salmond in the Banff and Buchan seat during the 1992 General Election and lost by 18,000 votes to 22,000, Manson is unlikely to dip his toe into the political waters again. “It’s not on the horizon,” he laughs. “I get on well with Alex and we’ve spoken on many occasions. No matter their political leanings, I take my hat off to people who choose to serve in that way.”