The race is on for one of the most prized jobs in professional services as Deloitte prepares to replace John Connolly after a decade in charge of the Big Four accountant.
Mr Connolly, 59, will stand down in May next year after three terms as chief executive and senior partner. In that time he transformed Deloitte from an also-ran among the City’s leading auditors into the most profitable.
Deloitte’s board will consult among the firm’s senior ranks over the next three months before recommending a successor to its 700 partners. A final decision is expected to be made at a board meeting in January.
David Sproul, head of the tax division, and Martin Eadon, an audit partner who sits on the executive committee, are the board’s preferred candidates, a person familiar with the situation told The Times. Mr Sproul joined Deloitte in 2002 after it acquired Arthur Andersen’s London operations. Mr Eadon is a Deloitte lifer, having joined in 1980. Neither is well known outside the firm.
Vince Niblett, head of the audit practice, initially was regarded as the favourite but is likely to take on a role with Deloitte’s global network.
Deloitte declined to comment on specific candidates. Speaking to The Times, Mr Connolly conceded that the issue of succession was “in the air” but said that the firm wanted to avoid open competition between potential successors. “We don’t allow people to go around the country calling meetings and giving presentations about why they will be a great leader,” he said.
Mr Connolly is the City’s best-paid accountant, earning £5.2 million last year, and has been one of the most dominant figures in the sector since he took over Deloitte in 1998.
The firm was then the smallest of the big accounting firms, roughly a third the size of PricewaterhouseCoopers and half the size of KPMG. Under his leadership, fee income increased by 350 per cent to nearly £2 billion last year, only slightly behind PwC, on £2.25 billion, as the largest of the Big Four. Partners’ profits have tripled under Mr Connolly’s leadership to an average of £883,000 last year, while Deloitte increased its share of FTSE 100 audits from four to 21.
Mr Connolly’s ambitious expansion of the firm began with the decision to remain in the consulting business in the wake of the Enron scandal. This was swiftly followed by his boldest step — taking over the remains of Arthur Andersen after the accounting giant, which audited Enron, collapsed in 2002. The acquisition, which resulted in 3,500 staff joining the firm on a single day, is widely considered a success.
PwC, Ernst & Young and KPMG sold their consulting divisions in the early 2000s but are now scrambling to make up ground and rebuild them.
Mr Connolly again surprised the accounting world this year by moving into the £2 billion commercial property market with the acquisition of Drivers Jonas, a chartered surveyor. It is one of three deals Deloitte has announced this year. It has also recruited more than 40 partners from rivals since the financial crisis hit.
He said: “People think I’ve gone potty because I’m even more relentless [than before I decided to retire], as if I’ve got something to prove.”
Mr Connolly, who is also chairman of Deloitte’s global network, said that he may remain at the firm after stepping down as UK chief executive. “All the partners know I’m not going to retire. I don’t have plans to go off fishing or something like that.”
Boss with a winning mentality
A Deloitte partner, when asked to describe his boss, puts it this way: take all the chief executives of big British businesses, lock them in a dark basement and tell them to fight their way out — and John Connolly will be the one who emerges alive.
Mr Connolly, a Manchester United fan, is similar in many ways to Sir Alex Ferguson: a formidable boss who is used both to winning and to getting his own way. Those who have worked with him say he is a ferociously bright dealmaker who is not afraid to trust his instincts.
Mr Connolly owns homes in London and Sussex, where he keeps racehorses, yet he grew up in Manchester in a “dead ordinary” family. The son of a civil servant, he attended St Bede’s Roman Catholic school but dropped out at 16. After leaving school he took a job with a high street accountant and within a decade had moved to London and become a partner at Mann Judd, which eventually would become part of Deloitte.
As chief executive, Mr Connolly has been so dominant that some fear a leadership vacuum after he steps down. Leaders of professional firms are seldom as all-powerful as the chief executives of big corporations, yet Deloitte partners joke that they have been little more than “account managers” under Mr Connolly.
Mr Connolly admits that he can be a tough boss: “I am very decisive. I probably sometimes even make decisions a little bit early, before I’ve heard the debate.”
He attributes this to a relentless drive to succeed. And not even Deloitte’s fiercest rivals would deny that his track record has been extraordinary. “He’s phenomenal,” a partner at another Big Four firm said. “Whoever takes over will struggle to keep up.”
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