3 min read March 2024 — In an interview with Invest:, Joseph McLauchlan, managing director of KPMG, shared his perspective on the significant growth in the middle market as private equity drives expansion in San Antonio. He also highlighted the collaborations the firm has with local universities to attract young talent into accounting, and how the transformative nature of AI is seen across tax, audit and advisory services.
When you take a broader look at what is going on in the economy, how have the ongoing changes impacted your company?
There has been a bit of a downturn in transaction work over the last couple of years given inflationary conditions, which is putting a strain on many companies due to higher interest rates and costs. Although we have seen fewer transactions in the market, there has been an uptick in other areas such as tax and audit work to pivot to and plan for the current market conditions.
However, we are starting to see signs of a turnaround. There has been an uptick in M&A, which is promising as it indicates increased activity in the market. Companies seem to be growing more comfortable with what the Fed is doing. One item that remains challenging is finding talent, which has become more difficult given rising wages and the prevalence of hybrid work arrangements.
What strategies do you use to maintain KPMG’s standard of excellence and deliver your services to clients?
We are focused on our teams and culture since our strongest asset is our people. We are always working to help them grow and succeed in their careers by providing the right tools. We pride ourselves on being adept at networking and communication within our teams, which not only adds value to client interactions but also enhances both internal and external communication. This approach is crucial for building and nurturing relationships.
Moreover, we have placed a significant emphasis on incorporating technology into everything we do. We are making great strides in areas like AI to improve our efficiencies and uncover new opportunities. It’s about maintaining that strong culture and team focus because people look for excellent service, and integrating technology further into all aspects of our work is key to meeting those expectations.
What partnerships do you have in place with local educational institutions to attract a younger workforce into accounting?
We have put a strong focus on growing our relationships with local universities, and we’re fortunate to have a wealth of partnerships with excellent institutions such as Trinity, UTSA, Texas State, TLU, Incarnate Word and St. Mary’s. These universities consistently provide a pool of great talent as their programs and enrollment continue to expand. Locally, we are actively engaged in being on campus and establishing connections with professors and students. Our goal is to start building relationships early during a student’s first year in college and continue to help them learn about KPMG, showcasing what a career in accounting and consulting looks like and making them comfortable with their career choices. We are consistently on campus, interacting with students and professors while fostering a deeper understanding of the profession.
In which types of businesses are you seeing the potential for growth?
I’m witnessing significant growth in the middle market, with private equity injecting more and more capital into the area. From a public company perspective, there has been a decrease in activity and IPOs over the last few years given inflationary issues and the additional costs of being a public company.
What is the key to helping your clients navigate an ever-changing tax environment?
The key is staying on top of a constantly changing tax landscape while advising our clients. We pride ourselves on our client service, which is paramount to earning trust in the markets. It involves having open and honest conversations, laying everything on the table, and staying attuned to what’s happening in their industry. Understanding their perspective is key, and from a tax standpoint, it’s essential to communicate effectively. While some may not be keen on delving into the intricacies of the tax environment, I find it crucial to educate clients as much as they want to know. This way, they can factor tax considerations into their decision-making. It’s about fostering a relationship with open communication, a continuous exchange of information, and helping clients apply tax insights to navigate the ever-changing tax landscape in their business endeavors.
What trends are you seeing that are having an impact on accounting and the advisory segment?
When it comes to trends in the market, a key focus for us is technology, especially AI. We are committed to investing in this area and have announced plans to invest over $2 billion over the next five years. The goal is to harness a broader range of AI technologies that can impact and assist across all facets of our business, benefit our clients in how we deliver our services and train our teams in these capabilities. We see this as the most significant development on the horizon which will be transformative for the profession. The potential AI holds for KPMG and our clients is immense and our continued investment will help us leverage its capabilities for continued innovation and excellence.
What is your outlook for KPMG in the near term and your top priorities?
Our top priorities moving forward are to continue focusing on servicing our clients and growing responsibly. We see a lot of opportunities on the horizon, and despite the headwinds, we’re optimistic about the future. The most thrilling aspect, especially from a technology standpoint, is witnessing the potential of AI and various technology investments. We believe these advancements will revolutionize the industry, facilitating accelerated career growth for our teams. In fact, we are at the forefront of this transformation. We were among the first to partner with Microsoft on AI, contributing to the billion-dollar-plus investments made over time. It’s a source of great excitement for us as we look forward to the positive impact of these collaborations and technological advancements.
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