Looking for a savvy investment? There’s one name you shouldn’t overlook…

Brett Kelly, founder of the eponymous Kelly & Partners (ASX: KPG) is a human tornado.

KPG are a voracious acquirer of accounting practices both here and more latterly in both the U.S. and Ireland.  Interestingly, accounting businesses change hands for very low values, normally around 1x revenue.  I suppose it’s because they’re deemed to be so people centric and possibly rather dull. 

However, like death and taxes, accounting is a necessary evil and given the socialistic swing in the western world, combined with ever increasing attempts to tax anything that moves, one would be brave (or stupid) to try and operate without their services.

There have been several decidedly ho-hum accounting aggregators listed on the ASX.  Mind you, the same could’ve been said about Insurance brokers!!!  What caught my attention with KPG – apart from the fervour of the founder – was the simplicity of what they are doing in terms of aggregation. KPG aren’t into Wealth Management, Audit, Consultancy or all the other bits that tend to hang off Accountants. Rather, it’s all about TAX. 

KPG are a tax advice business and going to my point earlier, this an absolute necessity for anyone who has a quid, is trying to make one or better yet, trying not to lose whatever they have left in the coffers.

The model works on a shared services basis, where KPG provide ‘back end’ systems and of course specialist tax services.  In the spirit of Austbrokers, they only buy 51% of a practice and help the emerging partners into the businesses as the old codgers depart.

The growth to date has been impressive; 49 acquisitions in Australia with the focus now expanding to the U.S. to replicate the model.

Brett does not suffer fools gladly and he is on a mission.  He abandoned dividends a while ago to concentrate on growth.  There is a slight whiff of dictator here but if I am to think through my little black book of CEO’s and Managing Directors, I suppose some of the best companies I’ve ever seen possess this endearing characteristic….

Simply, KPG is one of the most intriguing Companies I’ve come across.  The systems appear to be outstanding.  The opportunity identified is enormous.  The balance sheet risk would seem to be negligible.  And the Fund managers find it all too hard.

So, if you add all these things up the story is pretty compelling.

Hugh Robertson is a Senior Investment Adviser at Morgans Financial with over 40 years experience in the Australian Capital Markets. 

Disclaimer: Hugh Robertson, Morgans Financial Limited (Morgans) and its associates may hold securities in the companies/trusts mentioned herein. Unless otherwise stated any advice contained in this article is of a general nature only and has been prepared without taking into account your relevant personal circumstances. Those acting upon information contained in this article without first consulting one of Morgans investment advisers do so entirely at their own risk. To the extent permitted by law we exclude (and where the law does not permit exclusion, limit to the extent permitted by law) all liability for any direct, indirect and consequential losses, damages and expenses incurred in any way (including but not limited to that arising from negligence), connected with any use or access to or any reliance on information contained in this article or any attachments. Morgans Financial Limited ABN 49 010 669 726 | AFSL 235410. A Participant of ASX Group.