Earlier this month I had the pleasure of speaking with Brett Kelly, founder and CEO of Kelly Partners (ASX: KPG), about his entrepreneurial journey and his vision for compounding shareholder value at KPG over the long term.
If you examine the historical track record of Kelly Partners, you will notice a pattern of superb execution on behalf of shareholders — cash-generative operations, profitable growth, and an emphasis on minimizing equity dilution in order to maximize the compounding of value per share.
KPG is an accounting and tax advisory firm in Australia that has grown organically and through M&A and is in the process of aggressive expansion outside of Australia, including in the much larger US and UK markets. The company has developed a proven recipe for acquiring and integrating smaller accounting firms. As the center of gravity of the business shifts increasingly to the US, management is considering a US listing of the shares. This should bring greater attention to the company and assist with its US growth plans.
KPG is focused on becoming a global accounting firm — think PwC or Deloitte — with Australian roots. The runway for growth is long, enabling Brett to keep applying the same recipe that has proven successful to date. In this sense, KPG may be analogous to a smaller version of Constellation Software, but in the accounting services industry. Brett sees Mark Leonard as a role model, both in terms of the process the Constellation president has applied on the acquisition side as well as Mark’s ability to think big about the potential of his business.
My session with Brett covers a lot of ground in a bit over an hour:
Brett’s path and the genesis of Kelly Partners
Business operations
KPG business system
Kelly culture: what makes it special
Partner/employee incentives
Global expansion plans and priorities
Role of tech: threat and/or opportunity
Capital allocation
Metrics Brett tracks, e.g., owner earnings + trinity (parent/opco)
Capital allocation philosophy and role models
Acquisition criteria and funnel
Advantages of being a public company
Looking ahead
Runway — vision for KPG a couple of decades out
Growing as a leader — Brett’s secret to scaling with the business
How shareholders can be constructive on KPG’s journey
