Private equity-backed Ryan breaks with billable hour tradition as AI reshapes sector
Private equity-backed tax specialist Ryan says its value-based pricing is built for the age of AI, unlike competitors that depend on traditional hourly billing.
Most of the professional services sector operates under the billable-hour system, in which the specific amount of time spent working on client tasks can be invoiced. But the rise in AI use at firms, including consultancy and law firms, is prompting more clients to question their advisers’ hourly rates, forcing the sector to reconsider traditional billing methods.
Tom Shave, president of Europe and Asia Pacific at Ryan, told CityAM, “I believe that we have a commercial model that will be successful in the age of AI and technology… our approach is that we effectively charge our clients on a value-based route, so we don’t have hundreds of people doing timesheets.”
“I think that model is the one that’s going to win out in the age of AI, because you don’t get into the debate.. around time and materials… it is actually what value we have delivered for you, and we’ll charge you on that basis.”
Ryan was in the headlines last week after it won a “very competitive” bid to acquire European tax adviser Svalner Atlas Advisors in a deal reportedly worth $400m.
Headquartered in Texas and with a presence in London, Ryan specialises in tax services and counts BP and BAT among its clients. The firm was valued at about $7bn earlier this year when private equity firm Neuberger bought a minority stake in it.
Private equity, which dominates the conversation in the accountancy sector, holds a minority stake in Ryan, with partners retaining control of the business.
“My view is that Ryan is actually the best of all worlds… the partners still have a significant stake in the business, we have the capital investment from the private equity firms, which honestly is really positive, it enables us to go faster… and also invest in technology, which is absolutely critical,” he explained.
“I’m a strong proponent of private equity investment into organisations, but it has to happen the right way, and I think Ryan’s got it spot on,” Shave added.
Ryan eyes 20 per cent organic growth
Ryan is positioning itself as a pure tax firm across as many jurisdictions as it can access.
“We [Ryan] think the future is very much specialist-focused and led, and that’s what our clients want, and frankly, that’s what the talent wants as well. Tax is the most important thing, and effectively, we’re creating a new tax-only industry, rather than tax as part of the accounting and audit world,” Shave told CityAM.
Its deal with Svalner Atlas Advisors gives the firm weight in the Nordics and the Netherlands, as well as strength in mainland Europe and the UK. Last September, it entered a strategic partnership with Indian tax advisory firm Dhruva Advisors to gain ground in the Middle East.
He claimed the firm is one of the leading recruiters of senior talent in the market right now as it is targeting around 20 strategic hires (partner-level) in the UK by year‑end. “I think the talent is attractive to Ryan, because firstly, we act for almost 80 per cent of the Fortune 500, so they can work with really blue-chip organisations.”
“We grew organically over 20 per cent last year, and we’ll look to replicate that this year, and growth brings opportunity to work on interesting clients, assignments.. but also disrupt the market, so they want to be part of that, that journey, and I do think now is a time where people are looking at alternatives where they can do have something a bit different,” he added.