Corporate restructuring expert’s career path was partly shaped by his time on the board of the nascent Nama.
Brian McEnery could be forgiven for not looking entirely confident trying to locate the meeting room he’s booked in the firm’s head office in Dublin for an interview with The Irish Times. The firm had only moved a few weeks ago into one of the blocks of Larry Goodman’s landmark Miesian Plaza on Baggot Street, the one-time headquarters of Bank of Ireland. There, serendipitously, the hue on sculptor John Burke’s long-standing red steel piece, Red Cardinal, outside the foyer almost perfectly matches to one of the corporate logo colours of BDO.
While the complex boasts an on-site gym, and perks from bike parking to adjustable stand-up desks have been dangled as incentives to draw staff into the new premises during these hybrid working times, the promise of an in-house barista on the third floor triggered the most excitement when employees first learned BDO was moving from its previous building behind St Stephen’s Green shopping centre we’re told.
The tall and bespectacled McEnery, previously a corporate finance partner and head of advisory at BDO Ireland, who divided his time between the Limerick and Dublin offices, has become a regular customer as he spends more time in the new headquarters.
“I’m still in Limerick at weekends, but I’m Dublin about four days a week now,” says the recently appointed managing partner of BDO Ireland in his Limerick lilt.
McEnery officially took over the reins on Wednesday from Michael Costello, who had completed a trio of three-year terms at the helm and remains a senior figure at the firm. McEnery says his ambition is to grow the business from generating about €70 million of revenues – as it is on course to do the financial year to the end of March – to around €100 million at the end of his term in 2026. It would take BDO Ireland into the three-digit-million league already occupied by the Big Four accounting and consultancy firms and Grant Thornton.
BDO Ireland currently has 550 employees, including 40 partners, with just over 100 people in Limerick where McEnery has traditionally been based, about 30 in Cork and the remainder in Dublin. The firm is seeking to recruit 100 staff this year across all service lines, including audit, tax, advisory, consulting and business services.
“I’ve been given a mandate by the other partners to grow the business geographically, to build the Cork office, for example, where we have a consulting practice, but I think should become full service, covering audit, tax and advisory,” he said. “I want to talk to firms in Cork that would like to become part of BDO.”
He also has eyes on setting up offices in the south-east and west of the State.
The corporate restructuring specialist by background takes over at a time when business insolvency cases are on the up again after something of a hiatus during the Covid-19 pandemic, when businesses were kept on life support with various State supports and bank forbearance. Does he see a dramatic uptick in corporate insolvency fees?
“Certainly, some businesses are being stretched as a result of rising costs and interest rates in recent times – and I think that rates will remain higher for longer than many in the market expect [as central banks try to rein in inflation],” says McEnery. “There will be a need for some restructuring and tidying up. But I can’t see a hard crisis coming in Ireland, as the economy remains buoyant, unemployment is low, and corporate and personal savings were built up during Covid.”
For McEnery, the environmental, social and governance (ESG) agenda will be a key area of growth for the firm over the coming years, particularly as the EU Corporate Sustainability Reporting Directive, requiring companies to disclose information on how they operate and manage environmental and social risks, is phased in between next year and 2028.
“Whether this ends up being an audit service or an assurance service, there is a big role for accountancy firms in terms of measurement and management,” he says. “But ESG is relevant to everything that we do, from audit to tax. It’s also going to be very important in advisory, because if you are working with a company that will be looking to sell itself in two or three years’ time, they’re going to have to make sure that they have the right credentials, because the acquirer won’t otherwise get bank financing for a deal.”
The Limerick native, whose father was an engineer and mother a nurse who went on to manage a credit union, followed his other brother Kevin in studying accountancy and taking the Association of Chartered Certified Accountants (ACCA) exams while at the School of Professional Studies, after leaving the CBS in Sexton Street in Limerick in the late 1980s.
“I was semi-motivated at second level. I was very motivated at third level,” he said. “Even when I was doing my accountancy exams, I was doing some bookkeeping for a number of businesses around Limerick, for the likes of a travel agency and a few other companies.”
After graduating, McEnery joined Limerick-based Fitzpatrick Business System, a leading information technology service provider to accountancy practices and offices in the midwest to gain an edge on the IT front. He “halved” his salary a little over a year later when he went into accountancy, signing up to what was then Horwath Simpson Xavier in 1995. Within months, it had migrated to become part of BDO.
McEnery cut his teeth in corporate recovery under Con Quigley with BDO in the Limerick office’s role in the 1996 debt overhaul of property developer McInerney Holdings, which had racked up massive losses over the previous five years. McInerney Holdings, the subject of a previous restructuring in the 1970s, would ultimately implode in 2011 following the property crash.
In the late 1990s, McEnery also landed a gig to carry out a strategic review for the Irish Nursing Homes Organisation (now Nursing Homes Ireland), establishing a career-long speciality advising in the healthcare sector.
His interest in the sector had been established long before that, working summers while in college as a care assistant in a nursing home near Birmingham, where his aunt was involved in running hospitals. It was just ahead of strict vocational training and vetting rules being introduced in the UK – and well before the Health Information and Quality Authority (Hiqa) was set up in Ireland in 2007 in the wake of the Leas Cross nursing home scandal. McEnery would serve as chairman of Hiqa between 2013 and 2018.
McEnery and Quigley were among a group of about 20 BDO staff who left the firm in 2003 to set up Horwath Bastow Charleton in Limerick, again under the Horwath banner. Less than a decade later, they rolled the business back into BDO Ireland under the firm’s then managing partner, Derry Gray.
McEnery was appointed to the board of Nama by then minister for finance Brian Lenihan when the so-called bad bank came into operation days before Christmas in 2009. The seed had been planted earlier that year, when the two found themselves sitting beside each other at an event in the dining hall of Trinity College Dublin and the minister quizzed McEnery on his restructuring experience.
“Towards the end of the evening he said: ‘There’ll be something coming up. I’ll say no more. But keep your eyes open. I’d be interested in people with your type of profile’,” recalls McEnery.
McEnery’s wife heard an item on RTÉ Radio 1’s Morning Ireland a few weeks later about the establishment of Nama, prompting them to wonder if that was what Lenihan had been alluding to. He put in an expression of interest, detailing his background in insolvency and restructuring, and was called by the minister the day before Nama’s first board meeting to say he’d gotten the gig. He describes the experience as one of the “highlights of my life”.
“It was just a phenomenal achievement that an organisation could be built from scratch that quickly to take over €74 billion of loans from the banks.” While the loans were acquired at a discounted price of €32 billion – reflecting how the value of property assets behind the loans had slumped following the crash – there were a lot of fears at the time that it would expose taxpayers to further losses.
On the contrary, Nama currently expects to pay a lifetime surplus of €4.5 billion to the exchequer by the time it is wound down in the middle of this decade.
McEnery says he never believed the doomsayers. “A lot of the commentary on Nama at the time excluded one thing: the interest income generating capacity of the organisation. But Brendan [McDonagh, Nama’s chief executive] was very focused from the outset on getting assets to perform and capturing income from rents on properties where banks had given up the fight. The money, before that, was leaking left, right and centre.”
The esteem in which he holds McDonagh is clear. “He is one of the hardest-working and shrewdest individuals I’ve come across. I couldn’t but admire his dedication to the cause and his very, very significant personal understanding of everything that went on in the organisation.”
McEnery stepped down from the Nama board in late 2018, after completing two terms. Months later, his team in Limerick was appointed to work with BDO staff in Nicosia to advise on strategy to manage the non-performing loans of failed lender Cyprus Cooperative Bank.
Name: Brian McEnery
Position: Managing partner of BDO Ireland
Something about him you might expect: He is a past president of the ACCA global council and was in New York this week for the International Federation of Accountants global board meeting
Something that might surprise: He is known to paddle-board on the river Shannon. “But only during the summer months . . .”
“I was in Cyprus for more than 100 nights in 2019 working on the project,” he says, “and had just returned from a trip there four or five days before Covid [restrictions were introduced in Ireland]. I had been planning to be in Cyprus for much of 2020 and 2021, but we ended up having to do much of the work remotely.”
The EU audit reforms that came into force in 2016 resulted in the Irish Auditing & Accounting Supervisory Authority (Iaasa), previously a watchdog over accountancy bodies, taking on the direct oversight of firms that audit public interest entities, including banks, insurers and listed companies.
The latest round of Iaasa reports on sampled audits for 2021, issued almost a year ago, concluded that while BDO, which had a 0.4 per cent slice of the Irish public interest entity audit market, received good grades for both its sampled audits, it received one so-called “red” finding as part of Iaasa’s assessment of the design of the firm’s system of quality control over such audits. A BDO spokesman said at the time that the firm would take on board Iaasa’s recommendation that there should have been more internal consultation by the engagement partners, who map out the scope of audits with clients.
McEnery says he agrees with Iaasa’s practice of publishing its findings, even if most peers across Europe still keep such reviews away from public eyes. “There needs to be transparency here, just as there is with Hiqa publishing its [nursing home] inspection reports,” he says.
“The [audit] profession also needs to continuously evolve. We’ve got to continue to try to close the expectation gap,” he says of the disparity between what auditors see as their role and what’s expected by the public, politicians and media.
Most recently, the firm he leads has been investing heavily in ongoing training of partners on the scope of the latest acronym to hit the industry: ISQM 1, a new audit quality management standard pushed out in the wake of a series of international accounting scandals in recent years, including the collapse in 2020 of German e-payments group Wirecard, Europe’s answer to Enron.
“I’m going to support the investment required in this practice around ensuring that there are quality outcomes,” says McEnery. “And that means, among other things, that you can’t overburden your audit partners with too many audits, so that they get the time for quality control and assessing risk appropriately.”
He says that BDO has built up resources in recent years so that much of the continuous learning that its staff need to go through is delivered in house. There are limits, however. The 52-year-old is currently doing a part-time Master’s in central banking and regulation, through Warwick Business School in collaboration with the Bank of England, having finished a masters in professional accounting at the University of London in 2019.
“I’m very passionate about lifelong learning,” he said. “I have a great hunger for knowledge.”
Content adapted from The Irish Times.