Oliver Hubertus: “Double-digit growth per year should become the norm”

This interview was published in the German-language trade journal JUVE Steuermarkt, and we have been kindly granted permission to use it in English.

JUVE Steuermarkt: Mr. Hubertus, you recently announced that you wanted to develop Baker Tilly's tax practice more in the direction of a ‘tax boutique’. In the JUVE Steuermarkt interview over two years ago, you said that you wanted larger clients, more internationality – especially in outsourcing – and to compete more with the Big Four. That sounds like a contradiction at first.
Oliver Hubertus: In my view, that is not a contradiction. On the contrary, what we initiated back then has already been almost completely achieved. But, of course, this is always an ongoing process. And to be clear: We have not said that we want to overtake the Big Four. But we regularly come up against them in pitches. We are successfully navigating the same waters and have more than reached an equal footing – this is also reflected by our clients and competitors.

But what does that have to do with a boutique?
The objective is different. We could only have the goal of doubling our turnover in a certain period of time and not change anything else. Instead, we have developed a different idea which was derived from specific clients and inquiries. The commodity sector is changing drastically. But there is also a top sector. And we have given this top sector the name ‘boutique’. We want to concentrate even more on the top end, on particularly demanding clients. We call this focus ‘boutique’.

Tax Boutique stands for flagship projects - with a very high standard of quality

So, it's no longer about growth?
The term boutique does not mean small but, reflected in our practice groups and bundled services, stands for “flagship projects” – with a very high standard of quality and a correspondingly fine portfolio of clients. This includes large units, international outsourcing projects, complex succession planning, advising private clients and transactions as well as corporate issues. We have bundled this under the term ‘boutique character’. We do not see a contradiction, but rather the next step.

So, the MDP structure will remain the same?
Yes, we will remain an MDP. We are continuing to develop our specialized units within this structure. One example is our real estate team headed by Steffen Meining and Andreas Griesbach – which is absolutely top class. If the team were outsourced, it would be a boutique in its own right. This is our real estate flagship. The same applies to Ursula Augsten and her team in the non-profit sector. There are only a few in Germany who work at this level. These teams use the MDP platform, but act like specialized boutiques. They are backed by a large number of tax partners; together we have developed this strategic course. 

Isn't there a risk that individual areas will operate too independently, and the referral business will fall by the wayside?
We are convinced that the flagship units generate additional business and do not replace the basic business. And that is precisely what sets us apart from some of our competitors.

We already have a strong standard business with high-quality inquiries.

Which competitors specifically do you have in mind?
I have a few in mind, although they had a different setup. They started as a “boutique” and added commodity topics such as audit or declaration at a later stage. In our case, it's the other way around: we have a broad base and are building specialized units on top. We already have a strong standard business with high-quality inquiries. If we now specifically expand the high-end area without neglecting the basic business, we kill two birds with one stone. Our experience shows: If we serve demanding clients with high quality, this not only increases turnover, but also our visibility and attractiveness in the market. The standard business is running, we just want to position it even better in the future. We didn't just want to get bigger, we pursue a clear goal. And it works. We see further growth potential, especially internationally - not least due to the merger of Baker Tilly US with Moss Adams. This has doubled Baker Tilly US in North America to a volume of 3.8 billion dollars. This naturally opens up new prospects for our transatlantic relationships.

Speaking of which, the private equity firm Hellman & Friedman had invested in the US merger you mentioned. Rumor has it that Baker Tilly is also open to a partnership with a financial investor. Would that be interesting from your point of view?
On the one hand, we see the topic of “investors in consulting firms” as a business model. We support potential investors with our tax, legal and financial disciplines during the entry process, the challenging international structure and, of course, future exit scenarios. Ronny Walter and Frank Stahl are driving this topic massively in the business. In this respect, the entire German market is on the move – WTS/EQT is the most recent example. The code of professional conduct represents a “hurdle” compared to other jurisdictions. As you know, we at Baker Tilly Germany successfully changed our partner model years ago and therefore have no “need” to get involved anywhere. 

All the topics you mentioned not only require specialization and good consultants, but also the corresponding development in tax technology. In this respect, the Big Four are already much further ahead.
Developments in tax technology are rapid. If I tell you today’s status quo, it could be completely different the day after tomorrow. It is clear to us that we are not a software company and do not want to become one. But we have fundamentally reorganized our IT structure over the past year. We have transferred parts of our former core IT into two business IT units: one for Audit & Advisory and one for Legal & Tax. Only specialists – auditors, tax advisors, lawyers – with a high affinity for IT work in these units. They pick up on market impulses, test new approaches and drive forward technical developments in a targeted manner.

Such as …?
A concrete example: a few months ago, we started developing an internal application – a kind of “ChatBT” for our own data world. We are also driving such developments forward with external partners. In the tax area, more than ten people are now working on this project under the leadership of Thorsten Went. Bernhard Rehbein is the counterpart in the legal area. This development is a real quantum leap for us. This is what our business IT stands for.

And you yourself are also busy prompting?
I'm not an IT specialist myself, but I'm still convinced that if you want to make a business line fit for the future, you have to make IT a top priority. That's what we did. I now spend around 40 percent of my week on IT issues. That shows how important IT is for us. And I don't have the feeling that we are lagging behind – on the contrary. And to your question: I also prompt. But we are already moving in the direction of fast-tracking Gen AI preparing for Agentic AI. Just to clarify – this description is not mine.

The traditional hourly rate still exists, but it is becoming less important.

What does this development mean for your growth? Baker Tilly recently had a strong year – 14.2 percent overall growth, more than 11 percent in tax consulting – in other words, for the first time more than EUR 100 million in tax revenue. On the one hand, digitalization also requires investment. On the other hand, clients first have to accept digital products – and above all, they have to pay for them. There used to be an hourly rate, but this is becoming increasingly obsolete. What is your perspective?
We are already in the middle of this process. If we bundle services, we also have to adjust the fee structures accordingly. We do this together with our clients – transparently and in partnership. The traditional hourly rate still exists, but it is becoming less important. Instead, we are increasingly working with package prices, opening clauses and flexible models. We are doing very well with this approach.

One example is our Regensburg office: we integrated “WW+KN” at the beginning of 2024, a highly profitable unit that works very efficiently. Such structures are difficult to develop in large organizations – you need specialized units from which you can transfer valuable knowledge to the entire sector. This brings us back to the boutique approach.

The figures prove you right. At least productivity has also increased - turnover per professional has risen by more than 10 percent.
Exactly. And if you look at our structure: We have more experienced employees and fewer associates. That has an impact, of course. Here, too, what we started years ago is clearly bearing fruit.

Speaking of which, a number of experienced consultants have recently joined your firm – such as Matthias Groschupp for VAT and Christian Jacob in the area of transfer pricing. Are such additions part of a targeted strategy or are you rather opportunistic?
Basically, our approach is strategic. But when a good opportunity arises, we naturally take a look at it. We first analyze the areas in which we want to strengthen our position. This is followed by a possible regional perspective. We do this in close consultation with the practice groups. In addition, we do not pay any purchase prices for new partners or teams. Anyone who joins us must make a conscious decision to join our setup, not because of a financial incentive. That doesn't fit in with our philosophy. This excludes some options, but we offer the younger generation in particular a strong platform with real development opportunities. We develop business cases together, provide sales support and actively support integration. That is our commitment. And the figures show that this approach works. Of course, we also examine opportunities – but always without a purchase price.

And does that also apply to the Regensburg colleagues you mentioned?
Yes, we convinced the Regensburg office in this respect.

We have already talked about VAT, transfer pricing and tax technology. What other growth areas do you see for Baker Tilly in the tax sector?
We want to further expand our flagship units and develop the boutique idea in a targeted manner. One example is the aforementioned Real Estate division led by Steffen Meining and Michel Roes, which operates at a very high level. We need to strengthen the team if we want to achieve our goals. To this end, we are specifically targeting young partners or talents below partner level who are able to convince us professionally. At the same time, we focus strongly on internal development – this is often easier because our colleagues have already been socialized with us. Our goal is to expand these areas in a targeted manner. This also increases turnover.

Where exactly are you heading?
We have clear growth targets. What we achieved in 2024 is not our end goal. Double-digit growth per year should continue to be the norm. That is ambitious, but realistic. The inquiries we are currently receiving are strong – and our sales channel is also working very well. That's a healthy mix.

Despite all the technologization, people remain central to our business.

Overall, the market is in a good position – many competitors have recently performed just as well or even better than Baker Tilly. But many law firms report challenges in recruiting. What is your situation?
We are complaining at a very high level. Of course, some of our employees say: “We need more people.” But the fact is: we regularly hire new people, including tax advisors. There are fluctuations, but the bottom line is that we are growing net. Our HR team under Jens Hoeppe does an excellent job. With over 30 employees in HR, we have a large team – not only for Tax, but also for Audit and Advisory as well as Legal. Despite all the technologization, people remain central to our business.

So, you are less pessimistic.
Our requirements for new employees have increased - and that's a good thing. We conduct targeted searches and take the time needed to find the right talent. We also look for and recruit experienced employees, as well as juniors, and develop all juniors through our Academy. Another point that should not be underestimated is the length of stay. The longer employees stay with us, the better – both qualitatively and economically. That's why we have revised our processes, starting with pre-onboarding. Integration with us already starts when someone signs a contract – long before their first day at work. This creates an earlier and significantly better bond.

Nevertheless, Baker Tilly also had to contend with fluctuation.
A healthy fluctuation is normal. But we have managed to significantly increase the length of stay. And that brings real added value for all sides.

Everyone has to do more for the next generation – that's nothing new. In our annual tax expert survey, you scored well overall. However, one point of criticism that is frequently mentioned, also with other law firms, is the lack of transparency when it comes to salaries. In your opinion, does something need to change?
You can't talk about salary without also talking about performance. In recent years, the topic of performance has often been pushed into the background – although it always forms the foundation. In other areas, it's about consciously thinking ahead. Working from home is a good example: barely conceivable before 2020, it is now standard – and has long been flexibly regulated in our company. But if we see that certain tasks work better in the team on site, we develop solutions together with our employees and talk to them very transparently about the services to be provided for our clients. For me, this is also an important form of transparency.

What does this have to do with remuneration?
When we talk about performance, we also have to talk about remuneration – and that is only possible with transparency. We can see the contribution margin per employee in detail. This means we know exactly what economic contribution someone makes and can derive from this what we can pay. This creates a whole new basis for discussion. 

Is this even possible on a broad scale?
We are creating bandwidths that are comprehensible. This is not a revolution, but it is an important step.

So, the criticism is not justified?
Our employees know what is being invoiced and are often involved in the invoicing process. This performance is logically linked to remuneration. And logically, this is only possible with transparency. In any case, we are creating more transparency and will consciously continue to drive this development forward.