90+ Acquisitions, 30% Revenue CAGR, 35% Book Value Growth | Brett Kelly Interview

Brett Kelly's accounting roll-up runs on 51% stakes

Brett Kelly built Kelly Partners by buying the best accounting firm in a region and taking only 51%, leaving partners with 49% and the incentive to run it. The firm doubles profits by changing leadership rather than software, cuts working capital and returns time to partners, so it compounds revenue at 30% a year while raising just A$17m. Kelly thinks private equity's three-to-five-year mandates do not fit accounting's slower velocity, so he wants permanent capital and a dual-class listing to grow from 35 firms to 1,000.

Takeaways

• Kelly Partners buys 51% of leading local firms. It follows Jack Welch's GE playbook, buying the number one or two firm in an area. Partners keep 49%, profits double, working capital needs fall by two thirds, and partners get back 25% to 40% of their time.
• The roll-up compounds without much outside capital. Kelly Partners generated about A$400,000 of EBITDA in 2009 and projects A$50m for 2026. Revenue has grown 30% a year and book value 35% over 20 years, while the firm raised only A$17m.
• Leadership, not software, doubles accounting profits. Brett Kelly says the average self-reported accounting firm EBITDA margin is 18% but is really about 15%. The biggest lever in doubling profits is leadership, and AI will not remove the need to lead people.
• The firm systemizes every step of accounting. The Progress Pyramid sets out 12 parts of a business, and the system for accounting firms has 204 documented steps. A critical activity network borrowed from IKEA covers workflow, office layout, seating and SKUs, and hiring runs through 17 steps.
• Private equity's short mandates do not fit accounting. Brett Kelly says private equity mandates are really three to five years, creating a mismatch with the velocity of accounting businesses. He listed Kelly Partners in 2020 to attract talent and firms, and to legitimise and prove the model in public.
• Kelly wants 1,000 owned firms. He plans to list on an appropriate exchange with a dual-class structure and raise 15-year debentures. He also wants to enter every market that invites the firm and grow from 35 owned firms to 1,000. His biggest current challenge is financing growth without dilution.

Brett Kelly's path to Kelly Partners

1. At 14 he washed cars and mowed lawns.
2. At 18, after a financial controller embezzled money at his father's business, he joined Pricewaterhouse as an undergraduate accountant.
3. He read Warren Buffett and Charlie Munger from 17 and lost an investment banking job at 22. He self-published a book after writing to 80 prominent Australians and making about 3,000 calls in twelve weeks.