3 min read January 2023 — In 2023, the economy is heading toward a slowdown but, according to John Capone, office managing partner at the Boston hub of KPMG US, the downturn in the region is going to be short-lived as a result of the strength in sectors like life sciences, healthcare and financial services. Capone spoke with Invest: about this and other issues facing the region.
What are the major highlights and milestones for your office in the last year?
We’re fortunate that we had our best year ever among the six offices that we have in the region. It’s a fantastic story. When you’re in a professional services firm like ours, the economy drives businesses and our business is to react to how companies respond to economic situations. Last year, although we were coming out of this pandemic, there was still a lot of spending by companies in our industry. When you think about KPMG and you think about the companies that we serve, they are in the industries that saw strong growth: healthcare, life sciences and financial services. We provide advice, audit, tax and consulting services to the major companies in those industries. It was a time for them to invest in their businesses and when they invest in their businesses, they need help and expertise. They turned to us as one of those providers. We enjoyed a very strong year, helping our clients to grow their businesses through, for example; digital and process transformation, cloud migration, and to prepare for when the economy turns around. That has been a good story for us.
How was your firm able to take advantage of all that growth?
You can’t have the kind of results that we had without retaining our people and more importantly attracting strong talent to our firm. Even though we went through the worst of the pandemic, I think a key to where we are and how we’re positioned for the future is that we didn’t have any significant turnover across our businesses like many others experienced. It speaks to the culture in our offices and how well we work together.
The other element is that we’ve been successful in bringing high-powered talent to our managing director and partner ranks. That has positioned us well for the future.
What is your assessment of the life sciences sector in your region?
We’ve helped several large life sciences companies think about their business, whether that’s through digital transformation, migrating to the cloud or on the strategy side. We’ve helped large companies think about their business and what the future of their business looks like in strategic ways.
The life sciences spectrum, though, isn’t just large pharmaceuticals. There are a lot of early-stage life sciences companies. We do a lot of work in early-stage life sciences, including through the capital markets, whether they are planning an IPO or debt financing. We’ve been very busy helping early-stage life sciences find some footing and to find some funding, which carried us during 2020 and 2021.
After 2021, there was a slowdown of IPO activity, certainly here in Boston, where funding early-stage life sciences companies took a pause. It gave investors and others a chance to say, let’s slow down on some of the valuations that are getting pretty high for some of these life sciences companies that are coming to market. Right now, what you’re seeing is a refinement of the improvement of their operations in their margins. That will continue in 2023. There’s still a lot of cash out there. In 2023, we hope we’ll see that tick back up.
What is your strategy to attract new talent?
Massachusetts and the Boston Region are home to some of the best universities in the world. So, there is a lot of talent here. How do we keep that talent? How do we continue to make Massachusetts, and Boston in particular, an area where when the talent comes, they stay? From a broader macroeconomic viewpoint, we have to make sure that the cost of living is reasonable here in Massachusetts as well as having transportation that gives people access to the city and the ability to live and work in the same place.
From the micro viewpoint of KPMG, one of the things I’m also very proud of is that we have very strong networks at many of the premier educational institutions and we are prominent at some of the major colleges and universities.
The thing that we’ve done recently was to allow ourselves to be an employer of choice to many other people, not just in Boston. We now recruit nationally and globally. You don’t have to necessarily be in some of the premier Boston universities to have an opportunity to work for us.
What is your strategy regarding diversity and inclusion?
We have what we call our business resource or affinity groups, representing everything from Asian Americans to African ancestry and Hispanic Latinos. We have the veterans’ network. We have more than a third of our workforce committed to those business resource groups. That means that we have a very strong culture of support and inclusion.
One of the things I’m most proud of in Boston is that we have a culture that promotes and supports diversity and inclusion. We have almost 2,000 people in the region supporting a business. We have a $650 million business here. That provides the opportunity for all those folks to find their way and find success. As a managing partner, my job is to make sure all of our people have an opportunity to succeed and move up.
What is your outlook for 2023-2024?
Nationally, the view is that we are heading for a slowdown. That slowdown, we believe, will be short. But there certainly will be a slowdown in 2023. For Boston, the expectation is that it will be short-lived and we’re fortunate to live in a region that is on the cutting edge of industry development in sectors like life sciences. The same is true for healthcare. And the same is true for some of the emerging businesses, such as alternative energies. There’s a lot of opportunity for New England and upstate New York to lead in alternative power sources as well. We’re well positioned for innovation to come and in 2023, that’s probably what will lead us out of any downturn in a relatively short and stable way.
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