Grant Thornton deal shakes up auditor rankings

Robson Rhodes deal will push Grant Thornton to the brink of entering top four client table

Written by Nicholas Neveling

Accountancy Age, 04 Jun 2007

Grant Thornton's mega-merger with Robson Rhodes will place the firm on the brink of breaking into the top four auditor rankings for total stock market clients, according to the latest rankings compiled by Hemscott .

According to the data for the second quarter of 2007, the combined client numbers of Robson Rhodes and Grant Thornton would total 284, less than 50 clients behind 4th ranked Deloitte, who audit 325 listed companies.

But although the merger has the potential to shake-up total audit client numbers, it will have little impact on the FTSE350 market and when it comes to combined market cap the merger will also cause little change.

In terms of total market cap, a combined Grant Thornton and Robson Rhodes will serves clients with a combined market cap of £17.9bn, substantially behind the £35.2bn of fourth-placed Ernst & Young.

The merger will also fail to create a presence for Grant Thornton in the FTSE100 and add only one client to Grant Thornton's FTSE250 list, taking the total in this index up to just three, well behind the 45 clients of fourth-placed Deloitte.

Should there be concern that the biggest merger in the accountancy market since Deloitte joined up with Andersen has failed to cause a shift in the top end of the audit market?

Peter Wyman, head of professional affairs at PricewaterhouseCoopers, says that as long as the market is fluid, there should be no cause for concern.

'If there is nobody growing and nobody shrinking then we should be concerned, but we have a well-functioning market where there is movement,' Wyman said.

The Hemscott figures provide some support for this view. Over just a quarter KPMG (first for Q2) and PwC exchanged positions in the total client rankings, as did Deloitte (4th for Q2) and Ernst & Young. There were similar shifts on AIM, where Grant Thornton edged out KPMG for first place after they were level in Q1.

The FTSE 350 market remained static, however. Grant Thornton board member Malcolm Ward said the firm, headed by Michael Cleary (pictured), would take longer to break into this space.

'The Big Four have been investing in this space for decades, so it is going to take ten years or longer to catch up. But we are investing in offering buyers more choice and capacity, which the transaction with Robson Rhodes shows,' Ward said.