Accountancy market primed to poach Big Six business, experts say

Mid-tier accounting practices in the UK are increasingly identifying opportunities to win business from the industry’s Big Six firms, market participants say.

Simon Brownbill​,  director of practice development and partner at HURST, says that thanks to years of brand building and talent acquisition, his is now “one of a few firms seen as a credible alternative to the Big Six”.

But Brownbill also believes that a number of external factors have played into HURST’s hands.

“Over the past couple of years, we’ve seen considerable demand across all service lines from Big Six clients looking to move,” he says.

“These moves, however, are often initiated by the incumbent. Our perception is that fees have been rising beyond clients’ expectations and there have been resourcing issues.”

Brownbill believes a “parting of the waves” is providing his firm with opportunities to pick up clients from the Big Six, rather than it having to “step up and take” them.

Similarly, Helen Clayton, a partner at PM+M, says she doesn’t think taking business from larger firms “is a strategy per se”.

Instead, Clayton says “the Big Six are shedding audit clients, as the statutory audit is typically a loss leader” for them.

This “market-created opportunity,” she adds, is a chance for firms to offer services that slightly undercut larger rivals but provide “comparable quality”.

Opportunities in differentiation

The quality of audits carried out by the industry’s biggest firms continues to be the subject of intense scrutiny by the Financial Reporting Council (FRC).

As revealed in the FRC’s annual enforcement review, it handed £46.5m in fines to these companies in the 12 months to April 2022 – the highest annual total on record.

However, Rakesh Shaunak, group chairman of MHA MacIntyre Hudson, says “it’s a bit unfair and disingenuous for the Big Six to be singled out for criticism on quality”.

The accounting veteran adds that any business the Big Six may be losing is a result of “how the market is evolving,” and, therefore, mid-tier firms should focus on “identifying markets where they have the skills and confidence” to win clients.

Likewise, as accountants all “undertake the same professional training”, Clayton describes service quality as “subjective”, and says “the opportunity is in differentiation”.

For Clayton, this means taking the time to “listen to clients’ needs[…]and bring the relevant professionals to the table”,to allow them to fulfil their business ambitions.

“We seek, wherever possible, to win new clients through personality and relationship which may come from a cold start, but more often comes from a referral,” she says.

“Firms shouldn’t seek to win clients at any cost, as we have seen time and time again how this drives down fees and soon thereafter, quality.”

Growing alongside the Big Six

Despite picking up talent and business from the Big Six, Brownbill says HURST actually has “great relationships” with the accounting industry’s largest firms, who are “more than happy to refer clients to former colleagues”.

This, Brownbill explains, is aided by the way banks and funders are also “being proactive at securing clients to an alternate firm”, in recognition of the tightening audit market.

“More often than not this is down to service and fees, rather than quality,” he adds. “Others will have moved on for whatever reason and are simply looking for a new home.”

PM+M’s Clayton also says that as the professional services sector grows, challenger firms don’t necessarily need to compete with the Big Six for client opportunities.

Her observation is backed by IBISWorld figures from August, which show the UK accounting and audit sector is due to grow 2.1%  in 2022.

Clayton says that, with this in mind, there are plenty of opportunities out there. She therefore believes firms should focus on reviewing their own “strengths, new markets and needs of their future client bases”, rather than targeting Big Six clientele.

In doing so, Clayton says This means that practices can better understand the skills their team will require in order to meet clients’ changing needs, she says.

“Currently, the average accountancy firm delivers [approximately] 30% advisory services and 70% compliance. This is destined to flip and will require different skills, experience and delivery methodologies.

“I still believe that the personal relationship will be integral… and so people development will be a key part of a growth strategy to remain relevant, competitive and open to new ideas.”