PracticeAuditMerger fails to upset rankings

Merger fails to upset rankings

Although the Grant Thornton-Robson Rhodes merger has the potential to shake-up total audit client numbers, it will have little impact on the FTSE 350 market

Grant Thornton’s 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 fourth ranked Deloitte, which audits 325 listed companies.

Although the merger has the potential to shake-up total audit client numbers,
it will have little impact on the FTSE 350 market, and when it comes to combined
market cap, will cause little change.

Regarding total market cap, a combined Grant Thornton and Robson Rhodes will
result in clients with a 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 FTSE
100 and add only one client to Grant Thornton’s FTSE 250 list, taking its 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 of
PricewaterhouseCoopers says
that as long as the market is fluid, there should be no cause for worry: ‘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. Just over a quarter,
KPMG (first for Q2) and PwC exchanged positions in the total client rankings, as
did Deloitte (fourth for Q2) and E&Y.

The FTSE 350 market remained static, however. Grant Thornton’s Malcolm Ward
said it would take longer to break into this league: ‘The Big Four have been
investing in this space for decades, so it will take ten years to catch up. But
we are investing to offer buyers more choice and capacity, which the transaction
with Robson Rhodes shows,’ Ward said.

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