PracticeAccounting FirmsThe Top 50 – Corporate finance shines, but clouds are gathering

The Top 50 - Corporate finance shines, but clouds are gathering

There has been double digit growth in corporate finance but the impact of the credit crunch has yet to make its way onto the books

Accountancy firms posted double-digit growth yet again in their combined
corporate finance revenues, growing at a rate of 13%, according to our Top 50
analysis.

However, the firms’ figures do not take the credit crunch into account as
they have only posted their 2007 year-ends. The growth figure therefore belies
future prospects for the sector, where some firms are already beginning to cut
jobs.

‘I think [a drop-off in work] is already happening,’ says David Brooks,
corporate finance partner at Grant Thornton. ‘Mid-market deals are taking longer
and more of them are falling down before they reach completion.’

The firms posted £1.1bn in corporate finance revenues for the year to 2008,
compared with £1.02bn the year before.

Although the economic outlook for the sector has dipped significantly since
last summer, the period between 2006 and 2007 was ‘buoyant, with lots of
activity’.

John Cole, partner at E&Y, says: ‘The principal driver is deal activity
and it was a buoyant time. Volume and value rose during that period, which would
have driven revenues.’

The figures have had to be adjusted because not all the Top 50 firms,
including PricewaterhouseCoopers, provided corporate finance breakdowns.
Deloitte submitted the same numbers for this year’s study as last year’s, so a
parallel set of numbers excluding the firm was also generated, throwing up the
positive results.

But for all the optimistic noises being made, the sector is expected to face
choppier waters, if KPMG’s shedding of 90 jobs in its corporate finance arm is
any barometer for the wider market.

Cole says: ‘There has been a slowdown in mergers and acquisitions. Apart from
in some sectors such as mining, there hasn’t been a lot of activity.’

Brooks adds: ‘I don’t think you will see much improvement until Q2 next
year.’

Consultancy divisions pulled in less cash than their peers in corporate
finance but did even better in terms of combined percentage growth, recording an
18.6% increase after Deloitte’s exclusion, marking a rise to £928m from £786m
last year.

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