BusinessCompany NewsTop 50 survey: the pursuit of happiness

Top 50 survey: the pursuit of happiness

Our annual survey of the profession reveals that slower growth is having an adverse effect on many top 50 firm’s revenue

It’s a jungle out there for the profession, which is desperately trying to
navigate itself through the dense and oppressive foliage of the recession and
emerge fit enough to take advantage of more clement conditions on the other

So far, many firms are wilting in the heat, while just a few of the fittest
are standing strong. The annual Accountancy Age Top 50 survey has found that
four in five firms saw growth rate slow, some dramatically, on previous years ­
nine posting negative growth figures.

Growing pains

Just nine of the Top 50 increased growth on their previous set of figures, of
which three
BDO Stoy Hayward and
Tenon) relate to 2008
year-ends. Last year’s Top 50 survey saw 23 firms, almost half, with increased
growth rates.

Their 2009 numbers are eagerly awaited, along with many of the other biggest
firms whose growth rates hit the skids for their 2008 numbers.

KPMG grew just 0.7%,
blunted by a drop in corporate finance fees, a thorn in the side for this year’s
top firms.
’s corporate finance revenues dropped by 41% to £16m, leaving the firm
with zero growth overall.

Ernst & Young’s growth
rate halved to 4.6%, and the firm declined to provide breakout figures for its
service line units as it is now part of E&Y EMEIA.

’s merger with Robson Rhodes saw a fee income of £394m ­ a 1.3%
increase on last year’s pro-forma figures which took both firms’ separate fees
into account.

grew 11.5% compared to 15.6% for its 2007 year-end. Can they maintain such
growth for 2008/09?

Well, prospects for the other 100 firms are mixed, if their confidence for
the year to come is anything to go by.

Split across the board, 32% of respondents said they expected revenue growth
rate to be higher than last year, 35% said lower while 33% thought revenue
growth would be about the same.

One third expect to increase UK partner numbers in 2009.

Tough decisions

There’s less good news for firms’ other staff.

A quarter expect to reduce support staff headcount in the next year, while
17% will cut professional staff numbers.

A third will cut graduate recruitment, while 62% will keep their plans the
same as before. A hardy two firms expect to increase graduate recruitment

‘It’s the fifth major recession I’ve seen, and they’ve all been depressing
through short-term actions taken, with firms then spending the next bull market
trying to recover. But this time they are trying to find different ways to deal
with it without losing staff,’ argues PwC’s global leader of public policy Peter

‘We’ve had record fees in professional services as a whole in recent years,
so there’s probably greater capacity to invest for the future.’

Despite the global nature of the recession, growing markets have offered
firms expansion opportunities, while staff are more willing to accept change in
their roles and conditions, ‘even compared to ten years ago’, Wyman adds.

Battle lines

With our most comprehensive survey ever, and good performance from some
smaller players, a few Top 50 2008 firms have missed the cut for the main table
this year.

Berg Kaprow Lewis saw revenues fall across the board, Bishop Fleming were
pushed out by faster growing businesses, after two years of modest growth.

Campbell Dallas dropped out, but had sold its financial services division.
The remainder of the firm actually grew 16.2% like-for-like.

Impressive performance was seen by UK and US tax specialists Frank Hirth,
which leaped nine places to 47 with 28% growth in the practice. The firm, which
posted revenues of £11.9m, brought in a cool £1.5m per partner.

Cutting back

Tough market conditions failed to deter firms from considering their business
structure, as 24% either bought or sold off a part of their firm in the last

The navel-gazing didn’t stop there, as 42% expect to centralise parts of
their business in the next 12 months and 20% will outsource some of their

KATO Consultancy director Phil Shohet warns that the biggest management
mistake firms’ bosses can make in the current climate is to restrict marketing
spend, as it cuts off the supply line of new business.

‘Marketing budgets are being reduced, which makes it difficult to get in new
work. Training is cut as well.
‘Cash will also be a problem for many firms, as they haven’t managed working
capital in the good times. Clients are asking for more time to pay.’

He also expects the figures to worsen in next year’s survey. ‘Even those with
double digit growth will struggle.’

In other results, the glass ceiling still appears to be firmly in place. Just
two women are managing partners of our 100 firms surveyed, while 11% of partners
are female. A third of the firms’ qualified accountants are women.

Despite the number of unemployed accountants out there, five firms said they
will look abroad for talent.

Frank Hirth will consolidate its US expertise with hires from across the
pond. BDO Stoy Hayward plans to looks to the EU, South Africa, Australia and
Canada for both graduate and experienced hires. Jeffreys Henry will look to

And in a bid for transparency, more firms are disclosing profits than ever be
fore ­ 27% disclosed profits this year, compared to 25% in 2008.

As revenues have been squeezed, so have profits. KPMG, Grant Thornton and BDO
Stoy Hayward saw profits fall. In a strange twist, PwC and Deloitte posted the
same profit figure as each other: £664m.

There was little movement in jostling for position among the big firms this
year, although Tenon appear to have cemented the ninth position in the chart
ahead of PKF, where the firms used to switch positions in the past. PKF will
also be looking over its proverbial shoulder, after strong performances in
recent years from Mazars, Vantis and RSM Bentley Jennison.

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