Top 50 – Premier division

Compiling a league table of accountancy firms was never going to be an easy task. But over the last two years, the refusal of some of the (now) Big Five and many of the Group A firms to publish their figures has made the job at hand far harder.

In the face of such deliberate wrecking tactics, Accountancy Age did not publish its table of the top 50 firms last year. The result was outrage on the part of readers, particularly those in business. Even though it is now two years out of date, our 1996 list remains by far our most requested back issue.

So we have responded to the clear need for objective information about an increasingly secretive profession by reviving the Accountancy Age Top 50. In the event, and to their great credit, many Group A firms have broken ranks and supplied us with figures.

Where firms have refused, we have turned to other published sources. In the absence of direct information from the handful of refuseniks, we have applied an inflation factor to available figures in line with general growth in the market.

Throughout, we have sought to do nothing more than present a true and fair picture of the firms’ performance. Every Group A firm was sent our questionnaire and informed of the methodology we intended to adopt in the event that they did not supply figures.

Some, such as BDO Stoy Hayward, have brought forward the release of their figures to enable latest results to appear in this table. Others, such as Kidsons Impey, have taken refuge behind the Group A closed-shop decision and refused to disclose any figures while making uncorroborated claims about growth. Many produced figures for overall fee income without giving a breakdown for different sectors.

The key decision-makers who use the Accountancy Age Top 50 to help inform their choice of firm for everything from audit to consultancy, will draw their own conclusions. As we report opposite, many in business resent the fact that the very firms that encourage them to be open about business refuse to take their own medicine.

One of the factors driving some to secrecy is the pressure to consolidate. Nowhere is this influence more noticeable than among mid-tier firms. Most with income over #10m are struggling to generate the momentum they need to secure an independent future – despite one of the longest periods of sustained growth in the UK economy since the war. In response, even the strongest are searching for a prospective bride, preferably one who comes with a large dowry in the shape of a strong client base.

The group of 20 or so UK accountancy firms beneath the mighty Big Five are in almost the same situation they were in five years ago. With some exceptions, growth has been slow, even in traditionally strong areas such as tax.

A series of takeovers among the Group A firms is the likely outcome. Moores Rowland and Kidsons Impey are in merger talks, while Neville Russell has accepted a takeover by top-ten French firm Mazures. Sector pundits hint that more merger talks will take place before the year is out.

Profits in the mid-tier are in sharp contrast to the Big Five, which have seen their fee income soar over the last three years. Fees per partner for the Big Five are on average three times the average figure for Group A firms.

PricewaterhouseCoopers says it is unable to provide any meaningful figures in the first few weeks of its merger, and merger accounting being what it is, they probably would not be of much help anyway.

PwC claims to have 20% growth worldwide. Whether this growth has been repeated in the UK is unknown, but we have given PwC the benefit of the doubt and factored this figure into its national income. UK figures are liable to become increasingly hard to get hold of as PwC stresses its global operation and focus.

Unfortunately for Deloitte & Touche, the merger of Coopers & Lybrand and Price Waterhouse has widened the gap between itself and the largest four firms, leaving clear water between itself and Ernst & Young on the one side, and Grant Thornton on the other. Rumours abound that Deloittes is looking around for an alliance of some kind, but most decisions, as with the PwC merger, will be made in the US, where size is important.

The aborted merger discussions between KPMG and E&Y appear to have done them little short-term harm. KPMG posted fee income figures up 17%, while E&Y is expecting to see growth of at least 15%.

These two are also setting the agenda for greater openness, with KPMG already auditing its results externally, and E&Y moving to it this year.

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