Progressive withdrawal from the regions by several of the Big Four’s corporate finance practices over the past year has provided new opportunities for mid-tier expansion. But the drought of deals at national and global level has led the Big Four to begin cherry-picking regional M&A deals – at astonishingly low fee levels.
‘The Big Four have tended to build up very expensive teams of specialists but are finding little or no work in their target markets,’ said Stephen Bourne, national head of corporate finance at BDO Stoy Hayward.
‘Until recently their minimum fee sizes meant they wouldn’t consider anything below around £250,000. But now, relatively minor deals with fee income around £100,000 are suddenly of interest to them. We were recently undercut on an M&A deal by a Big Four firm who came in at 50% below our quote, and won the deal.’
Mark Lister, corporate finance partner with PKF in Leeds, said: ‘There’s a trend away from realistic fee levels. A lot of regional Big Four corporate finance expertise has migrated towards the mid tiers, and the big players are having to drastically reassess their minimum fees to find work.’
Deloitte & Touche Corporate Finance, which employs 500 staff and 65 partners in the UK, denied losing sight of the regions. ‘We maintain a strong, highly-profitable regional presence and pursue a successful middle market strategy,’ said Ian Jamieson, head of corporate finance.
‘There may be additional competition emerging, but as far as we’re concerned, there’s no question of lowballing. We’re not seeing any pressure on pricing – our clients are more interested in quality of service.’
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