PracticeAccounting FirmsBig Four widen the gap

Big Four widen the gap

Mid-tier firms must invest more in their businesses to prevent Big Four from further widening the gap between them

BDO Stoy Hayward managing partner Jeremy Newman has warned mid-tier firms
that unless they start investing in their business, the gap between the giant
firms and themselves will continue to widen.

This year’s Accountancy Age Top 50 survey shows that the average
percentage growth of the Big Four is 15%, compared with the 13% combined average
of the Top 50.

More strikingly, the Big Four have outstripped their nearest rivals,
BDO
Stoy Hayward
,
Grant Thornton,
PKF,
Baker Tilly and
Smith
& Williamson
. On an average percentage basis these mid-tier firms grew
by only 11.28%.

A similar picture emerges when looking at the percentage growth of combined
revenues. The combined Big Four revenues grew by 14.4% to £6.3bn, while the
combined revenues of the group of mid-tier firms only grew by 12.8% to £1.1bn.

‘Firms outside the Big Four have lost market share because relatively few of
them have made the investment necessary to grow market share. We have invested,
but many others have not,’ Newman said.

An Ernst & Young spokesman, however, said fears of the growing gap
between the Big Four and the rest were overplayed, as the Big Four numbers still
reflected the one-off benefits of IFRS and Sarbanes-Oxley.

‘Our figures still reflect the impact of IFRS and Sarbox work. When our
results come out later this year those one-offs won’t be present and the gap is
unlikely to be as wide as it appears now,’ the spokesman said.

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