Accountancy Age Top 50: Big Five racing away

The gulf between rich and poor accounting firms is widening with the Big Five now growing almost twice as fast as the rest of the profession, according to the first Accountancy Age Top 50 of the new millennium.

Growth rates among PricewaterhouseCoopers, KPMG, Ernst & Young, Deloitte & Touche and Arthur Andersen in the UK averaged 18.3%, according to the analysis.

Among mid-tier firms, fee incomes rose by an average of 12.35% while practices numbered 31 to 50 in our survey grew by an average of 9.6%.

The rise in fee income among the Big Five was slightly behind last year’s 20.9% but again the rate was almost enough to create another Big Five firm. These firms earned £4.8bn this year and should break through the £5bn barrier for the first time in 12 months’ time.

The figures also show the profession is polarising even further with last week’s merger announcement by Grant Thornton and HLB Kidson likely to lead to the emergence of a new super league servicing the SME and owner-managed business sector.

The intended merger will create a £230m firm with 375 partners – a clear £70m ahead of nearest rival BDO Stoy Hayward, but still £332m behind the nearest Big Five player, Arthur Andersen.

Both managing partners have concentrated their strategic efforts on providing business advice to SMEs throughout the UK via a single national partnership structure. And both expect further consolidation. Kidsons managing partner Ray Greatorex said: ‘The middle market will rationalise even further resulting in fewer but better resourced firms.’

Grant Thornton’s David McDonnell said: ‘Most of these firms are neither fish nor fowl. They are neither small enough with a low cost structure to be cost effective against the smaller players, nor do they have the characteristics of critical mass, investment capability to provide the much more sophisticated service that justifies their existence as compared to the smaller firms.’

Top 50 table

Top 50 – New economy, new riches

Top 50 – Big Five rocked

Top 50 – Audit and tax hold their own

Top 50 – The mid-tier muscle

Top 50 – Small firms bloom

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