BDO chief takes on the Big Four

Simon Michaels, the new managing partner of BDO Stoy Hayward, has laid down a
challenge to the Big Four firms, saying he wants to win more clients that they
would traditionally serve.

Giving his first public interview after taking over from the firm’s departing
chief Jeremy Newman, Michaels, a former national head of business recovery, made
it clear the Big Four’s listed clients are the target.

‘I’m highly ambitious for the firm,’ he said. ‘What that translates into is
that I believe that we are uniquely placed to exploit the opportunities in the
market and build the critical mass to exploit the gap between us and the Big
Four.’

He added that it meant BDO would seek ‘a broader client portfolio’ and wanted
to ‘knock down the doors to the listed company market.’

Michaels’ arrival brings ambitious aims for market share. Currently BDO has
around 3%.

Michaels would like to see that grow to more than 10%, but that, he said,
would be a five to 10-year ambition.

His means of achieving these are the classic strategies for any large firm,
but they have particular resonance given BDO’s recent history under Jeremy
Newman of courting controversy in the debate over audit choice and regulation.

Michaels is moving the firm away from a geographical management structure,
wants to bring down the ‘silos’ that staff work in and leverage BDO’s healthier
partner to
staff ratio.

‘The profession has a way of allowing silos to develop inside professional
service firms and I’m keen to break that mentality.’

The new management structure, he said, will give clients a view of, and
access to, the ‘whole’ firm and respond more quickly.

‘What we are trying to do is make sure we understand the challenge that our
clients are facing.

‘We have got to put clients at the heart of the firm supported by people
willing to work and connect across streams and out of those silos.’

He has great hope of the staffing leverage the firm has ­ one partner to 10
staff average, rather than the Big Four’s one partner to 15 or 20 staff. ‘In
it’s simplist form that’s what it is about,’ he said.

‘The more time I am able to spend with clients, the more trust and confidence
they have in you.’

That, he believes, is how they are encouraged to buy more services, even in a
downturn like the one the UK is now embroiled in.

But Michaels will not be ignoring the work his predecessor has put in placing
BDO at the forefront of debate on audit choice. That remains crucial to the
firm’s future.

‘For us over the course of five years we have got to make sure that we not
only build the reputation of the business through our work but also that we
continue to raise our profile in the market and continue to be at the forefront
of regulatory and industry debate,’ he said.

‘The market needs to be using more than four firms. That will give us more
opportunity to pitch for more quality audits.

‘Though we are not expecting the Big Four not to fight back. We are seeing
them more and more in our core market ­ the mid corporate.’

He did issue a warning however. He said: ‘The challenge to growing market
share is going to be fierce because there’s a risk of over capacity in a
difficult time.’

Despite rumours circulating around the sector that BDO was in talks about a
merger with PKF, Michaels said the firms were never in negotiations, though he
has no principled objection to those kinds of conversations.

Michael’s said being bigger than Grant Thornton is important but added: ‘We
are not going to get into a volume battle with GT. The market position and
reputation is more important to us.’