Mergers loom as firms struggle to grow
When told of the results from this year’s Accountancy Age Top 50, a board member in one of the largest firms remarked that he was amazed anyone had booked any growth at all
As it is, 39 of the 50 firms reported growth rates that had either shrunk or
gone negative. The figure for last year was just 23. It’s been a very difficult
time. The same partner complained that the ‘pressure on fees has been enormous’.
But with so many large firms still to report how they’ve faired since the
collapse of Lehman’s in September last year, the true picture may be far worse
than our survey suggests.
That leaves the observer wondering what the future holds.
KPMG has had a very tough
time. The firm has grown, but only just and with less than a single percentage
point but that’s on a year end of September 2008.
Of those with 2009 year ends many look very sorry.
PKF entered negative
territory with -1%, Baker Tilly is flat on the same revenues as the previous
year, while Mazars could
only clock a single percentage point of growth. Those that prospered were those
that invested heavily in business recovery before the great wave of insolvencies
began.
What happens next? Once again there is much talk of consolidation, especially
in the mid tier. This speculation comes around on a regular basis but the
downturn gives it greater credence. The poor results, the average age of
partners and the state of balance sheets could prompt many to ask whether they
wouldn’t be better joining another firm under fresh leadership and with a fresh
model to work on.
Who would be surprised if next year’s survey was missing some big names
because of a wave of mergers? Only time, and the recession, will tell.