Surprised? BDO certainly was
Double congratulations to Michael Cleary and David Maxwell
The senior partners of Grant Thornton and Robson Rhodes have not only tabled
the biggest accountancy firm merger since Price Waterhouse and Coopers &
Lybrand in 1998 (we’ll leave aside the post-Enron, shotgun marriage of Deloitte
and Andersen), but they also managed to keep it mostly under wraps. No mean
feat, given the general leakiness of most partnerships.
‘We have considerably added to our firepower to consistently challenge the
Big Four in key areas,’ boasted Cleary. And that may well happen when it comes
to tax, risk and restructuring. But will blue-chips suddenly rush to the new
Grant Thornton for audit services? It’s doubtful.
More significantly though, it puts clear blue water between Grant Thornton UK
and BDO Stoy Hayward. BDO’s fees for 2006 were £275m; GT’s, including Robson
Rhodes, would have been £360m.
As we’ve said before, the only merger that would catch the Big Four’s
attention would be GT and BDO. Now, a power play between the two appears much
more likely.
Only a merger with a firm generating fees in excess of £50m would make a
material difference. There are 16 of those and a couple appear decidedly
vulnerable. PKF grew by only 3% last year (though its fees per partner are
pretty healthy) while Moore Stephens grew by just 7.3% and is generating just
£535,928 in fees per partner.
That’s hardly black and white, admittedly; they are the sorts of figures that
in the current climate make them as unlikely as they are likely to be
acquisition targets.
But one thing is clear: it’s definitely going to be an interesting summer.