BusinessCorporate FinanceBig Four must break America

Big Four must break America

The Big Four accounting firms must wish they could be as powerful in corporate finance as they are in the audit market.

The appetite among the giant firms to be lead advisers on large deals is
there ­ they regularly recruit experienced partners from investment banks to
bolster the ranks ­ but the Big Four continually struggle to mount a challenge
to the Merrill Lynchs and Morgan Stanleys of the world.

The Big Four have always been tight-lipped on why this is the case, but a
look at the situation in the US provides some explanation.

Any firm wanting to be a big player must be established in the US. Figures
from Thomson Financial show that so far this year this is where almost half of
the $2.05 trillion (£1.15 trillion) in global deals was generated.

The US market is clearly the most important, but with the deluge of
Sarbanes-Oxley regulation, US companies are, rightly or wrongly, wary of
appointing a Big Four firm to lead deals, say corporate financiers.

It is much easier for a US company to let the Wall Street banks take charge
of the big deals and leave the accounting firms to do the auditing. The
international repercussions are obvious. What multinational would appoint a lead
adviser that didn’t have a strong US division?

It is rather ironic that the Big Four’s audit dominance, grounded in global
muscle
and financial expertise, is holding them back when it comes to leading blue-chip
transactions.

Nicholas Neveling edits the corporate finance page

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