Accountant BDO sees mergers in the sector speeding up
By Huw Jones
LONDON Nov 29 (Reuters) - Global accountant BDO predicts rapid consolidation in the sector due to pressure on fees, regulatory change and big investment costs, that will leave only a couple of mid-sized firms.
"Within the next five years, we anticipate that the global consolidation of our profession will gather pace, leaving only two or three substantial mid-tier networks globally," BDO Chief Executive Martin van Roekel told Reuters.
The 50-year old London-based company said on Friday that its revenues in the financial year ended Sept. 30 rose 7.3 percent to $6.45 billion, due in part to a string of mergers including three in the United States and with Britain's PKF in March.
The global accounting sector is dominated by the so-called Big Four firms, KPMG, EY, Deloitte and PwC, with BDO and Grant Thornton leading the mid-tier pack.
Van Roekel said the Big Four wouldn't suddenly become the Big Five or Big Six as the gap between them and mid-tier firms would take years to close.
There are about 10 mid-tier firms with revenues of more than $2 billion and he expects the merger talks now going on to whittle this down to 2-3 over the next five years or so.
Consolidation is being driven by the need to invest heavily in technology, regulation, and the need for an extensive cross-border presence to serve increasingly international customers.
"A number of smaller mid-tier firms are struggling with that investment. Based on discussions I have had, it gives me confidence that mergers are not going to stop," he said. Continued...