Mergers of accounting firms are not a new thing by any means, but announcements made this month by network BDO give a timely insight into the current M&A climate.
This month BDO UK and PKF UK announced they are to merge next year, placing BDO UK neck and neck with the fifth-largest UK firm, Grant Thornton UK. Days later, BDO International announced parts of PKF China will join its Chinese firm (see page 3). This follows the summer’s round of musical chairs in Australia where BDO, having lost its Sydney and Melbourne firms to Grant Thornton (see page 9), recovered its presence by merging with PKF East Coast.
As always, mergers beget other mergers, and back in the UK, PKF International says it is already actively looking to replace its UK firm. Nevertheless, finding the right fit in terms of size and client base might not be such an easy job. There are several strong firms in the market, just to name a few: Saffery Champness, a Nexia member firm, Morrison International’s member MHA MacIntyre Hudson, Geneva Group International member Haines Watts and others. All would be fine additions to PKF on paper, but no amount of speculation will determine their likelihood of breaking their current affiliations, or their cultural and strategic fit with the PKF network.
This type of headhunting following mid-tier merger action highlights a perennial pressure – that of ensuring member firms remain with a network. It’s a formidable task, especially for smaller networks.
The challenge posed by the need to monitor closely and keep in regular contact with members when international budgets are tight and resources are limited is creating a level of vulnerability for smaller networks, whose members are attractive to larger, more resourced networks.
Even as the world becomes far more connected, it’s still a challenge to know what exactly is going on at member firms, and to understand whether their growth ambitions are in line with network strategy.
There will certainly be more accounting firm M&A in the near future, as rising regulatory compliance costs, intense fee pressure and challenging global economic conditions put pressure on firms to do more in order to generate business growth. After all, that growth can often be best achieved by tying up with another market player. When these mergers occur, they will trigger a further wave of absorptions as those who have lost partners go looking for replacements among smaller networks.
Social is global
One of the more popular ways to stay connected with member firms while building brand awareness is social media, an issue we discuss in this month’s feature.
We found there are a surprising number of networks and associations that are still reluctant to make full use of social media either because they doubt its value, lack the resources to put significant man-hours into it, or fear the reputational risks involved.
This publication spoke to some of the industry’s top social media experts, who claim they have seen social media use bring recruitment costs down, improve existing and potential client relationships, and build brand recognition.
The future is likely to bring additional cross-over between platforms as technology and data sharing speeds evolve. Even if you remain a social media sceptic, it’s hard not to accept it as a marketing and communications channel that’s here to stay, even if it’s hard to predict what its eventual role in the world of business will be.