Almost four years after EY acquired Terco Grant Thornton in Brazil, the mid-tier network announced it has enforced its position as the fifth largest firm in the market with two M&A deals.
The first deal is the acquisition of KMPG Brazil’s outsourcing practice and the second a merger with former PKF firm Directa Auditores.
The acquisition of KPMG’s outsourcing practice is to add 70 staff and $5.5m in revenues and the merger with Directa Auditores will add 120 staff.
Brazil has been a very competitive market in the past four years and in 2010 both KPMG and EY took over two of the largest mid-tier firms in the market, BDO Auditores Independentes, BDO Consultores and Terco Grant Thornton respectively.
In the wake of those deals BDO International filed a complaint to the local competition authorities which approved KPMG’s acquisition of BDO Auditores Independentes and BDO Consultores in November 2013.
However, the Brazilian Competition Authority (CADE) imposed several restrictions on KPMG Brazil such as a ban on acquiring any auditing firm in Brazil with clients with revenues of BRL300m ($131m) or more per year for a period of two years.
Additionally, once this period is over, in the following two years KPMG will have to inform the CADE of any acquisition of firms in Brazil with clients generating more than BRL350m in revenues.
Following the announced deals Grant Thornton Brazil is to strengthen its position as the fifth largest firm in the country and be less than a third of the size of its nearest rival, KPMG, with just over 1,000 staff.
Grant Thornton International’s Brazil firm reported revenues of BRL101m ($42m) in 2012.
The global network also reported 8.1% increase in global revenues to $4.5bn for the year ending 30 September 2013, which was partly organic and also assisted by several additions and M&A.
Grant Thornton International revenues grow 8.1%
Brazilian competition authorities approve KPMG acquisition of BDO firms
E&Y acquires Terco Grant Thornton