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January 4, 2011

BDO seals merger in Japan

BDO has become the largest mid-tier firm in Japan after former Crowe Horwath International member Toyo & Co joined the mid-tier network today.

As part of the move, existing member BDO Sanyu & Co will merge with Toyo & Co to form a ¥7bn ($86m) firm, BDO Japan KK, which has more than 600 staff in four offices.

This would make the firm marginally larger than Grant Thornton Japan, which reported fee income of ¥6.47bn in the year to 30 September 2009 and has about 400 staff. Although Grant Thornton Japan has not revealed its 2010 figures, Japanese firms largely experienced flat growth in this fiscal year.

BDO Japan KK chairman is Masashi Yoshida, of Toyo & Co, while the firm’s chief executive is Jun Sugita, of BDO Sanyu & Co.

Growth opportunities

The Japanese audit market has undergone a shake-up in the past few years since PwC’s previous member firms Chuo Aoyama and Misuzu collapsed.

This has provided opportunities for the mid-tier to recruit former PwC talent and clients.

“The audit and accounting market in Japan is unique, in that the four largest firms make up 80% of marketshare,” Sugita said.

“Furthermore, significant accounting fraud in 2005 resulted in the industry in Japan going through drastic changes. We were able to win both new audit and IPO clients as a consequence… [we] are now actively planning to expand our tax business as well through acquisitions, mergers and strategic recruitment.”

On joining BDO, Yoshida said: “We wanted to be associated with an international network with high quality audit standards and an IFRS-conformed audit tool, as well as a global culture built on respect: BDO was clearly the best choice.”

Sanyu & Co was founded in 1986 and joined BDO in 1996 while Toyo & Co was established in 1971.

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