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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.

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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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