BDO’s offices in Melbourne and Sydney are
poised to merge with Grant Thornton Australia by the end of April
after terms of the deal have been agreed.
The proposed merger must now be approved by
stakeholders and legal documentation finalised before BDO’s Sydney
and Melbourne practices trade as Grant Thornton.
Australian media reports the deal to be
worth A$50m but the amount of annual revenue the merger will add to
Grant Thornton is about $85m. Grant Thornton Australia’s revenue
will increase from A$152m to A$245m and the firm will catapult
above BDO into sixth position, behind WHK Group. BDO is likely to
drop from A$214m to about A$130m.
Fifty-five partners and 462 staff will join
Grant Thornton, increasing total headcount to 153 partners and
1,339 staff. The largest office will be in Melbourne with 512 staff
followed by Sydney with 380 staff.
Grant Thornton claims the deal will make it
the undisputed market leader of Australia’s middle market. Although
WHK Group earns more annual revenue, the firm tends to serve
smaller clients than Grant Thornton and has many more regional
offices – 59 in total. Grant Thornton only operates out of
Australia’s five largest cities – Sydney, Melbourne, Brisbane,
Perth and Adelaide.
For BDO, the loss of its presence in Sydney and Melbourne means
it must now recruitment new practices to plug the gaps.
Australian mid-tier firms often operate on a state-by-state
basis where national coverage is achieved through a federation type
structure of independent state firms.
BDO Sydney and Melbourne’s decision to sever
ties with BDO came to light last month when BDO confirmed it was
closing its offices in North South Wales and
BDO’s problems are reported to have begun in
2007 when its Sydney, Canberra and Melbourne offices decided to
merge operations, with the firm taking on tens of millions of
dollars in unsecured loans to allow partners to cash out the value
of their goodwill.
Grant Thornton has been looking to grow in
Australia via M&A for the past few years and previous rumours
suggested PKF was a target.
“Our rationale for this merger has always been
to deliver what clients are nowadays demanding,” Grant Thornton
Australia chief executive Robert Quant said.
“Most dynamic enterprises are actively
pursuing opportunities and seeking assistance from like-minded
advisers. Relationships are still key, but these dynamic
organisations are expecting geographic coverage, scale and
expertise to match their own business footprint and growth
Pat Donato, the chief executive of BDO’s
combined Sydney/Melbourne practice said his team looked forward to
“the benefits of a truly integrated national firm that shares our
passion for delivering exceptional service”.
“Grant Thornton International invests heavily
in global research and thought leadership and we are keen to bring
the benefits of this to our clients”, Donato added.
Mergers between Grant Thornton and BDO are not
uncommon. In the past few years, Grant Thornton and BDO firms have
been involved in significant mergers in South Africa, Hong Kong and