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April 30, 2008

Big Four target US middle market

A drop in Sarbanes-Oxley (SOX) related business in the United States has led to mid-tier firms in some markets once again competing with the Big Four when making proposals for new jobs. Leading Edge Alliance chairman emeritus Gary Shamis told IAB that the Big Four “retrenching” back into the middle market caught his firm, SS&G Financial Services, by surprise about six months ago.

“The Big Four created additional capacity to do some of this additional SOX work and most of the SOX work that was created is dissipating right now. So these big national firms are realising that they are over-staffed,” Shamis said.

This is creating a challenge due to the better name recognition of the Big Four. “We’re not losing work, once we get the clients, we usually keep the clients, what’s been happening is we’re losing some opportunities to [the Big Four],” he said.

Several other mid-tier leaders who spoke with IAB for this year’s US survey (turn to pages 10-15) agreed the Big Four either are, or will be, competing once again in the mid-market.

Praxity chairman Bill Fingland said it will happen eventually, but not everywhere at once. “In the towns where the smaller [Big Four] offices are, I think that is absolutely happening. But when you look at [for example] Houston, Texas, Big Four firms are still overstretched,” he said.

Praxity has been encouraging its member firms to focus on client service. The alliance is telling its firms that if they serve the clients they attracted from the Big Four during the past five years better than they were being served they will not be at risk. “If you aren’t able to serve them well then you are at risk because the Big Four will come back and they’ll promise them everything and many times they will deliver,” Fingland warned.

Baker Tilly North America chairman Robert Ciaruffoli added: “When [the Big Four] moved out of the marketplace, some of them moved gracefully out, some of them moved not-so-gracefully and those will have a much more difficult time getting back into the marketplace.”

Carolyn Canham

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