With a new strategically-important merger planned, Grant Thornton Australia (GT) intends to be at the forefront of anticipated changes to the nation’s mid-tier professional services market.
The firm plans to combine with the Melbourne office of AGN International member William Buck this month, strengthening its presence in Australia’s second largest city.
Grant Thornton has had limited representation in Melbourne since its former wealth investment management arm decided to leave the firm last year to create its own brand. The defection followed a decision by Grant Thornton’s Australian firms to combine into a single national firm, which became effective at the start of this year.
William Buck Melbourne adds 23 partners, more than 280 staff and annual turnover of A$42 million ($39.5 million). GT chief executive Robert Quant told the International Accounting Bulletin that the planned integration will provide many benefits for the firm. “It completes our national presence in terms of scale and having full service offering,” he said. “It takes us to a A$160 million practice and we can now confidently say we have a high quality full service offering of scale and depth in each of our key capital cities.”
Aggressive growth The William Buck merger is the second large-scale acquisition for GT since it announced its decision to form a national business. The Perth office of Praxity member Bentleys joined Grant Thornton in September 2007. The two acquisitions, combined with steady organic growth, takes GT’s annual turnover to A$160 million, which is an increase of more than 50 percent on the A$104.6 million reported for the year ended June 2007.
The largest player in the Australian mid-tier is consolidator WHK Group, a Horwath International member firm that reported fee income of A$265.1 million in 2007. The other mid-tier presence that is possibly larger than GT is BDO Kendalls, an association of firms that reported combined fee income of A$159.4 million in 2007.
The decision to become a national firm and recent aggressive growth are both linked to GT’s strategy to be the “standout alternative to the Big Four in the Australian professional services and accounting market”, Quant said. “We realised that there are certain elements required to [become the standout alternative to the Big Four] and one element is that we must have the scale and depth of service offering to be able to meet the needs of our chosen market. To get there we recognise we need to have a combination of a strategic and organic growth,” he said.
“I’m not a believer of size for size’s sake but you need to be on the league tables when you are being considered in your markets. You do need to have enough scale to be able to cover the investment costs for initiatives and infrastructure costs that you would like to incur.”
Part of the incentive behind consolidation is to take a leading role in an evolving mid-tier market. “I see further consolidation and adjustment taking place. In the middle-tier there has been limited change for 20 years and we think there is now a catching up taking place. Ultimately, there is a position for a few firms to be genuine alternatives to the Big Four in terms of their scale and their quality of offering. Not in every part, but in certain markets, and we think clients and the market are crying out for some competition because the Big Four can’t be all things to all people.” MERGERS AND ACQUISITIONS Movements in the market • 2006-2007 – Deloitte Australia acquires parts of BDO Melbourne office and Horwath Sydney office
• Early 2007 – Horwath Australia member firm merges with BDO member firm
• April 2007 – WHK Group defects to Horwath International less than a year after joining SC International
• September 2007 – Grant Thornton Australia merges with Bentleys Perth office
• 16 May 2008 – Grant Thornton Australia merges with William Buck Melbourne