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February 28, 2010

Mid-tier firms in merger talks

Grant Thornton Australia confirmed it is in merger talks with several firms in an effort to grow annual revenue past the A$300 million ($270 million) mark.

Australia’s seventh-largest firm reported revenue of A$158 million in the year to 30 June 2009, which was A$42 million less than rival BDO.

It has been a long-stated goal of Grant Thornton’s to increase revenue to A$300 million by 2011, and growth by M&A would be the only realistic way to achieve this.

Grant Thornton Australia chief executive Robert Quant would not reveal the identity of potential merger partners, but PKF Australia has been suggested as a possible candidate.

“In the past 12 months to 18 months we have had conversations with several firms. While some of these have been productive and encouraging, at this stage we will not be making any formal announcements,” Quant commented.

“We will continue to talk to those firms which share our commitment to provide clients with seamless, high-quality service and which can enhance our ability to extend our national reach across all our service lines.”

Details of accounting firm mergers are rarely leaked to the public before negotiations are at an advanced stage or a deal has been struck in principle.

PKF Australia reported revenue of A$136 million in its most recent fiscal year. A marriage between the two firms, coupled with marginal organic growth, could power the revenue of a combined entity to A$300 million. This would be the sixth largest accounting organisation in Australia, behind the Big Four and WHK Group.

Other large mid-tier market players include Baker Tilly Pitcher Partners (A$145 million), Moore Stephens Australia (A$112 million) and RSM Bird Cameron (A$111 million).

PKF Australia said it was open to mergers but has no specific targets.

 

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