This year BDO is marking a milestone moment in its development – the 50th anniversary of its global membership network. Further to our recent article about the BDO and PKF merger, Andres Heede talks to Global Accountant about the future of the Mid-Tier Accountancy sector and its consolidating moves:
Anders Heede explains:
I believe the accountancy profession is on the brink of a global transformation – the consolidation of mid-tier accountancy firms. It is a trend we have already witnessed for some years among the very largest networks and it is now repeating itself for the mid-tier. Let me illustrate the scale of this transformation. I predict that by 2018, only two or three truly global mid-tier networks will remain.
As one of the most developed financial services markets in the world, the UK is leading this development, but this is a sign of what is coming in other countries. The impact of this will be far-reaching, not just for our profession, but for those we serve too.
The core client base for mid-tier firms, SMEs are increasingly seizing opportunities for international expansion – according to Eurostat figures, 44% of all EU SMEs already have international activity, and this is only likely to continue as we start to see economic recovery in the region. Hand-in-hand with this opportunity, will come risk – and in order to navigate this ambitious SMEs will increasingly need professional services firms to help them.
But these companies have different needs and service expectations to their larger counterparts. They are not always best served by the largest firms, who have traditionally catered for the demands of large corporates. They need professional advisors with the depth of skills, sector expertise and local knowledge to help them navigate risk.
At the same time, they need firms with the global infrastructure and centralised processes to deliver high quality work as their organisational structure and activities become more complex.
To be able to deliver all of this requires investment – investment that many mid-tier firms simply cannot make or sustain. We have already seen this force in action, with a number of firms around the world pushed out of the market in recent times.
Pricing pressures, combined with ongoing economic uncertainty, will mean that only the strongest and most capable networks, those able to meet the increasingly sophisticated needs of mid-market businesses, will be left standing.
At BDO, we have actively pursued a strategy that will drive further mid-market consolidation – and we will continue to do so. We are growing our network both organically and by merging with strong firms that share our values and add to our strengths. As such, last year BDO Li Xin merged with a significant part of PKF China, strengthening BDO Li Xin’s position as the largest Chinese owner-managed audit CPA firm and the market leader in serving state-owned enterprises in China.
This year we have also welcomed six new member firms in Europe, Africa and the Caribbean to our network.