Forecasts Healthy Outlook for Growth at All The Big Four Accounting Firms

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An improving global economic environment, strong demand from emerging markets and for advisory services will be key factors for a positive revenue growth scenario for the Big Four Accounting Firms - Deloitte, KPMG, Ernst & Young, and PricewaterhouseCoopers PwC.

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2012 will also be an interesting year to watch for any changes in Big Four rankings: whether PwC will be able to maintain its lead over Deloitte, and whether KPMG will be able to further narrow its gap with E&Y., the premier social networking forum for professionals and alumni of Accenture, Andersen, BearingPoint, Capgemini, Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers PwC in a recent study, highlighted the principal factors enabling the Big Four Accounting Firms to report a strong 9% revenue growth from 2010 to 2011.

2011 has been a solid turning point, building upon the foundation set in 2010, as the world’s worst economic crisis only moderately impacted the firms. For 2012 and beyond, the Big Four firms will likely see a return back to revenue growth. The Big Four firms have participated extensively in the explosive growth in the emerging markets, and while it will be harder to grow at high levels from an already huge revenue baseline, now exceeding $20 billion for each firm, the firms have demonstrated tremendous global breadth and depth to benefit from any growth or even changes in their client base. Particularly, there are some solid factors to drive growth in the near to medium term:

Advisory and Tax will directly benefit from improving global confidence and business growth. Audit will be helped with some easing of client pressures on rates and pricing. Tax will benefit from M&A, increasing global complexity and compliance requirements

  • There is already higher penetration into emerging markets which have better growth profiles. More importantly, Asia has become a more significant and highest-growth region for all firms - both factors will help drive higher revenue growth.
  • Advisory has become a larger component of revenues and continues its strong year-on-year revenue growth. Both factors will be propel total growth
  • 2011 has shown that Big Four firms are rapidly making selective acquisitions to enhance their consulting expertise. These value-adding services will provide additional boosts to overall revenue
  • Growth in developing markets such as Brazil, Chile, East and South Africa, Middle East will be strong and deep as increasing financial sophistication will create demand for Big Four audit, tax and advisory services
  • Global macro factors such as low interest rates, improving equity markets, strong Japanese Yen, and a weakening Euro will provide impetus to cross-border M&A
  • Adoption of IFRS standards all over the world will accelerate in 2012 and beyond, necessitating external assistance from Big Four auditors to effect implementation and compliance

The Big Four firms dominate their space and are unlikely to face any emerging competitors for a long time, and while regulation and audit litigation do pose operating and financial risks, it is unlikely that any of these single items will be of sufficient magnitude to generally upset the status quo.

Continued absence of credible and scaled competition will perpetuate the domination of Big Four firms in the Audit and Tax markets, notwithstanding any efforts in European zone to diminish Big4’s near monopolies

2012 will also be an interesting year to watch for any changes in Big Four rankings: whether PwC will be able to maintain its lead over Deloitte, and whether KPMG will be able to further narrow its gap with E&Y.

This analysis may be reproduced or distributed in parts or whole, but prominent and full attribution should be given at all times to “The 2011 Big Four Firms Performance Analysis by

The full study can be downloaded as Adobe pdf at

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Kristy Short
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