Delineates Key Factors Enabling Strong 2011 Revenue Growth for Big Four Accounting Firms

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An improving global economic environment, strong demand from emerging markets and for advisory services drove a 9% revenue growth at the Big Four Accounting Firms - Deloitte, KPMG, Ernst & Young, and PricewaterhouseCoopers PwC.

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Actual 2011 performance exceeded our expectations, with rebounds in Audit and Tax; and continuing Advisory growth. Growth returned to Americas and Europe, while the Asian streak continued., 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.

The 2007 to 2009 recession has been the world’s worst financial crisis for over 70 years, and despite such turbulence, the Big Four firms turned in quite a creditable performance, with revenues falling by single digits in local currency terms from 2008 to 2009. Since March 2009, global financial markets had a marked improvement in equity values, and general business conditions were in much better shape in December 2010.

More so, leading economic indicators in developed nations were on the uptrend in 2010 and both OECD and emerging market countries posted multiple quarters of positive GDP growth. 2011 saw the continuation of positive trends, as stability returned to the United States, Latin America countries continued their fast growth, Asian economies remained strong while Europe generally experienced high volatility and economic dullness. A reduced threat of US double-dip recession and deflation, an optimistic outlook among global executives, and rebounding M&A activity strongly favored Big Four firm revenue growth, as the firms participated in an increasing level of financial activities pursued by their clients, whether it be tax restructuring or compliance, transfer pricing, mergers and acquisitions, IPOs, strategic growth, risk management, IFRS conversions or audit compliance.

Having likely captured the worst of 2009’s impact in fiscal year 2009, fiscal year 2010, which ranges from mid-2009 to mid-2010, did produce small but highly welcome positive revenue growth. For 2011, we foresaw much better revenue growth for all the four firms, likely in the 4% to 7% range for a variety of key factors:

  • Companies have improved their bottom lines, and are moving rapidly from a mentality of cost control to a more optimistic attitude of aggressively seeking top line growth. This translates into more need for consulting and tax services from the Big Four firms
  • Global equity markets have been generally stable to positive in 2010, and 2011 points to further gains. More so, credit markets have loosened up and private equity firm activity is on the increase.
  • Both Merger and Acquisition activity and Initial Public Offerings are on the rise in 2010 versus 2009, and expected to further increase in 2011.

2010 revenue base for Big Four firms is similar to 2009 levels, but external conditions are much better in 2011 than in 2010.

  • The dollar has started sliding against major currencies in mid-2010.

We expected KPMG to have the strongest fiscal 2010, since its fiscal 2009 ended in September 2009, and captured much of the crisis; and further that its 2010 revenues will be compared to a much lower base. This turned out to be right, and we forecasted a repeat performance from 2010 to 2011 due to its smaller overall size and its larger proportion of higher-growth Advisory services.

However, actual 2011 performance was far beyond our expectations, as all these above expected factors turned out to be true. Audit and Tax rebounded strongly from two years of negative to flat growth, Advisory continued its streak of strong revenue increases, growth returned to mature regions of Americas and Europe, and emerging countries and Asia marched on with outstanding results. KPMG did post the highest growth in US dollar terms among all the Big Four firms.

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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