A Mixed 2011 for Top 60 Firms
The top 60 UK accountancy firms have bounced back strongly, showing a 6.5% increase in total fee income during 2011, compared to a 1% fee income fall in 2010, the first time that had happened since the recession of the 1990s.
The findings in the latest annual survey byAccountancy revealed the fortunes of the top 60 vary according to the size of firm. The Big Four – PwC, Deloitte, KPMG and Ernst & Young - generally had a good year in 2011 and reported healthy increases in revenue in their most recent results. This is in spite of what Ian Powell, chairman of PwC, described in the firm’s annual report as ‘a difficult market’.
Accountancy acting editor, Sara White, said: ‘A look behind the headline growth figure reveals a more complicated picture. Organic growth remains difficult to find and more firms than in the previous year’s Accountancy survey (26 compared with 19 in the 2011 survey) reported negative or stagnant growth during the year, an indication that the market remains challenging.
‘A few firms have seen improved results due to mergers and acquisition activity – such as Reeves & Co, which merged with FW Stephens in June 2010, and RSM Tenon in the wake of its merger last year with Bentley Jennison.’
Anecdotal evidence, particularly among the mid-tier and smaller firms, suggests they have found themselves unable or unwilling to increase client fees over the past two years and find themselves working harder to produce the same level of fee income.
Michael Snyder, senior partner of Kingston Smith (ranked 18 in the survey), said: ‘We have been steadily winning business, perhaps not at the same rate as before the recession, but still at a significant level. The difference is that one-off and additional work has reduced and I’d be very surprised if that isn’t replicated in other firms.
‘Clients are more difficult to win and they don’t necessarily concentrate on the range of value added rather than price. The sensible businesses realise that you get what you pay for. I’d expect to see smaller firms struggling a lot because they are more vulnerable to fee pressure and to losing clients – and a lot of people are after their clients.’