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AFR Wednesday 13 November 2019www.afr.com | The Australian Financial Review

43Accounting & Consulting

Top trends

Fastest growing divisions within the firms (Top 5 responses)*

Breakdown of firm revenue FY19** (%)

Fastest growing firms by renevue growth, FY19

Advisory services

SMSF and superannuation

Assurance services

Cyber security

HR consulting

8

5

3

3

Based on data supplied by participating firms; revenue includes chargebacks.

Mazars

Rubik3

Synergy Group

Carbon Group

MVA Bennett

Causbrook & Associates

ASF Audits

McGrathNicol

Mackay Goodwin

Highview Accounting & Fin

1

2

3

4

5

6

7

8

9

10

51.39

22.00

55.46

8.43

6.50

3.54

5.17

88.00

6.55

8.47

55

+98

+33

+32

+30

+29

+28

+26

+22

+20

+116

Revenue ($m)FirmRank Change (% YoY)

SOURCE: FINANCIAL REVIEW

1

2

3

4

5

*Respondents that saw growth in this division, firms could only select one division ** Avg excluding big four

49.5 28.5 15.1 10.5 1.0

Tax Advisory Other Audit Legal

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Edmund TadrosProfessional services editor

Expanded services the path to growth

Jadeja Partners’ Magnus Yoshikawa: ‘‘Alarge amount of firms are now movinginto the model of multiple services.’’

Sam McNeill of Advisory Successsays mid-tier firms are feeling thesqueeze from both ends.

BDO partner Tony Schiffmann: ‘‘Ourinvestment in talent is making BDO amore attractive employer.’’

� Next Wednesday: The AFR Top 100Accounting Firms Special Report, inpartnership with Chartered AccountantsAustralia & New Zealand

Accounting firms that have expandedbeyond traditional auditing andtaxation work into higher-marginconsulting are the big winners in ayear in which the 100 largest outfitsgrew revenue by a healthy 9 per cent to$12 billion.

The Australian Financial ReviewTop 100 Accounting Firms for 2019shows that more than half of the sur-veyed firms nominated business, taxand risk advisory as the fastest grow-ing parts of their business.

Overall, advisory now accounts forabout 29 per cent of revenue at the topfirms, while audit accounts for anaverage of just 10 per cent of income.These figures exclude the big four,which did not provide a breakdown ofincome.

The list was produced by the Finan-cial Review in partnership withChartered Accountants ANZ.

The shift demonstrates thataccountants increasingly look tobecome a one-stop shop for clients,said Magnus Yoshikawa, the directorof Jadeja Partners and a specialist inaccounting merger and acquisitions.

‘‘The Top 100 now represents firmsthat have adopted completely differentmodels offering multiple services withadvisory/consultancy taking shape,’’Mr Yoshikawa said.

‘‘Pure accounting is becoming moreof a rarity. Pure accountants do stillstand proud, but you can’t help feelthat a large amount of firms are nowmoving into the banking/big fouraccounting firm model of multiple ser-vices to ensure a stickier relationship.

‘‘The future accountant seems to beheading towards a respected GPstatus, one’s own ‘Financial GP’, thatthen refers the clients to an in-house orexternal professional.’’

The big four firms earned a collect-ive $8.6 billion, with overall growtheasing slightly to 10 per cent from 11 percent last year. This collective result dis-guised a big gap in performancebetween the firms.

PwC, which once again topped thelist, posted strong results across itsdivisions with revenue growing by 11per cent to $2.6 billion.

Deloitte, which came in second onthe list with revenue of $2.3 billion,grew at a strong 14 per cent, thanks to asurging consulting division.

The firm’s executive leadership lastweek decided to shutter the more mod-estly growing Deloitte Private divisionin order to allow a greater focus onhigher-margin consulting work. Thefirm’s consulting division grew byabout 20 per cent last financial yearand accounts for about $1 billion, orroughly 40 per cent of total revenue.

EY, the former Ernst & Young, wasthe slowest growing of the big four,posting FY19 income up 6 per cent to$1.9 billion. Last week, the firmannounced the new head of its consult-

ing division, an area that grew at only 2per cent last financial year.

KPMG, fourth on the list, grew by 9per cent to $1.8 billion, thanks to strongdemand for its risk advisory specialists.

Performance was mixed at the ninemid-tier firms, with revenue between$100 million and $375 million. Thesefirms posted a collective revenue of$1.85 billion, up 4.8 per cent for the year.

BDO, once again the standout per-former, posted an impressive growthrate of 12 per cent for total revenue justshy of $300 million. It won clients awayfrom the big four and recruited effect-ively, said Tony Schiffmann, its chiefexecutive partner.

‘‘Many of the people we talk to are

unhappy with their current arrange-ments and are experiencing poor out-comes with their providers, mainly thelarger global competitors, and they’reactively seeking alternatives and com-ing to us at BDO,’’ Mr Schiffmann said.

‘‘Our investment in talent, develop-ing our already highly skilled work-force and making some strategic lateralhires, is making BDO a more attractiveemployer and also driving more posit-ive client experience and outcomes forthe businesses we work with.’’

In June, BDO partners voted to com-bine its three largest offices – Mel-bourne, Sydney and Brisbane – into onepractice for the east coast operationunder Mr Schiffmann. The firm is look-

ing to become a single national firm.William Buck and Bentleys Network

were the next fastest growing mid-tierfirms, with revenue at both firms up 8per cent. William Buck attributed thatgrowth to demand for the firm’s out-sourced chief financial officer service,while Bentleys pointed to its ability toprovide specialised advice to regionalclients coping with the drought.

Revenue at Findex and HLB MannJudd increased by just 1 per cent in theyear, to $368 million and $103 millionrespectively. Income was down by 1 percent at PKF to $116 million.

The mid-tier had the slowest growthrate of any grouping in the Top 100,partly due to the squeeze it was feelingfrom both ends of the market, said SamMcNeill, a consultant who helpsaccounting firms transition into mul-tidisciplinary firms.

‘‘[Mid-tier firms face] pressure fromthe big four reaching down and smallerfirms reaching up. These firms need tobe rock solid in driving compliance effi-ciencies and in business advisorymethodology and execution,’’ he said.

The rush by accounting firms tolearn consulting skills has kept MrMcNeill and the firm he co-founded,Advisory Success, busy. It engaged with13 Top 100 accounting firms during thefirst half of 2019

Revenue growth at the 24 firms earn-ing between $20 million and $100 mil-lion was up 10 per cent to a collective$1.15 billion. This segment was thestrongest performing in the Top 100and featured stellar results fromMazars (income up 116 per cent to $51million), Rubik3 (up 98 per cent to $22million) and Synergy Group (up 33 percent to $55 million).

The market for independent advicewas still strong, with insolvency firmMcGrathNicol posting growth of 26 percent to $88 million in revenue.

Successful practices have a mix ofincome streams and often provide mul-tiple services to each client, said GrantBloxham, the CEO of Bstar, a companythat offers tools and research to helpaccountants grow their practice.

‘‘Typically, accounting practices thathad achieved benchmark profitabilityhad diversified their revenue mix;offered and secured multiple servicesper client; and managed productivity,efficiency and labour benchmarks forcore accounting, compliance and taxservices,’’ Mr Bloxham said.

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