BDO aims to merge into challenge to Big Four firms
Hong Kong's fifth-biggest accounting practice keen to expand and offer more diverse services
BDO, the fifth-biggest accounting firm in Hong Kong by revenue, is eyeing merger opportunities to go head-to-head with the Big Four, according to chairman Albert Au Siu-cheung.
Au has grown his firm through many acquisitions to about 1,000 employees from 160 since 1997. But he said future mergers would not follow the same pattern as before.
"In past mergers, we focused mainly on expanding our audit ability," he said.
"Looking ahead, we would like to merge with firms with consultancy or other specialised skill sets so as to diversify … and provide more comprehensive services to the customers. The ultimate goal is for us to challenge … the Big Four firms."
Analysts are not surprised at the shift in strategy, given that the number of initial public offerings (IPOs) has dropped substantially this year, bringing down demand for auditing services. Hong Kong has been the world's largest IPO market in the past three years, but this year it might drop out of the top 10 due to growing uncertainties about the euro-zone debt crisis and an economic slowdown on the mainland.
In the first eight months of this year, new listings raised just under HK$43 billion, down 77 per cent from about HK$190 billion over the same period last year. The amount was also a 10-year low for Hong Kong Exchanges and Clearing.
Au said he hoped to merge with accounting firms that would add such expertise as advisory services for corporate restructuring, mergers and acquisitions as well as forensic capabilities. He said more specialists would help attract bigger clients and government and public bodies that would expand BDO's client base.
BDO Hong Kong is a member of BDO International, an accountancy network with more than 1,100 offices in 130 countries. The Hong Kong firm began as McCabe & Associates in 1981. Au joined it as an executive director when there were 29 staff. It started out offering company secretarial services, and three years later expanded into auditing.
By 1997, the firm had grown to 160 staff and completed its first merger by combining with BDO's Hong Kong operation. A merger with K.L. Lee & Partners in 2005 boosted headcount to 350 and another merger in 2009 with Shu Lun Pan Horwath Hong Kong boosted the total to 600.
Two years ago, a merger with the former Grant Thornton Hong Kong catapulted the headcount to 1,000. (Grant Thornton has since appointed another member firm in Hong Kong.)