Mid-tier firm revenue surges 17pc, outpacing big four

afr.com:

Strong demand for traditional auditing, accounting and tax services, along with fast-growing consulting offerings, helped boost annual revenue at mid-tier accounting firms by a breakneck 17 per cent, to $2.8 billion.

This outpaced the overall 12 per cent growth of Australia’s largest accounting firms in the year to June.

Mid-tier firms with revenue of $100 million to $500 million also outperformed the big four firms in the 2022-23 financial year as the largest firms began to feel the bite of a pullback in private and public demand for their consulting services.

Deloitte, EY, KPMG and PwC, which were up a collective 12 per cent to $11.1 billion in revenue in FY23, have already cut jobs this financial year as the full impact of the PwC tax leaks hits that firm and overall public sector demand for the four brands.

The strongest performers in The Australian Financial Review Top 100 Accounting Firms list for 2023 were those with income from $10 million up to $25 million, a segment with 32 firms that grew 18 per cent to $509 million in collective revenue.

In contrast, the 29 firms with $5 million to $10 million in revenue shrank by 17 per cent as mergers and acquisitions removed fast-growing firms previously in this group.

Mid-tier firms including BDO, RSM, Grant Thornton, Pitcher Partners, William Buck and McGrathNicol all had growth of 15 per cent to 18 per cent in FY23. These firms were helped by focusing on core services and a growing perception they provide many of the same services as the big four but at a more reasonable price.

BDO chief executive partner Tony Schiffmann said strong demand across the board helped the firm grow income by 18 per cent, to a record $475 million. This result ensured the firm firmly held on