Just how big are the Big 4? They are really big.
If we took our magic wand and split up each firm along 3 product lines, the resulting firms would be larger than the currently fifth largest firm.
If we took those Big 12 firms and waved our magic wand again to split each of the 4 audit firms in half, the former Big 4 would make up 16 of the 18 largest firms.
Here is some more info. The breakout of the seven biggest firms along product lines, as reported by the Accounting Today magazine I mentioned earlier.
| A&A | tax | MAS | other | |
| Deloitte | 29 | 18 | 48 | 5 |
| PwC | 41 | 28 | 31 | 0 |
| Ernst & Young | 36 | 29 | 28 | 7 |
| KPMG | 34 | 28 | 38 | 0 |
| McGladrey | 41 | 36 | 22 | 1 |
| Grant Thornton | 41 | 28 | 31 | 0 |
| BDO | 58 | 32 | 10 | 0 |
What’s that looks like in dollar terms? I did the math:
| revenue | A&A | tax | MAS | other | |
| Deloitte | 14,908 | 4,323 | 2,683 | 7,156 | 745 |
| PwC | 11,724 | 4,807 | 3,283 | 3,634 | – |
| Ernst & Young | 9,900 | 3,564 | 2,871 | 2,772 | 693 |
| KPMG | 6,870 | 2,336 | 1,924 | 2,611 | – |
| McGladrey | 1,471 | 603 | 529 | 324 | 15 |
| Grant Thornton | 1,383 | 567 | 387 | 429 | – |
| BDO | 833 | 483 | 267 | 83 | – |
So, back to my headline.
If the Big 4 were split neatly along the reported A&A, tax, and MAS lines, those 12 firms would each be larger than the currently 5th largest firm at $1,471M.
If the ‘other’ of Deloitte and E&Y were each spun off into their own firm, each of them would displace the current 8th largest, Crowe Horwath, at $687M.
Furthermore, if we split the Big 4 into 12, spun off the 2 ‘others’ and then split the resulting 4 audit-only firms in half, we would have 18 firms. Only McGladrey, Grant, and BDO would be larger than any one of those pieces. The resulting 18 firms would be 18 of the 21 largest firms.
The sheer size of the firms is staggering.
Jim, Am I reading this correctly? Deloitte Consulting has exceeded its Audit practice in revenue in US? I do not think that is yet true on a global basis. (See their global transparency reports on the respective global sites.) KPMG too? (All the firms do not split things up and report numbers in the same categories, I am afraid.)
Francine –
Those are the percentages listed by Accounting Today: 29 / 18 /48 / 5. No footnote elaborating on their split.
KPMG as well: 34 /28 / 38 / 0, although there is a footnote that KPMG changed their methodology for inter-function work so the percentage is not comparable to last year.
Jim