Baker Tilly DHC Forms Alliance to Take on Big Four
Tie-ups to bring five smaller accounting firms under Baker Tilly DHC umbrella
Mumbai: Baker Tilly DHC, the Indian arm of Baker Tilly, has formed an alliance with five smaller chartered accountant firms in the country. Baker Tilly DHC, which currently has about 1,300 people on board including about 100 partners in India, would add more than 500 people after the integration.
As per the new operational integration design, all new firms would now come under one umbrella and called Baker Tilly DHC. Some senior partners in five firms would also get some national roles in the new firm.
Dilip B Desai, chairman, Baker Tilly DHC, confirmed the development, but refused to share the names. “This is not an outright acquisition of the smaller firms as employees and their clients would be part of Baker Tilly DHC,” he said.
In at least one of the five cases, Baker Tilly DHC would also make a payment to some senior partners for them to join the network.
ET has learnt that three of the five firms include Cloud Info-solutions, R Kothari & Co, Spearhead Services. He also added that the firm is now looking for similar integration with 10 separate smaller firms. Talks with these firms are in the final stages, he said. Industry trackers say that this is just the beginning of the deal activity in the professional services firms. Many firms are also looking at an outright acquisition of the smaller firms.
The activity in the space is mainly due to the new Companies Act which, after it comes into force in from next financial year, will make it mandatory for Indian companies to change their auditors every 10 years.
There are different views on how audit rotation would impact the auditing firms, but it is speculated that the Big Four—Deloitte, EY, PwC and KPMG—could end up eating into smaller firms’ pie. Due to this some of the other firms beyond the Big Four have been trying to increase their size and footprint to stand a fighting chance against the big boys.
Most major auditing firms, including BDO and Grant Thornton to other domestic firms like Mumbai-based MGB & Co, are on a look out to acquire smaller firms. In September 2014, Grant Thornton’s acquisition of Mumbai-based Thingna & Contractor was one of the major ones. The smaller firms are pushed to the wall & combining their strengths can only be their chance to take on the Big Four. Till now, many big companies have had non Big Four companies auditing them like Singhi & Co has been auditing Hindalco for over 50 years and Chaturvedi and Shah been working with Reliance for over three decades.
Post this deal, Baker Tilly DHC — Baker Tilly network globally has 27,000 people in 137 countries — is set to become one of the top six firms in India by number of people and revenue. The new firms would bring in some of the capabilities that Baker Tilly DHC would require to compete with the big boys. Like Spearhead has a team of over 200 people servicing more than 100 Fortune 500 multinational companies in India. “This integration between Baker Tilly DHC and Spearhead creates a formidable partnership that can re-define customer delivery globally. It brings the best of IT with the best of accounting practices to provide unparalleled values to businesses,” said K R Rajagopalan, Chairman, Spearhead.
Desai Haribhakti had joined the Baker Tilly network in 2015. In 2013, Haribhakti Group had joined hands with Kolkata based DB Desai Group to form one of the biggest firms outside the big four.
Post this deal, Baker Tilly DHC will become one of the top six firms in India by number of people and revenue