Baker Tilly DHC Forms Al­liance to Take on Big Four

Tie-ups to bring five smaller ac­count­ing firms un­der Baker Tilly DHC um­brella

The Economic Times - - Companies: Pursuit Of Profit - Sachin.Dave @times­group.com

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

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