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International news - Martin van Roekel interview in Het Financieele Dagblad

07.02.2017

Martin van Roekel, Global CEO of BDO, was recently interviewed by Het Financieele Dagblad – a prominent financial newspaper in the Netherlands – about the importance of consolidation in the mid-market, BDO’s position in the marketplace and trends within the profession in general.

The full article in Dutch is available here and the full translated (English) version here.

Please find here some of the key highlights from the piece:

Temptation and pressure

  • BDO offers the member firms in our network a number of benefits, including a strong brand, as well as, for example, access to central software programmes for auditing.
  • We push hard for integration and alliance within our network, which means that we sometimes need to have tough conversations with any firms that are not meeting our high quality standards. If this doesn’t happen, we require improvement plans to be put in place - and if that doesn’t happen, sanctions are likely.

The gap with the Big Four

  • BDO is present in 159 countries and has a global footprint that is close to that of the ‘big 4’ networks (PwC, Deloitte, EY and KPMG)
  • Audit reforms require stock-listed companies to rotate their accounting firms: this has given BDO the opportunity to attract some big companies
  • In the latest rotation, our score hasn’t reached quite the level as we had hoped for. We find that often in the bidding process large companies are pleasantly surprised by BDO’s expertise and reach, but nonetheless eventually choose for one of the Big Four, because they are considered a safe option. However, as a result of audit rotation, BDO has been successful in becoming advisers to large entities: we hope to have more success with the next rotation.

Failed merger discussions

  • Closing the gap between BDO and the Big Four isn’t our goal: the gap is simply too big. But we do want to be perceived to be in the unique position of the only viable alternative to the Big Four
  • We have had some ‘intense conversations’ with a number of international networks (‘I won’t say names’), but without any result

Big is beautiful

  • Thinking about scale is inevitable. As long as a large merger remains unfeasible, BDO continues to grow by taking over smaller individual firms or acquiring partners from others. BDO’s average growth in the last few years has been around 7%, while the market average has been nearer 5% or 6%
  • The market is consolidating and ultimately there will only be 2 or 3 of the mid-sized players left. The necessity to invest in quality, IT and regulatory compliance are so challenging that only the bigger networks can keep up. The same is true of the ongoing necessity to attract young talent by both growing and excelling. Networks where firms are too focused on their autonomy and realise no growth will drop off in the next few years.

Powerhouse in China

  • The only big economy in the world where BDO can really compete with the Big Four is in China, where BDO is ranked as the number 3. One reason for this is the decision of the government to place an important emphasis on the Chinese character of the larger accounting firms – for example, it demands that 80% of the partners must be Chinese. BDO scores very well on this particular point as, from the beginning, we have only worked with Chinese partners. This is another reason why big companies in China don’t automatically choose the Big Four, but BDO.

Netherlands, an exemplary country?

  • The Netherlands plays an important role in BDO’s global network and is one of the seven countries represented in our global supervisory body (the Global Board)
  • The global CEO, Martin van Roekel, does find the intense oversight and many new regulations in the profession in the Netherlands to be of concern
  • An important issue here is whether the audit profession remains attractive enough to young talent - which is increasingly opting for the consulting profession.

For press inquiries, please contact Keum Roling