The Johannesburg office of consulting firm Grant Thornton has bagged another acquisitive deal, taking over PKF Johannesburg, in what comes to add into a list of actions which are now suggesting that the ground is shifting within South Africa’s mainstream consulting market.
An announcement released yesterday by Grant Thornton and PKF (Johannesburg) said the two companies will merge their mid-tier assurance and business advisory offices to create a formidable professional services firm in the city of gold.
Critically the announcement noted that the Grant Thornton/PKF (Johannesburg) merger comes hot on the heels of another recent two-way merger. TIS/Fintis and Rebahale, two black-owned professional services firms, merged with Grant Thornton South Africa in March 2013. The latter passes as a BEE push positioning Grant Thornton for the public sector market.
Last year saw a merger of two medium sized audit and consulting firms, Sekela Consulting and Xabiso Chartered Accountants to create SekelaXabiso. The claimed to be challenging for the sixth the sixth spot in the rankings of South Africa’s largest auditing and advisory firms. That merger came shortly after the marriage between two other black giants to create SizweNtsalubaGobodo who were said to be challenging for the fifth spot. By claiming big auditing accounts like Transnet, SizweNtsalubaGobodo is posing a serious challenge.
The Grant Thornton/PKF (Johannesburg) merger will be effective on 1 July 2013. This will see PKF Johannesburg becoming part of the Grant Thornton Johannesburg and a member of Grant Thornton South Africa. “The merged offices will operate as Grant Thornton Johannesburg within the national network. Other PKF offices in South Africa will continue to trade under the PKF name and will not be part of the merger at this stage”.
Grant Thornton is clearly on a challenge to enhance its position within the top league as dominated by the big four, Deloitte, Ernst & Young, PwC and KPMG.
The announcement said the merger will entrench Grant Thornton’s position as the 5th largest in its market in South Africa as ranked by fee income. They cited the November 2012 International Accounting Bulletin (IAB) SA survey to back their claim.
The challenge is captured by Andrew Hannington, who is currently a board member of PKF International and chairman of PKF in South Africa and will become the new CEO of Grant Thornton Johannesburg. “Our new Johannesburg office will create a more richly resourced firm, a superior client offering and will significantly strengthen our position relative to the big four”. He said push will transpire “especially in terms of audit choice – a heated topic currently being debated between the auditing profession, global regulators, and the boards of listed companies”.
Jeanette Hern from the Grant Thornton will assume the role of deputy CEO in Johannesburg. The announcement said current CEO of Grant Thornton Johannesburg, David Campbell, recently tendered his resignation to return home to his family in the UK and to explore new business opportunities.
Hern said “For our businesses, today’s merger of equals forms the next step in our national strategic growth plans. The new combined Johannesburg staff complement of over 500 enhances our capacity and will be beneficial to our clients. The merger is not expected to have any impact on staff numbers and will bolster the South African firm with a national staff complement of over 900.”
“Mergers are a vital step in achieving our strategic ambitions and Grant Thornton is committed to fast and strategic growth with like-minded organisations and individuals,” said Ed Nusbaum, global CEO of Grant Thornton. This merger is a truly significant step for Grant Thornton in South Africa and I am pleased to welcome the new partners and staff to our global organisation”.