Bigger. Better. Both?

2011 Beaton450: A comparison of the major professions

26 June, 2012

Eric Chin. Accounting. Consulting engineering. Law. Management consulting. Mergers & Acquisitions. Strategy

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This year marks the launch of Beaton Capital’s league table of the world’s largest 450 professional services firms in accounting & advisory, consulting engineering, law and management consulting. 206 law firms, 167 consulting engineering firms, 42 accounting and advisory firms, and 35 management consulting firms generated US$473 billion through 3.2 million professional staff operating from 46,456 offices.

The Beaton450 firms recorded 285 mergers and acquisitions in 2010, and 69 firms chose organic growth by opening greenfield offices.

Table 1 compares the professions in the 2011 Beaton450. Each of these professions has fared differently in the post-GFC world economy.

Table 1: Comparison of the major professions

The accounting and advisory firms recorded the highest revenue, headcount, merger and acquisition activity, and presence by number of countries and thus represent the most globalised profession. The Big4 lead the way and, as Beaton Capital’s analysis shows are going in different directions with their M&A activity.

The 167 largest consulting engineering firms compete for US$136 billion in the US$1 trillion global industry. The consulting engineering firms in Beaton450 are diversifying through merger and acquisition and appear to be more globally coordinated in this activity than the accounting firms.

More than half the law firms in Beaton450 are from the US, while the UK contributed 22 law firms. The legal industry is one of the ‘oldest’ with 51% founded before 1920. It is the least globalised profession with a globalisation ratio of only 0.33. Law also appears to be the most risk-averse profession, clocking up the fewest mergers and acquisitions. In 2010, four major cross-oceanic M&A events occurred:

• Hogan Hartson [USA] merged with Lovells [UK]
• Squire Sanders [USA] merged with Hammonds [UK]
• Sonnenschein Nath & Rosenthal [USA] merged with Denton Wilde Sapte [UK]
• Norton Rose [UK] merged with Deacons [Australia].

For more on law firm mergers and acquisitions from Beaton Capital go here.

Management consulting firms compete for US$80 billion in the US$270 billion global industry. The largest by far, is publicly listed Accenture, with revenues of US$21 billion and 181 offices in 54 countries. A relatively ‘young’ profession, it is not surprising that 60% of management consulting firms were founded since 1970.  The consulting profession was hardest hit during the GFC.

While firms in each of the professions covered in the Beaton450 faced a range of different external factors, they also have much to learn from those in other professions. This year’s Beaton450 is one of our contributions to this learning.