Top 100 Firms Headed for Slowdown?
CCH’s Top 100 CPA firms posted a third year of double-digit growth. But the report’s authors see signs that the run could be coming to an end.
This year marks the first time CCH’s Public Accounting Report Top 100 firms posted a three-year streak of double-digit revenue growth rates since 1999, 2000 and 2001.
The PAR 2008 Top 100 found an average revenue growth rate of 11.4 percent, up from a growth rate of 10.8 percent in 2007.
As in previous years, firms outside the Big Four posted stronger overall results than their larger counterparts, with non-Big Four firms growing their revenue at an average rate of 14.4 percent compared to 10.6 percent for the Big Four. For 2008, the Top 100 actually includes 102 firms, with a three-way tie in revenue for the last spot on the list.
In addition to revenue growth rates for overall firms, composite net revenue per partner also rose to more than $2.87 million, a 6.3 percent increase over the previous year, while net revenues per professional for firms in this year’s top 100 increased 4 percent to $320,194 compared to those firms’ previous performance, according to PAR 2008 Top 100 results.
While an increased double-digit revenue growth rate for the third straight year appears to be good news, there are signs that point to an economic slowdown.
Weakness in underlying data suggests the revenue growth rate may not make a return trip to double-digit growth territory next year.
Drilling down beyond the surface of the numbers reveals that 2008′s revenue growth rate figure of 11.4 percent is actually weaker than the previous year’s rate of 10.8 percent when taking into account that this year’s growth rate is largely contributed by firms with fiscal year ends prior to March 2008.
Further signs of slowdown are apparent when reviewing the data from firms with fiscal year ends from April to August 2008.
According to the 2008 PAR survey, the top 10 of the Top 100 ranked by revenue are:
1. Deloitte (New York, N.Y.)
2. PricewaterhouseCoopers (New York, N.Y.)
3. Ernst & Young (New York, N.Y.)
4. KPMG (New York, N.Y.)
5. RSM McGladrey (Minneapolis, Minn.)
6. Grant Thornton (Chicago, Ill.)
7. BDO Seidman (Chicago, Ill.)
8. CBIZ/Mayer Hoffman McCann (Cleveland, Ohio and Leawood, Kan.)
9. Crowe Group (Oak Brook, Ill.)
10. BKD (Springfield, Mo.)
Historically, there has not been a great deal of fluctuation in the ranking among the top 10 in PAR’s Top 100. This year, the top 10 remained the same as in 2007 with PricewaterhouseCoopers maintaining the No. 2 spot that it won over Ernst & Young last year.
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