Mid-Size Firms Unite to Capture Big Four Business

A national network of 22 mid-size accounting firms is marketing itself as one company to draw business away from the Big Four.

The network is called Baker Tilly USA, and it opened for business Monday, offering tax, audit and consulting services under one brand name, according to the Washington Post.

"We're coming at a time when the business market is crying out for alternatives to the Big Four, and we believe our structure can fill that void," Geoff Barnes, chief executive and president of Baker Tilly International, told the Post.

James Peters, chairman of the accounting department at the University of Maryland at College Park, said the industry has a “name-brand effect.” Firms in alliances, such as Baker Tilly USA, "have a better chance of competing with the second-tier firms," which include RSM McGladrey Inc., Grant Thornton LLP and BDO Seidman LLP, he said.

In the post-Sarbanes Oxley (SOX) environment, the Big Four firms have been overwhelmed with work to help public companies comply with the stricter internal control requirements. Regional firms have found it difficult to break into the Big Four market, in part because some of the biggest clients require the international reach and specific industry knowledge offered by the Big Four — Deloitte & Touche LLP, Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP.

Baker Tilly International is a worldwide consortium of 125 firms. Three other networks that represent mid-size regional firms — Moores Rowland North America, the Leading Edge Alliance and Moore Stephens North America — are also planning to market themselves as an alternative to the Big Four, the Post continued.

Marketing consultant Allan D. Koltin of PDI Global Inc., told the newspaper that those groups, with Baker Tilly, represent about two-thirds of the nation's top 100 accounting firms.

The new alliances "will become four very significant pillars that realize that, if they create depth and resources, they can have tremendous competitive advantage against all other firms in the marketplace," Koltin said.