Acquisition guide to overcome cultural and structural challenges in the acquisition spree of big four accounting firms

Abstract

The growth of the consulting services, flattening audit revenues and clients’ need of one stop shop have thrust the Big 4 accounting firms to follow an acquisitive mood. To be able to take a complete advantage of the opportunities in various sectors like IT, media, etc., accounting firms should either build an internal talent pool of required skills or acquire a firm which has specialization in a particular category. The former one is time-consuming as compared to the latter. Thus the Big 4 accounting firms (PwC, Deloitte, KPMG & EY) have chosen to make acquisitions in different spaces and broaden their impact. However, the biggest challenge to extract value from these acquisitions is culture. Acquired firms are extremely nimble assets and are at the cutting edge of their field. Four firms are rarely innovative and entrepreneurial. This creates a cultural and organizational barrier between the acquired firms and acquirers. Thereby, it is important to identify and analyze the culture and organizational structural loopholes in the acquisition strategy followed by the Big 4 accounting firms and develop an acquisition model to converge the cultures and structures of the acquired firms and acquirers. The report identifies the cultural differences between the Big 4 accounting firms and the acquired firms on the basis of 10 parameters selected for the purpose. Based on analysis, it was concluded that there is a big gap between the two cultures under focus over here and the Big 4 firms are actually trying to ape the cultures of the acquired consultancy firms since they still lag on many parameters to be leaders in the consultancy sector. To bridge the gap between the acquired firms and the Big 4 firms, the report gives some recommendations for the Big 4 firms regarding their acquisition strategies and cultural and structural integration of the acquired firms.