09/03/2012 - 15:39

BDO cuts Sydney-Melbourne out of Australian franchise

09/03/2012 - 15:39

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BDO cuts Sydney-Melbourne out of Australian franchise

Major second-tier accounting franchise BDO has dumped the firm representing it in NSW and Victoria in a schism which is likely to cause further musical chairs in the sector.

UK-based BDO International said it was looking in those markets for new representation which would make a better fit with the six other independent member firms in Australia.

It is possible that this could involve the members of other franchises to move under the BDO banner, prompting another round of brand swapping like that which occurred a few years ago.

Perth-based corporate finance partner Sherif Andrawes confirmed the split in a letter to clients, indicating that BDO had cut loose the NSW/Victorian member firm because it was impeding plans for national integration.  

BDO in Western Australia remains an independent, strong and growing practice that will continue to be recognised as a leader in the Perth accounting market,” Mr Andrawes said in his correspondence.

“The decision follows a strategic review of the business models of all the BDO Member firms in Australia and the inability of the Sydney and Melbourne offices to align its business model to sufficiently progress its plans to prepare for integration.

“Change is a reality of life and while the short term will be a challenge, the longer term possibilities are very encouraging.”

BDO  NSW/VIC Pty Ltd, the controlling entity of the Sydney and Melbourne offices of the BDO member firms in Australia, was effectively created in 2007 after big four rival Deloitte absorbed BDO’s representative in Melbourne and Horwarth’s in Sydney, prompting a merger of the remnants of those two firms in the alternative capitals and national amalgamation of the firms then in those two franchises under the BDO brand.

That was a pre-cursor to a full integration which has stalled due to what BDO International said was risks relating to the firm operating in NSW and Victoria – thought to relate to indebtedness created when the existing firm bought the practices in the two states.

“The financial stability of BDO NSW/VIC Pty Ltd, and their consequent ability to service clients in line with the expectations required of them by BDO is in contrast to the rest of the BDO firms in Australia, which are performing extremely well,” BDO International CEO Martin van Roekel said in a statement.

“Terminating a  member firm agreement is never undertaken lightly and this decision has been  taken in the best interests of the international BDO network”, said.

“Following a  strategic review of the business models of all the BDO member firms in  Australia that began 18 months ago, several risk issues have emerged in Sydney  and Melbourne, where the two firms have failed to sufficiently progress their  plans to prepare for integration.  As a  result, the long term interests of BDO, and specifically our strategic global  integration plans, may be affected. This would bring about  risks that are no longer acceptable to us”, he  continued.

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