BDO Gossip Roundup: Mergers, Secret Side Deals and Private Investigators

[Update 17/10 - we've turned this post into a feature because, well, we thought everyone should get a chance to read "partners abusing the living daylights out of each other" in the comments.]

A rat abandons a sinking ship yesterday. Cute little critter!
The BDO gossip looks set to continue for a good while longer.  We’ve received a record number of tips in the last few days and thought we’d do something of a roundup.  As ever, you should treat this as unverified gossip and not as factual news.  We simply report the comments we receive, since the firm has consistently refused to respond to our emails.  Here are some highlights – again, all unverified:

1. Reports of ongoing merger talks – one spy writes that “the CEO of BDO (NSW-Vic) has been in discussions with the board of PKF re kicking off merger talks again”.  After a new finance arrangement is passed, debt will reportedly fall to $40m on revenues of $80m-$85m. The PKF Board have apparently “told BDO that the debt is still too high but if it drops to $20m-25m then they will take the deal to the remainder of PKF”.

2. New personal guarantees - to push the merger through, a new entity called ‘BDO (NSW-Vic) Group 2′ has been set up to which “most” partners and directors will personally be required to guarantee over $1m – including recent hires – to reduce the debts of the firm to its existing creditors.  (Baseless conjecture: isn’t that almost exactly how a ponzi scheme works?)

3. Squeamish exits – another spy thinks that there “are a number of Partners/Directors who have resigned but BDO have not notified their banks (ST George and BankWest) to avoid having to re-financing existing debt….”  It heartens us to learn that the BDO upper crust have as much debt at home as they have at work.  Or are they just behind on their interest payments on their partnership buy-in loans?  Apparently several management CVs are circulating among recruiters.

4. Secret side deals – also news that the finance deal is “on the ropes” since revelations that various side deals have been concluded with some, but not all, partners and directors who have agreed to vote for the new deal in exchange for not being required to bear any increased personal exposure.  Meanwhile, some directors have, according to one spy, “about to enter administration” (we’re not sure what the spy means by this) and are quitting without signing the deal, while refusing to pay back the P300 money and advance loans.  Apparently, the wider group of partners and directors doesn’t know this.  Oops.  Our spy adds: “a wine habit is very expensive to maintain”.  So true, so very very true.

over she goes

5. Resignations - head of indirect tax at Melbourne BDO has quit.  [FS Edit: One tipster reckoned it was due to an ongoing feud with a Brisbane partner, but a commenter has since put that rumour to rest.]

One of the above spies adds that “the wise BDO management have previously employed a private investigator to explore the leaks and reviewing all SMSs on phones (software these days)”.  Streuth!  Maybe they should ask the investigator to find out where all the firm’s money and clients are going.

But another spy sends word that the situation is spreading to other BDO offices: most recently Adelaide.  S/he comments:

The rot within BDO isn’t confined to NSW/Vic or even the debacle in the Qld office.  BDO SA is sinking under significantly increased rental costs (shiny new offices and expensive new cars for all the partners).

The staff are angry – no pay increases (refer above) … The rate of attrition has spiked in recent weeks, as the personnel grab their lifejackets and jump over the side.

The SA partners are waiting patiently for a Big4 to come and buy them out so they can cash up and leave the mess for someone else to sort out.

Sounds like an optimistic gambit.  What about the clients?

clients are becoming less impressed by the lack of service/attention they receive.

Market share has tumbled on the back of the interstate revelations and a complete lack of foresight within the leadership of BDO SA.
BDO SA has been described as a fractured partnership on several occasions, by several people (former partners, former consultants and former clients).  The brand is damaged and they are rapidly destroying any remaining value.

We’ll say it again: BDOuch.  Any insiders care to shed light on the developing situation?  Remember: don’t post from work, don’t use a work phone or laptop, keep the tone civil and use your anonymity wisely.  Amusing though it is, we don’t want to be inundated with complaints about partners abusing the living daylights out of each other.

VN:F [1.9.13_1145]
Rating: 4.3/5 (19 votes cast)
VN:F [1.9.13_1145]
Rating: +13 (from 25 votes)
BDO Gossip Roundup: Mergers, Secret Side Deals and Private Investigators, 4.3 out of 5 based on 19 ratings