[ED: an official BDO response has been received and is posted below]
We are hearing rumours that mid-tier accounting firm BDO Australia is in financial trouble. In the last week we’ve had a few tips from anonymous BDO spies.
First this:
BDO Melbourne set for major change due to revenue problems.
Then this:
(a) Financial difficulties for BDO Melbourne and Sydney with the international parent threatening to pull the licence.
(b) The events led to two of Brisbane BDO’s tax partners quitting this week
Do you know more? Tell FS first!
In its own words:
BDO was established as an association of firms in Australia in 1975. Today, we are one of Australia’s largest associations of independently owned accounting practices, with offices in Adelaide, Brisbane, Cairns, Darwin, Hobart, Melbourne, Perth and Sydney.
In Australia, BDO offers the expertise of more than 155 partners and directors, supported by over 1300 staff.
Send the Firm Spy your news and views!
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Tony Schiffmann, BDO Australia National Chairman, responded as follows:
“These rumours are pure speculation and have no grounding in fact. BDO’s Australian member firms are all very strong businesses, contrary to what some of our competitors would like the market to believe.
Financial difficulties for BDO Melbourne and Sydney with the international parent threatening to pull the licence.
BDO’s Victorian/NSW firm is financially robust and its licence is not under threat. Yesterday’s Australian Financial Review online (BDO Boss Backs Possible Australian Merger, March 14) answers the accusation and writes that BDO’s global head of network development, Martin van Roekel, in fact backs a possible merger between all the Australian member firms and believes the Vic-NSW merger has led to positive business outcomes.
Mr van Roekel tells afr.com:
“BDO Australia and its member firms have the full support of BDO International. BDO has no intention to withdraw the licence to use the BDO brand for any Australian member firm and has not threatened to do so….I continue to champion further Australian mergers, especially having seen the positive business results of the merger … between the Melbourne and Sydney firms.” The link is here (afr.com subscription required)
The AFR also spoke to BDO’s Victorian/NSW CEO Pat Donato (CEO Underlines Strength of Merged BDO Firms, March 14), who provided robust data proving the strength of the firm. Mr Donato says:
“Revenue in the past four years has increased by 16.6 per cent despite having traded through the global financial crisis … the firm has always achieved a healthy level of profitability over the past four years and benchmarked against our peer group is amongst the best in the industry.”
See here for the story (afr.com subscription required)
(b) The events led to two of Brisbane BDO’s tax partners quitting this week
This is untrue. Two Partners finished with BDO in Brisbane a week ago after a lengthy transition process. Their departures were for professional reasons, and BDO wishes them well for their futures. BDO clients and staff are happy with the changeover arrangements, which are now complete, and client services continue as normal.
BDO is Australia’s fifth-largest full-service accounting network and it continues to expand in response to market and client demand. The loss of a Partner is part of operating a professional services firm, and BDO’s recruitment program ensures the network retains an enviable depth of expertise. At present, BDO in Australia has 150 Partners, supported by more than 1300 staff.”
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These claims were answered in some stories yesterday on the AFR website. Untrue.
BDO troubles are not just restricted to the East Coast of Australia. See the recently published decision handed down in BDO Corporate Tax (WA) Pty Ltd & Anor v Moltoni & Ors WA Supreme Court Action CIV 1945 of 2008.
The boys at D have been stoking these rumours (I work there) as they are not reaching their own revenue targets in OZ (massive pressure as D #1 in world, distant # 4 in OZ) and trying to attack closest competitor – poor form.
Claims are true with respect to BDO Vic/NSW practice. Disregard the spin in AFR articles the cumulative practice debt including partner borrowings, working capital facilities etc. is closer to 120 million rather than the 50 million reported. Revenue whilst 85 million for FY 2010 will reduce by at least 10 million due to key partner departures during that year and subsequent and may fall below $80 million for FY 2011. BDO International no doubt concerned by a possible implosion will feign support to protect brand damage for the time being. The existing partners will have a tough choice whether to guarantee a not insubstantial component of the practice facilities ( approx 70 million plus ) that not currently guaranteed or take their chances. Will the partners run or stay?
Despite the representations to the contrary whether posted here or on AFR the BDO NSW Vic practice is laboring under a mountain of debt and declinIng fee base. The key question remains as to whether the partners will personally guarantee a substantial portion of the debt or choose to go. Time will tell.
Apparently no new partners are being appointed to the BDO NSW/Vic practice until their debt issues have been resolved. Must be tough times for the partners and particularly concerning for those waiting in the wings.
Where there is smoke there is fire. I also hear that the BDO Melbourne Deputy CEO’s former personal assistant was paid a year’s salary after some sort of alleged incident, can anyone confirm?
The entire Melbourne corporate tax division has moved to Deloitte. Rumour is many audit partners and staff are not far behind. What will be left?
Well I heard some of the melb partners are in talks with PKF atm
The rumours are true – there are no ‘proper’ Tax Partners in Melbourne. It’s a sinking ship – see Herbert Greer – debt is nearly twice turnover – the PR people at BDO must be gettimng paid in gold and lining the AFR (sponsorhip of BRW???) – the figures are wrong – hope the journo got the statement in writing – maybe he shoudl doucble check with the BDO Bank – all three! The partners are up for $1.5m+ of personal debt under the new proposals – more than most of their mortgages. If you want to do ‘dodgy’ corporate financing go to BDO – The ghost of Bernie Madoff??????
Not much left of PKF either……
Heard that a few firms have been approached to take the name in Vic and NSW……
look at all the bdo zealots marking everyones posts down. the writing is on the wall. bdo has been going downhill since the nsw branch of horwath defected