The Big Four are the world’s largest professional services networks, the global accounting network Deloitte, Ernst & Young (EY), KPMG and PricewaterhouseCoopers (PwC). These four companies are often grouped together because they are comparable in size to the rest of the market, both in terms of revenue and some employees; they are considered equal in their ability to provide a wide range of professional services to their clients; and, among those who want to start a career in professional services, especially accounting, they are considered equally attractive networks to work with, given the frequency with which these firms work with Fortune 500 companies.
The Big Four all provide audit, assurance, tax, management consulting, statistics, corporate finance and legal services to their clients. The majority of public company audits, as well as many private company audits, are performed by these four networks.
Until the end of the 20th century, the professional services market was dominated by eight networks nicknamed the “Big Eight”. The Big Eight consists of Arthur Andersen, Arthur Young, Coopers & Lybrand, Deloitte Haskins and Sells, Ernst & Whinney, Peat Marwick Mitchell, Price Waterhouse and Touche Ross.
THE BIG EIGHT
The Big Eight gradually shrank due to amalgamations between these companies and the collapse of Arthur Andersen in 2002, leaving four networks to dominate the market at the turn of the 21st century. In the United Kingdom in 2011. It is reported that the Big Four account for 99% of the companies in the FTSE 100 index and 96% of the companies in the FTSE 250 index, an index of top to mid-cap ranking companies.
Such levels of industry concentration have raised concerns and desires among some investment community members that the UK’s Competition & Markets Authority (CMA) consider dissolving the Big Four. In October 2018, the CMA announced that it would launch a detailed study of the Big Four’s dominance in the audit industry. In July 2020, the UK Financial Reporting Council told the Big Four to submit a plan by October 2020 to separate its audit and advisory operations by 2024.
BIG 4 ACCOUNTING FIRMS: WHICH IS BEST FOR CONSULTING?
WHO ARE THE BIG FOUR ACCOUNTING FIRMS?
The four major accounting firms are Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young (EY), and KPMG. They are professional services companies recognized worldwide for their reputation and credibility.
These firms were founded as early as 1800 as small accounting firms but have steadily grown through mergers and acquisitions. Today they are huge professional services companies. In 2019, the four major accounting firms had more than $154 billion in annual sales. The Big 4 provide 3 main types of professional services to their clients:
Determine if a company’s financial records are accurate
Help businesses prepare and file tax returns, often by helping businesses reduce the amount of tax they pay
Help a company improve its business strategy and operations
Deloitte is the largest accounting firm among the Big Four, with annual revenue of more than $46 billion and 312,000 employees in 2019. The company’s headquarters is located in London, United Kingdom.
The business was founded by William Welch Deloitte in 1845. It was merged with Haskins & Sells in 1972, Touche Ross in 1989 and part Arthur Andersen in 2002. Deloitte made some acquisitions during the period, including the acquisition of Monitor Group, a large management consulting firm, in 2013. Deloitte offers five different services:
- financial advice
- tax and legal advice
Deloitte’s consulting services include:
Strategy and operations, technology and human resources
Deloitte has won many awards and honours:
- Number 1 accounting firm according to Inside Public Accounting
- #2 in Vault’s Top 50 Accounting Firms
- Ranked 9th Best Place to Work in Fortune Professional and Consulting Services
PwC is the second largest company in the Big Four, with over $42 billion annual revenue and 276,000 employees in 2019. Their headquarters is located in London, United Kingdom.
The company was founded in 1998 when Coopers & Lybrand merged with Price Waterhouse. William Cooper and Samuel Lowell Price founded these two companies in 1854 and 1849, respectively.
PwC is organized into 3 different service lines:
Insurance, consulting and tax. They expanded their consulting business through acquisitions, such as Paragon Consulting Group in 2009, PRTM in 2011, BearingPoint in 2009, and Booz & Company in 2014.
PwC has won numerous awards and honours:
- #1 in Vault’s Top 50 Accounting Firms
- #36 of Fortune’s 100 Best Companies to Work for
- #68 of the world’s most valuable brands according to Forbes
EY is the 3rd largest of the Big 4, with over $36 billion in annual revenue and 270,000 employees in 2019. Their headquarters is in London, United Kingdom. The company was founded in 1989 by merging 2 accounting firms, Ernst & Whinney and Arthur Young & Co.
EY provides four main services:
Insurance, tax, advisory and transaction advisory services. However, they have expanded into markets adjacent to accounting, such as operations, Strategy, human resources, technology and financial services consulting. In addition, they acquired the Parthenon Group in 2014 to expand their consulting services.
EY has won numerous awards and honors:
- No. 1 in Vault’s Best Financial Advisors
- Ranked 7th in Vault’s Most Reputable Consulting Firms
- #25 of Fortune’s 100 Best Companies to Work for.
KPMG is one of the smallest of the Big 4, but it still had over $29 billion in annual sales and 219,000 employees in 2019. The company’s headquarters is located in Amstelveen, the Netherlands.
KPMG stands for Klynveld Peat Marwick Goerdeler. The company was formed when KMG (Klynveld Main Goerdeler) merged with Peat Marwick in 1987.
KPMG offers three lines of services:
Financial audit, tax and consulting. They acquired some consulting firms, including Zanett in 2014 and Beacon Partners in 2015.
KPMG has won many awards and honors:
- #7 on Best Vault Consulting Firms for Financial Advisors
- Ranked 9th in Vault’s Most Reputable Consulting Firms
- Ranked 32nd in Fortune’s 100 Best Places to Work
DO THE BIG 4 ACCOUNTING FIRMS DO CONSULTING?
Although the Big 4 accounting firms are primarily known for their audit and tax services, they all have an advisory or consulting department.
However, the Big Four consulting activities include many different things. For example, in addition to management consulting, consulting includes technology, financial, and risk and compliance consulting. Therefore, if you are interested in management or strategic consulting, this type of work accounts for a much lower percentage of Big Four earnings than other types of consulting.
MANAGEMENT CONSULTING HAS BEEN A MAJOR INVESTMENT AREA FOR THE BIG FOUR, WITH MANY MANAGEMENT CONSULTING FIRMS ACQUIRING.
Deloitte acquired Monitor Group in 2013. PwC acquired Booz & Company in 2014, eventually changing its name to the management consulting firm Strategy &. EY acquired the Parthenon Group in 2014. If you are looking for a management consulting job at the Big Four, you should target the following groups
- Deloitte’s Strategy and Operations
- Strategy& (at PwC)
- Parthenon Corporation (at EY)
These groups perform the type of consulting work that resembles the work done in traditional management consulting firms.
Apart from these subsidiaries, the rest of the consulting work done by the Big Four accounting firms is quite different from the consulting work done by the leading management consulting firms, which we will discuss.