Posted , in Differentiation
Can Grant Thornton challenge the Big Four?
When we think of Grant Thornton relative to the Big Four, we naturally focus on external audit, where the Big Four have a stranglehold on the market. Only a handful of large listed companies in the US and UK are audited by firms outside the Big Four, and such are the barriers to entry that Grant Thornton UK announced in 2018 that it would no longer even pitch for audit work with FTSE350 clients.
However, focusing only on external audit ignores the strong presence Grant Thornton has in areas adjacent to audit. The barriers that exist in the audit market—including the inherent advantage of being an incumbent; the organisation and sector specific knowledge current auditors have from long-standing client relationships; and listed clients worrying about the signals they send to the market when changing auditor—are far weaker in other parts of the professional services market. There’s a large amount of advisory work in tax and risk where accounting expertise is paramount, and Grant Thornton may just be best placed to capitalise on this, viably challenging the Big Four.
In the US tax advisory market, our latest research into client perceptions shows that Grant Thornton is already in a great position to challenge the Big Four. Although the Big Four dominate in market share, Grant Thornton is the top-rated firm for quality and also came second in our mindshare rankings, a score which reveals which firms are front of mind with clients, suggesting it could be on the verge of a breakthrough in that market.
In the risk space, although clients in the US tell us they would largely opt for the Big Four or technology firms such as Accenture and IBM Services as their first choice, our research shows that people still prefer mid-tier firms such as Grant Thornton over boutique risk specialists. They are a popular choice for internal audit, actuarial, and third-party assurance work, which might not be a shock given the accounting and assurance expertise in mid-tier accounting firms. What is surprising is that mid-tier firms are also a popular first-choice for work in technology programme risk, and even cybersecurity, behind only the Big Four and technology consultants. Despite the fact that people might not traditionally associate a technology-focused and innovative service such as cybersecurity with a firm like Grant Thornton, it’s clear that it has the reputation and credentials to work in this space — the biggest and fastest growing area of risk. This highlights Grant Thornton’s strength and abilities across a wide variety of service lines.
Grant Thornton already leads the mid-tier in the audit market, and is potentially the best placed of any firm outside the Big Four to break their dominance. But to effectively challenge the Big Four in external audit, building a bigger base in other areas—tax advisory and cybersecurity in particular—is potentially the way to do it. By building its reputation in adjacent areas, Grant Thornton can expand its reputation for assurance, accounting, and innovation, and, crucially, build a level of trust with clients. If it does so, it may be in a position to really take advantage of any shake up in the audit market.