The new owners of mid-tier firm Blick Rothenberg are set to face enormous hurdles if they are to attempt their reported ambitions of taking on the Big Four, Calum Fuller reports
Private equity house HgCapital announced the deal in July under undisclosed terms.
This week, it was reported by Sky News that HgCapital, in concert with ex-Deloitte global chairman John Connolly, plans to rival the Big Four. The financier specialises in investments in services, telecoms and industrials while a separate arm invests in renewables. Companies in its portfolio include Iris Software, car leasing operators, Leasedrive and Zenith, insurance broker A-Plan, and Citation, a provider of HR and employment law, among others.
However, filings at Companies House show that Connolly and HgCapital have founded CogitalGroup, a vehicle with subsidiaries in Bristol, London and Jersey which will house Blick Rothenberg and future financial services ventures.
But while the London-based 24-partner firm and its 200 staff have a strong reputation in the profession, analysts are unconvinced of the firm’s capacity to expand to a level at which it could compete with the Big Four.
The firm's fee income is estimated to be approximately £25m, while the smallest Big Four firm EY takes £1.8bn.
Blick Rothenberg has traditionally been strongest in its tax and advisory services and would struggle to compete on audit, Foulger Underwood senior consultant Philip Shohet told CCH Daily.
‘If they’re taking the Big Four in what is now the SME market, which the Big Four have only made an entry into over the last two years, especially KPMG and PwC, then yes they could take them,’ he said.
‘The definition of what their aspiration is isn’t clear,’ Shohet said. ‘If they’re going down the consolidators’ route, they need to learn from some of the failures that have gone before both in the UK and abroad. It didn’t work for Vantis, Numerica, Tenon or Target in the UK. The formula was wrong, and in Numerica’s case that was after taking out an established firm in Levy Gee.’
Shohet added the scale of Blick Rothenberg’s plans was as yet unclear, but added they would need to ‘take out’ another established firm if they seek to challenge at that level in the UK, and several if their ambitions are global.
Blick Rothenberg has been contacted, while HgCapital declined to comment.
