Accounting firms need to ensure they have unique service offerings if they are to compete in an increasingly consolidated market, according to advice and accounting business Chan & Naylor.
The firm said consolidation has increased in the accounting sector, with small players unable to compete due to increased pressure from costs and reforms.
“What we find in business is that most industries start off with a significant number of separate participants and when they start doing very well a number of key players start to emerge,” Chan & Naylor group chief executive John Harriott told InvestorDaily.
“Then it’s very difficult for the individual player to continue to compete because they don’t have the economies of scale, they don’t have the marketing and they don’t really have the ability to compete on anything other than price, unless they have a very unique offering.”
Chan & Naylor recently announced that it will partner up with specialist accounting firms Edwards Collins Group and Burgess & Co as the company looks to expand in the face of this industry consolidation.
The two Brisbane-based firms will collectively operate as Chan & Naylor Accountants Brisbane and C and N Audit Services, and will retain operational control of their businesses.
Mr Harriott said that as a large sovereign firm, Chan & Naylor is in a position to offer these independent businesses an alternative partnership venture from “the big four”.
“Many of them [independent businesses] are interested in understanding how they can be a part of a firm that is growing quite fast as a protection mechanism,” he said.
“Being part of a national brand that has very specific and unique products helps them stand out, and certainly there is an attraction to being part of one of the major sovereign players.”
Mr Harriott said that as long as competition remains in the marketplace, and there are sufficient sovereign firms available, consolidation will benefit consumers looking for a more holistic product offering from their accountants.
Chan & Naylor, he added, is currently in final discussions with two more firms as they look to expand nationally.
