Deloitte has hired the former head of UK corporate finance at BNP Paribas, in a further indication of a trend for ‘big four’ professional services firms to try to muscle in on investment banks’ territory.
Paul Staples, who was a senior managing director in the European investment banking division of BNP Paribas, has joined Deloitte’s corporate finance advisory business as a partner – a move that brings him back to the firm where he qualified as a corporate financier 25 years ago.
Paul Lupton, head of advisory at Deloitte, said: “This hire allows us to turbocharge relationships with the FTSE 250 and FTSE 100, especially in the TMT sector.”
Although the big four firms – Deloitte, PwC, KPMG and EY – have their roots in accountancy and auditing, they have subsequently expanded into areas including consulting, tax advice and legal services. A series of appointments of former investment bankers now suggests they are attempting to diversify further.
In October, KPMG hired James Agnew, the former chairman of corporate broking at Deutsche Bank, as a senior member of its capital advisory group. Some months earlier, PwC hired Peter Whelan, a former Rothschild banker, as head of a new equity capital markets advisory service.
In recent years, the big four firms have witnessed the rise of independent corporate advisory boutiques, such as Zaoui & Co. and Robey Warshaw, working alongside the bulge-bracket investment banks on major mergers and acquisitions.
But, on Wednesday, Mr Staples said: “There is an appetite for independent corporate finance advice coming from the FTSE 250 boardrooms. We can offer similar things to these boutiques but also a lot that lies beyond their scope. Over the next three to five years, I think we can happily coexist and see a world in which we can work alongside them.”
Fees generated by the big four accountancy firms for M&A advice are currently a fraction of the sums made by the investment banks. From 2010-15, the big four accounted for $138m in UK M&A fees and had a total market share of 1.7 per cent, according to Dealogic. Goldman Sachs, which is top of the UK M&A rankings, earned fees of $785m and had a market share of almost 10 per cent.
However, regulations making it mandatory for companies to rotate their auditors present the big four with a commercial opportunity. Many FTSE companies will be forced to select new auditors for the first time in decades – and this merry-go-round of audit mandates will give the audit firms opportunities to seek non-audit work, such as consulting and corporate finance advice.
Mr Staples said: “There’s an opportunity to cross-sell in an interesting way as audit clients are rotated.”
Deloitte employs around 300 people in corporate finance advisory work. In November it hired Chris Nicholls, formerly an executive director at JPMorgan Cazenove, as a partner in its equity capital markets team.
Letter in response to this report:Regulators have failed to improve audit quality / From William N Kring