Following Hayes Knight’s recent acquisition of a small Sydney-based accounting practice, Bamfield and Company, Mr Hayes told AccountantsDaily he expects to see a major push towards consolidation within the industry in the next five years.
“We will see a lot of it, going forward,” he said.
Currently, sole practitioner firms make up around 63 per cent of the 9,000-plus firms nationwide, according to Mr Hayes, but he expects this figure to drop to as low as 45 per cent in the next five years.
“There is a significant transition occurring, there is no question about that,” he said.
According to Mr Hayes, a large pool of ageing principals and partners considering the long-term future of their businesses, and larger firms hoping to tap into greater efficiencies and economies of scale, both contribute to an industry wide push towards consolidation.
Mr Hayes said the recent buyout of Bamfield and Co. was about adding “complimentary scale consistent with our own delivery piece” to the Hayes Knight practice.
“It’s about building quality critical mass,” he said.
Acquisitions of this nature can result in significant cost reductions by dramatically saving on fixed costs by combining two back-office operations, he said.
“It actually adds significant value because we are able to strip out some of the replicated costs in terms of rents and things like that,” Mr Hayes said.
“You look at the costs sitting inside an accounting practice and you can look over so many of these areas and say, well, we don’t need to replicate that, we don’t need to replicate that, we don’t need to replicate that,” he added.
Mr Hayes said Hayes Knight is in continuing discussions with a number of smaller firms but he was not at liberty to discuss any details.