Accounting & Tax

Sussing Out the Second Six

Among the Group B accounting firms, six lead the pack. Will any make the Final Four?
Joseph RadiganOctober 2, 2002

Every CFO knows the Big Four firms. Less familiar are the scores of accountancies that rank below the top four in revenues — but well above the sales of much smaller regional firms.

Like the Big Four, this band of second-tier accountancies, known in the industry as Group B firms, provide auditing and tax work to publicly traded companies in the United States. Unlike the Big Four, however, the Group B accounting firms typically don’t possess a true global reach. Instead, many of the firms rely on partnerships with local accountants to service multinational clients.

Of the hundreds of firms classified as Group B accountancies, six stand out — both in revenues and the number of publicly traded clients. With the help of Arthur Bowman, editor of Bowman’s Accounting Report, has compiled snapshot profiles of these firms. We call them the Second Six.

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BDO Seidman

Headquarters: Chicago

International Affiliation: BDO International

Total Sales Audited: $27.9 billion

Total Clients Audited: 280

Average Sales per Client: $99.7 million

Offices: National

Strengths: Tax services have become an important market for BDO in the past few years.

Skinny: With Denis Field becoming chairman, company settled down after period of management turmoil, says Bowman… BDO Seidman, Grant Thornton, and McGladrey & Pullen all trying to become dominant provider of audit services for middle market companies — that is, businesses with annual revenues between $500 million and $1 billion. Right now, BDO Seidman and Grant Thornton appear headed for showdown… Firm tops Second Six in average sales per customer — key figure.

Grant Thornton

Headquarters: Chicago

International Affiliation: Grant Thornton International

Total Sales Audited: $29.6 billion

Total Clients Audited: 344

Average Sales per Client: $86 million

Offices: National

Strengths: Construction, consumer and industrial products, government, nonprofit, real estate.

Skinny: Went through long period of management stability in the 1980s and 1990s. Also saw some turnover in top management turnover — until current CEO Ed Nusbaum took over. Since then Nusbaum has become something of a visible spokesman for auditing profession as a whole… Sale of firm’s IT consulting business to Hitachi few years ago gave the company cash to expand… University of Delaware’s Charles Elson says if any of Second Six were to jump to Big Four, Thornton is most likely candidate. But Nusbaum tells that firm will stick to middle-market focus.

McGladrey & Pullen

Headquarters: Minneapolis

International Affiliation: RSM

Total Sales Audited: $4.7 billion

Total Clients Audited: 95

Average Sales per Client ($ Millions): $49.6 million

Offices: National

Strengths: Financial institutions, manufacturing, wholesale distribution, government, nonprofit, healthcare construction, agriculture.

Skinny: McGladrey sold its tax and consulting business to H&R Block in late 1990s, creating an entity called RSM. Bowman says it’s an unusual arrangement — one where McGladrey partners are Block employees, but own the auditing practice itself… To date, effort to cross-sell services between McGladrey and Block has produced mixed results.

Crowe Chizek

Headquarters: South Bend, Indiana

International Affiliation: Horwath International

Total Sales Audited: $3.7 billion

Total Clients Audited: 82

Average Sales per Client: $45.1 million

Strengths: Banking, automobile dealerships.

Skinny: Crowe Chizek was one of first accountancies to get into information technology consulting. Firm still owns U.K.-based subsidiary that sells software to banks… Bowman says Crowe Chizek has a more “collegial atmosphere than other firms. There’s more of a balance in the compensation among partners.” Setup has its plus and minuses. Few, if any, Crowe Chizek partners make seven-figure incomes. On the other hand, there’s little reason for any partners at low end of the pay scale to feel envious… Company maintains offices in Indiana, Florida, Illinois, Kentucky, Michigan, Ohio, and Tennessee.


Headquarters: Springfield, Missouri

International Affiliation: Moores Rowland

Total Sales Audited: $1.2 billion

Total Clients Audited: 40

Average Sales per Client: $29.7 million

Strengths: Healthcare, banking

Skinny: Bowman on BKD: “(They) like to say that they are the major player in the heartland of America.” But he says firm’s looking to acquire $20 million or so firm in Chicago to beef up presence. Currently, BKD more established in border states, with headquarters in Missouri and offices in Kentucky, Tennessee, and Arkansas. Firm does have operations in Colorado, Indiana.

Moss Adams

Headquarters: Seattle

International Affiliation: Moores Rowland

Total Sales Audited: $843 million

Total Clients Audited: 32

Average Sales per Client: $26.3 million

Strengths: High-tech, apparel finance, forestry, recording-industry royalty compliance

Skinny: Largest independent auditing firm based on the West Coast, with branch offices in Los Angeles and San Francisco… Bowman says Moss Adams, Crowe Chizek, and BKD all well-positioned for the future. He adds they face difficult task of “providing challenges for their personnel to show them a career path, while not exceeding management’s ability to manage the firms.” A nifty trick, if you can pull it off.