The former head of Deloitte’s operations in the U.K. is planning a number of takeovers that he hopes would create strong competition for the Big 4, according to a report by U.K.-based Sky News.
John Connolly, who chairs two FTSE-100 companies and serves on several board of directors, is working with the private equity firm HgCapital on his plan, Sky News reported, and Cogital Group is the newly established vehicle to create the new professional services firm. “Sources said that Blick Rothenberg, a London-based provider of accounting, audit and tax services in which Hg invested last month, would ultimately become part of Cogital Group,” Sky News says.
Connelly would become chair of the new venture to challenge the Big 4 in light of criticism that Deloitte, KPMG, Ernst & Young and PwC have a “stranglehold” on services to big companies. Even with mandatory auditor rotation, some say the major companies are simply rotating among the four.
Blick Rothenberg boasts of its “strong reputation for advising entrepreneurs” and “market-leading inward investment practice dedicated to supporting overseas businesses seeking to grow and develop in the UK and beyond,” Sky News reported.
Announcing the deal last month, the two parties said it was “in line with HgCapital’s proven, sector-focused approach of investing in leading regulatory-driven businesses in and around the accounting and tax compliance space. The firm demonstrates many of the business model characteristics that HgCapital looks for, including strong client loyalty, high levels of recurring revenue, and high cash flow generation.”
Sky News says HgCapital declined to comment on the plan for Cogital Group, while Connolly could not be reached for comment.