2f06ab74-9806-4469-a5b3-9211c03fa5d3

Grant Thornton International

Company Profile

Publication Date: 28 May 2010

www.datamonitor.com

Asia PacificAmericasEurope, Middle East & AfricaLevel 46245 5th Avenue119 Farringdon Road2 Park Street4th FloorLondonSydney, NSW 2000New York, NY 10016EC1R 3DAAustraliaUSAUnited Kingdom

t: +61 2 8705 6900t: +1 212 686 7400t: +44 20 7551 9000f: +61 2 8088 7405f: +1 212 686 2626f: +44 20 7551 9090e: [email protected]: [email protected]: [email protected]

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Grant Thornton International

TABLE OF CONTENTS

Company Overview..............................................................................................4

Key Facts...............................................................................................................4

Business Description...........................................................................................5

History...................................................................................................................6

Key Employees.....................................................................................................7

Major Products and Services..............................................................................8

Revenue Analysis.................................................................................................9

SWOT Analysis...................................................................................................10

Top Competitors.................................................................................................14

Company View.....................................................................................................15

Locations and Subsidiaries...............................................................................16


Grant Thornton InternationalTABLE OF CONTENTS

COMPANY OVERVIEW

Grant Thornton International (Grant Thornton) is an international membership organization, witheach member firm independently owned and operated. Accounting and consulting services aredelivered nationally by the member and correspondent firms of Grant Thornton International, anetwork of independent firms throughout the world. The company is headquartered in London, theUK and employs about 30,369 people.

The company recorded total member firm fee income of $3,592 million during the financial yearended September 2009, a decrease of 9.2% over 2008.

KEY FACTS

Grant Thornton InternationalHead OfficeGrant Thornton HouseMelton StreetEuston SquareLondonNW1 2EPGBR

44 20 7383 5100Phone

44 20 7383 5100Fax

http://www.gti.orgWeb Address

3,592.0Revenue / turnover(USD Mn)

SeptemberFinancial Year End

30,369Employees


Grant Thornton InternationalCompany Overview

BUSINESS DESCRIPTION

Grant Thornton International (Grant Thornton) is an international membership organization, witheach member firm independently owned and operated. Accounting and consulting services aredelivered nationally by the member and correspondent firms of Grant Thornton International, anetwork of independent firms throughout the world. It operates from about 521 offices in 113 countries.

The company operates in five service lines: assurance and accountancy; specialist advisory services;tax; outsourcing; and other activities.

Grant Thornton offers industry knowledge and business advice suited to the needs of privately-ownedbusinesses. It provides services to businesses, emerging, growing, maturing or in transition stageand the field of vision may be short or long term, local or global.

The company provides assurance services to a wide range of clients, including financial stakeholders,from private companies to public companies. It provides audit services according to the size andnature of the business.

Grant Thornton firms provide a range of tax services, including corporate tax international tax, transferpricing, expatriate tax, indirect taxes, privately held business services, private client services andcustoms and excise duties.

It also provides specialist advisory services (SAS) including business risk services; corporate finance;forensic and investigation services; project finance and recovery and reorganization. Grant Thorntonalso provides outsourcing services to its clients.


Grant Thornton InternationalBusiness Description

HISTORY

Grant Thornton originated as Alexander Grant & Company, which was founded by AlexanderRichardson Grant in 1924. During the mid-1960s, the firm expanded internationally.

In 1969, Alexander Grant & Company joined with firms from Australia, Canada, and the UK andestablished Alexander Grant Tansley Witt.

Grant joined with 49 other international accounting firms to form Grant Thornton International in1980. Five years later Alexander Grant & Company became the ninth largest accounting firm in theUS following its merger with Denver-based Fox & Company.

In 1986, Alexander Grant & Company changed its name to Grant Thornton after it was affiliated withthe UK firm Thornton Baker.

The company entered into a partnership with VeriSign in 2000, to jointly offer managed digitalcertificate services to Grant Thornton's financial services clients. In 2002, Grant Thornton expandedits US branch by taking on 38 Andersen partners and 330 staff.

Grant Thornton launched an online international benchmarking service in 2003.

Grant Thornton International terminated its relationship with member firm Grant Thornton in Italy in2004, following the Parmalat collapse. Same year, Terco, one of the leading Brazilian accountingfirms, joined the Grant Thornton International network as an independent member firm.

In 2005, Grant Thornton ASG (an authorized audit corporation of Grant Thornton Japan) and TaiyoAudit Corporation signed a merger deal to form Grant Thornton Taiyo ASG in 2006.

Grant Thornton International added Audihispana as its new member firm in Spain in February 2007.The company also expanded its member firm in Hong Kong by adding partners and staff of MooresRowland, Hong Kong member of Moores Rowland International in July 2007.

In July 2008, Grant Thornton International announced its intention to appoint HLB Frackowiak iWspolnicy as its new member firm in Poland. In September 2008, Thornton Ireland and FosterMcAteer merged to create the largest corporate recovery and insolvency unit in Ireland.

In September 2009, Grant Thornton Acevedo & Asociados joined as member firm of Grant ThorntonInternational.

Mr. Peter Bodin became chairman of the board of governors of Grant Thornton International, inJanuary 2010.


Grant Thornton InternationalHistory

KEY EMPLOYEES

BoardJob TitleName

Executive BoardChief Executive OfficerEd Nusbaum

Non Executive BoardMember, Board of GovernorsCarol Banford

Non Executive BoardMember, Board of GovernorsPeter Bodin

Non Executive BoardMember, Board of GovernorsJean-Luc Carpentier

Non Executive BoardMember, Board of GovernorsStephen Chipman

Non Executive BoardMember, Board of GovernorsScott Barnes

Non Executive BoardMember, Board of GovernorsChikahiko Honda

Non Executive BoardMember, Board of GovernorsGerald Mulder

Non Executive BoardMember, Board of GovernorsPhilip Noble

Non Executive BoardMember, Board of GovernorsEd Nusbaum

Non Executive BoardMember, Board of GovernorsJean Schnob

Non Executive BoardMember, Board of GovernorsHector Perez

Non Executive BoardMember, Board of GovernorsRobert Quant

Non Executive BoardMember, Board of GovernorsPaul Raleigh

Non Executive BoardMember, Board of GovernorsLuis Marcano

Non Executive BoardMember, Board of GovernorsMauro Terepins

Senior ManagementGlobal Leader – Privately Held BusinessServices, Canada

Alex MacBeath

Senior ManagementGlobal Leader – Assurance Services, USKen Sharp

Senior ManagementGlobal Leader – Specialist Advisory Services,UK

Scott Barnes

Senior ManagementGlobal Leader – Tax Services, UKIan Evans


Grant Thornton InternationalKey Employees

MAJOR PRODUCTS AND SERVICES

Grant Thornton International (Grant Thornton) is an international membership organization, with each member firm independently owned and operated.The company provides the following services:

Assurance and accountancyTaxation compliance and consultingBusiness advice consultingRecovery and reorganizationForensic and investigation servicesCorporate finance

Other activities:

Company formation, secretarial and administration and provision of legal advice other than accounting and tax advicePersonnel servicesServices to international development finance agencies.


Grant Thornton InternationalMajor Products and Services

REVENUE ANALYSIS

The company recorded total member firm fee income of $3,592 million during the financial yearended September 2009, a decrease of 9.2% over 2008. For the financial year 2009, Americas, thecompany's largest geographic market, accounted for 47.1% of the total member firms fee income.

Grant Thornton International generates total member firm fee income through four business divisions:assurance and accountancy (45.8% of the total revenues during the financial year 2009), specialistadvisory services (24.6%), tax (21.2%), outsourcing (6.9%), and other activities (1.5%).

Revenues by Division

During the financial year 2009, the assurance and accountancy division recorded member firm feeincome of $1,644 million, a decrease of 4% over 2008.

The specialist advisory services division recorded member firm fee income of $884 million in thefinancial year 2009, a decrease of 15.6% over 2008.

The tax division recorded member firm fee income of $763 million in the financial year 2009, adecrease of 9.1% over 2008.

The outsourcing division recorded member firm fee income of $247 million in the financial year 2009,a decrease of 7.5% over 2008.

The other activities division recorded member firm fee income of $54 million in the financial year2009, a decrease of 40% over 2008.

Revenues by Geography

Americas, Grant Thornton International's largest geographical market, accounted for 47.1% of thetotal member firms fee income in the financial year 2009. Member firm fee income from Americasreached $1,692 million in 2009, a decrease of 4.7% over 2008.

EMEA accounted for 42.1% of the total member firms fee income in the financial year 2009. Memberfirms fee income from the Americas a reached $1,511 million in 2009, a decrease of 16.8% over2008.

Asia Pacific accounted for 10.8% of the total member firms fee income in the financial year 2009.Member firms fee income from the Asia Pacific reached $389 million in 2009, an increase of 6.9%over 2008.


Grant Thornton InternationalRevenue Analysis

SWOT ANALYSIS

Grant Thornton International (Grant Thornton) is one of the world's leading organizations ofindependently owned accounting and consulting firms providing financial and business advice toentrepreneurial businesses. Increasing contribution per member firm is likely to drive overall feeincome of Grant Thornton. However, increasing competition could adversely affect margins of thecompany.

WeaknessesStrengths

Weak organizational structure and lowbrand recognition could be behind itsinability to break into Big 4 league

Consistently maintained number oneposition among the non-Big 4 auditing firmsIncreasing contribution per member firmlikely to drive overall fee income Lack of transparency could come in its way

to win some large clients- more so whenthere is spurt in regulatory consciousness

Fee income stream diversified by businessand geography

ThreatsOpportunities

Intense competition likely to erode marketshare

Grant Thornton likely to benefit from growthprospects in emerging markets

Increasing regulatory pressure ongovernment contractors

Private equity players showing increasinginterest in add-on acquisitions

Public debt crisis in Europe likely to impactrevenues

Strengths

Consistently maintained number one position among the non-Big 4 auditing firms

Grant Thornton has been maintaining its number one position among non-Big 4 auditing firms. Thisis evident from the Public Accounting Report’s Annual Professor’s Survey, which ranked the firm atnumber five since 2005 (the Big 4 auditing firms – Deloitte, KPMG, Ernst & Young, andPricewaterhouseCoopers – have been featuring among the top four positions, though there wereshuffles among them). The survey ranked the firms on parameters such as client service, technicalreputation, staff training, compensation, career opportunity, work/life balance, diversity, ethics, andfuture outlook. The ranking indicates that Grant Thornton’s member firms are well recognized andwell appreciated for their services. Moreover, it also means that whichever client who wants to shiftits accounting related work to a non-Big 4 auditing firm is more likely to shift to Grant Thornton ratherthan any other non-Big 4 firms.


Grant Thornton InternationalSWOT Analysis

Increasing contribution per member firm likely to drive overall fee income

Grant Thornton International is an international umbrella membership entity organised as a privatecompany limited by guarantee. Growth in fee income is driven by increase in number of firms and/orincreasing contribution per member firm. Since Grant Thornton International’ membership hasreached almost a plateau in the range of 90s, fee income of the firm is more likely to be driven byincreasing contribution per firm. During 2004-2008, the firm’s membership remained more or lessthe same (91 member firms in 2004 vs 95 in 2009) but fee income has continued to grow ($2,092million fee income in 2004 vs $3,592 million in 2009). The increasing trend in fee contribution permember firm ($23 million in 2004 vs $37.8 million in 2009) is likely to continue as the market potentialfor the member firms’ services is huge.

Fee income stream diversified by business and geography

Grant Thornton International’s fee income stream is diversified both by business and geography.During 2004-2009, Grant Thornton’s fee income grew at a compounded annual growth rate of (CAGR)11.4% from $2,092 million in 2004 to $3,592 million in 2009. Over this period, the member firms’ feeincome exhibited growth both by business and geography. At the end of September 2009, GrantThornton International’s fee income mix was as follows: assurance and accountancy (45.8%),specialist advisory services (24.6%), tax (21.2%), outsourcing (6.9%), and other activities (1.5%).Similarly, Grant Thornton’s revenue has also exhibited growth across all the regions (Americas,Asia-Pacific, and Europe, Middle East and Africa). At the end of September 2009, Grant ThorntonInternational’s fee income mix was as follows: Americas (47.1%), Europe, Middle East and Africa(42.1%), and Asia Pacific (10.8%). More importantly, during 2004-2008, Grant Thornton’s fee incomefrom emerging markets has exhibited growth both in absolute and percentage terms. Diversificationof fee income by business and geography reduces volatility in Grant Thornton’s fee income stream.

Weaknesses

Weak organizational structure and low brand recognition could be behind its inability to break intoBig 4 league

Unlike the Big 4 auditing firms, Grant Thornton’s organizational structure is weak. The weaknessstems from the fact that the member firms are loosely governed. These firms are not successful inprojecting a common identity to their clients. Grant Thornton needs to build its brand if it is to widenits client base. In the UK, it has been found that city intermediaries are often reluctant to recommenda name outside the Big 4. Though in 2008 and 2009, Grant Thornton initiated efforts to strengthenits brand identity, it would take some more time for the organization to maximize its brand leverage.Weak organizational structure and Low brand recognition could be behind its inability to break intoBig 4 league. Weak organizational structure could impede the organization’s speed in decisionmaking and low brand recognition could impede its efforts in attracting new clients.



Lack of transparency could come in its way to win some large clients- more so when there is spurtin regulatory consciousness

Being a private company, Grant Thornton lacks transparency compared to its listed competitorssuch as H&R Block and Watson Wyatt Worldwide. The company does not publish consolidatedbalance sheets and is under no obligation to comment on its financial status.These aspects of GrantThornton's operations may make some customers wary, and may result in Grant Thornton losingbusiness to public companies, whose business and financial performance are more transparent. Inaddition, the company does not have any access to capital market funding such as debt or equity.Grant Thornton has to depend on cash generated through its operations to fund expansion andgrowth opportunities. In an intense regulatory environment, clients may switch to auditors withtransparency in operations.

Opportunities

Grant Thornton likely to benefit from growth prospects in emerging markets

Asia's economic growth and increasing awareness of insurance and wealth-creation products presentsa significant opportunity for the company. Grant Thornton has an established presence in the twohigh growth markets in this region, India and China. These countries are high potential growthmarkets. For instance, in the US there is one licensed accountant for every 1,000 people, but inChina it is closer to one for every 10,000 people. India however has a rich source of highly-traineduniversity graduates.The company has been investing heavily in Indian practice to tap into this greatresource base, and create opportunities. Grant Thornton plans to take similar approach in otheremerging markets, where there is a great people resource that can expand the market, while balancinglabor shortages in some other markets.

Private equity players showing increasing interest in add-on acquisitions

According to industry surveys, add-on acquisitions will remain a major focus for private equity in thecoming months. Add-on acquisitions consist of a private-equity-backed company buying a piece ofanother business in the same industry. Private equity firms traditionally like to buy an entire company,restructure it and then take it public again, and then use the proceeds, plus debt, to start all overagain. But with the tight credit markets making that classic scenario difficult, smaller add-onacquisitions appear to be the next best thing. Add-ons are popular these days: roughly 51% of allclosed deals in the first quarter of 2009 were add-on acquisitions.That’s up from 40% from the sameperiod last year. With many companies in distress, private equity can use its large cash reserves tostrategically buy pieces of certain companies and include them to their existing portfolio companies.In theory, add-ons can increase a portfolio company’s value significantly, once the market returnsto normal, through a relatively small investment. Increasing focus on add-on acquisitions couldincrease the demand for Grant Thornton’s services.

Threats



Intense competition likely to erode market share

The consultancy business is highly competitive in nature and requires product and solution innovationon a regular basis to create and maintain a competitive edge. Grant Thornton faces intensecompetition from other large players in the consultancy market such as Accenture, Booz Allen,Boston Consulting Group, Deloitte Consulting, and Ernst & Young International. The managementconsulting environment has seen a propagation of competitors since the 1990's, many formed throughdivestments with major financial service firms, particularly accountancy firms. This growth in thenumber of competitors has placed major pressure on the operating environment. Besides firms thatoriginated in the strategic consulting environment such as Bain, firms proficient in IT solutions suchas IBM and Hewlett Packard have entered the consulting industry, bringing a new breed of innovationsand solution design, allowing other smaller IT firms to do the same. This has put pressure on themargins of mainstream consultancy firms such as Grant Thornton. Intense competition in themarketplace will erode the firm's market share and reduce its profitability.

Increasing regulatory pressure on government contractors

The regulations governing US government contractors were amended to impose new disclosureobligations and enhanced compliance program requirements. Under the new rules, the US governmentcontractors are required to disclose to the appropriate federal agency when certain company personnelhave knowledge of credible evidence of a violation of federal criminal laws involving fraud, conflictof interest, bribery or improper gratuity, a violation of the civil False Claims Act or receipt of asignificant overpayment from the government. Failure to make required disclosures could be a basisfor suspension and/or debarment from federal government contracting in addition to a finding ofbreach of contract of the specific contract. Reported matters also could lead to audits or investigationsand other civil, criminal or administrative sanctions. Grant Thornton being one of the US governmentcontractors is subjected to new regulations. Non compliance with the new regulations could adverselyaffect the company's operations.

Public debt crisis in Europe likely to impact revenues

Several countries in European Union are suffering from high public debt. In May 2010, Greece wason the verge of default on its debt payments; however, the European Union and International MonetaryFund (IMF) came together provide a rescue package. Apart from Greece, Portugal, Spain, Italy, andUK also suffer from high public debt. The crisis has impacted, financial markets, and the strengthof Euro, the European Union’s common currency. In order to avert similar crisis, some of the EuropeanUnion members including Greece are likely to cut fiscal spending. Consequently, the firm’s revenuefrom government contracts is expected to decline in 2010.



TOP COMPETITORS

The following companies are the major competitors of Grant Thornton International

BDO International B.V.Booz Allen Hamilton Inc.Deloitte Touche TohmatsuErnst & Young InternationalH&R Block, Inc.KPMG InternationalMcKinsey & CompanyPricewaterhouseCoopersWatson Wyatt Worldwide


Grant Thornton InternationalTop Competitors

COMPANY VIEW

A statement by Ed Nusbaum, Chief Executive Officer of Grant Thornton International is given below.The statement has been taken from the company's 2009 business review.

As part of a continuing focus on openness, the report aims to enable our many stakeholders tounderstand better our global organisation – our governance, our management structure and howGrant Thornton member firms throughout the world strive to deliver the highest possible qualityassurance services. Our clients rightly expect us to have policies and procedures in place that meanthe quality and level of service they receive from Grant Thornton member firms is not only exemplarybut consistent, irrespective of where they operate.

This is the first year I have presented a transparency report in my new role as chief executive officerof Grant Thornton International. I see many challenges ahead as companies and governmentscontinue to come to terms with today’s economic landscape and find ways to rebuild confidence andgrow strong economies. Grant Thornton is passionate about its role in serving the public interestand rebuilding the confidence of the world’s capital markets.

Our combined global revenues to 30 September 2009 were $3.6 billion – steady for the year measuredat constant exchange rates but a decline of 9% from 2008 when adjusted for exchange ratefluctuations against the US dollar. Our assurance services account for around 46% of our globalrevenues. Significantly, more than half of our global revenues are now generated by member firmsoutside of the UK and US, with China and Brazil now amongst the 12 largest countries by revenuein the organisation. Our role is to convert this global capability, focus on quality and reputation fordistinctive client service into greater market share for Grant Thornton member firms and for the30,000 people who have committed to making a difference for our clients and the global community.


Grant Thornton InternationalCompany View

LOCATIONS AND SUBSIDIARIESHead Office

Grant Thornton InternationalGrant Thornton HouseMelton StreetEuston SquareLondonNW1 2EPGBRP:44 20 7383 5100F:44 20 7383 5100http://www.gti.org

Other Locations and Subsidiaries

Grant Thornton International-UKGrant Thornton International-UKConference HouseDaedalus House152 Morrison Street, The ExchangeStation RoadEdinburgh EH3 8EBCambridge CB1 2REGBRGBR

Grant Thornton International-USGrant Thornton International-US60 Broad Street 24th floor175 W. Jackson BlvdNew York 1000420th FloorNew YorkChicagoUSAIllinois 60604

USA

Grant Thornton International-IndiaGrant Thornton International-ChinaGrant Thornton House13th Floor, Gloucester Tower53A, Sagar SocietyThe LandmarkRoad No. 215 Queen's Road CentralBanjara HillsHKGHyderabad - 500 034IND

Grant Thornton International-IndiaGrant Thornton International-IndiaEngineering Centre, 6th FloorL 41 Connaught Circus9, Matthew RoadNew Delhi 110 001Opera HouseINDMumbai 400 004IND


Grant Thornton InternationalLocations and Subsidiaries

Grant Thornton International-IrelandGrant Thornton International-IrelandMill House24-26 City QuayHenry StreetDublin 2LimerickIRLIRL


Grant Thornton InternationalLocations and Subsidiaries

Documents

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