KPMG and Deloitte acquire M&A and tax practices of BMR

21 July 2017
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After a series of acquisition deals, Indian Tax consulting and risk advisory firm BMR has fragmented, with its corporate tax team coming under the ownership of Deloitte, and the M&A and risk team falling into the hands of KPMG. The firm’s further division comes after their legal team was recently raided by Shardul Amarchand Mangaldas.

Consulting firm BMR operates with over 600 professionals in india. While emerging as a hub of talent and quality consulting services in the country, the firm has been struggling to hold its own in the market against the Big Four consulting firms. KPMG, Deloitte, PwC and EY, have regularly harvested entire teams from BMR, further reducing their capacity in a highly competitive market. In addition, BMR Legal recently saw its entire transaction and capital markets – comprising of over 30 lawyers – migrate to Indian law firm Shardul Amarchand Mangaldas.

As a result, the leadership at the firm made the decision to sell. Due to the success achieved by the firm, a number of companies, including the Big Four, demonstrated keen interest in the acquisition of the firm. However, the negotiations for the tax and the M&A segments were held by different leaders respectively, and produced different outcomes. While the corporate tax team, led by co-founder Rajeev Dimri and Gokul Choudhry has accepted Deloitte’s bid earlier this week, the M&A team, led by Rohit Berry, went with KPMG for the acquisition yesterday.

The Deloitte transaction involves the transition of 20 partners and 350 tax professionals. The partners have all reportedly been offered substantial increases in salary, as well as hefty joining bonuses. Meanwhile, the deal with KPMG involves the transition of 10 partners and 100 executives. Rohit Berry, who led the negotiations for BMR, will take up the position of Deputy Head of Deal Advisory at KPMG.

KPMG + Deloiite

Commenting on both deals, Chief Mentor and Partner at BMR, Bobby Parikh said, “In this ever-changing business environment, it is important to continuously adapt and innovate to stay ahead of the curve, and with BMR’s high-quality talent pool, it will help serve clients better by blending domain expertise with analytical rigour while maintaining an uncompromising focus on quality,“

Mukesh Butani, Non-Executive Chairman at the BMR commented, “The successful combinations would help dive deeper into our client’s business dynamics and blend our extensive technical and analytical skills, thereby, delivering effective solutions”

The Chairman and CEO of KPMG also commented on the acquisitions, stating that “The talented professionals of BMR embody ethos and values similar to ours, aligning naturally with KPMG’s culture. This was a very important consideration for the leaders of both firms. The combined domain expertise of the two firms will significantly enhance KPMG’s impact in the Indian market, strengthening our ‘One M&A’ initiative and our Risk Consulting offerings. We are confident that our current and prospective clients will derive immense value from the strengths that our new colleagues .. “

Advisory Battle

Sources suggest that alongside KPMG and Deloitte, PwC was also in the running for the acquisition during negotiations. The bids are representative of the larger advisory battle that is currently afoot in the country among the Big Four firms. KPMG reportedly tabled a bid to acquire BMR two years ago, but negotiations proved unsuccessful. Meanwhile, Deloitte, who had lost a number of prominent clients due to a law mandated audit rotation has been aggressively seeking to regain its foothold in the market.

The latest of these efforts has been the extensive poaching of talent from rival firm KPMG earlier this year, which has resulted in the transition of around 25 partners and 350 professionals from KPMG to Deloitte. The competition results from the large potential in the Indian consulting industry. Within the tax practice, the Big Four currently conduct business valued at more than Rs. 3000 crores in the country.