Big Four accounting firms

The Big Four are the four largest professional services networks in the world: Deloitte, EY, KPMG, and PwC. They are the four largest global accounting networks as measured by revenue. The four are often grouped because they are comparable in size relative to the rest of the market, both in terms of revenue and workforce; they are considered equal in their ability to provide a wide scope of professional services to their clients; and, among those looking to start a career in professional services, particularly accounting, they are considered equally attractive networks to work in, because of the frequency with which these firms engage with Fortune 500 companies.
The Big Four all offer audit, assurance, taxation, management consulting, valuation, market research, actuarial, corporate finance, and legal services to their clients. A significant majority of the audits of public companies, as well as many audits of private companies, are conducted by these four networks. Until the late 20th century, the market for professional services was dominated by eight networks which were nicknamed the "Big Eight". The Big Eight consisted of Arthur Andersen, Arthur Young, Coopers & Lybrand, Deloitte Haskins and Sells, Ernst & Whinney, Peat Marwick Mitchell, Price Waterhouse, and Touche Ross.
The Big Eight gradually reduced due to mergers between these firms, as well as the 2002 collapse of Arthur Andersen, leaving four networks dominating the market at the turn of the 21st century. In the United Kingdom in 2011, it was reported that the Big Four account for the audits of 99% of the companies in the FTSE 100 Index, and 96% of the companies in the FTSE 250 Index, an index of the leading mid-cap listing companies. Such a high level of industry concentration has caused concern, and a desire among some in the investment community for the UK's Competition & Markets Authority to consider breaking up the Big Four.

Legal structure

None of the "firms" within the Big Four is actually a single firm; rather, they are professional services networks. Each is a network of firms, owned and managed independently, which have entered into agreements with the other member firms in the network to share a common name, brand, intellectual property, and quality standards. Each network has established a global entity to co-ordinate the activities of the network.
Until 2020, KPMG was the only Big Four firm not registered as a UK private company, but rather the co-ordinating entity was a Swiss association. However, KPMG International changed its legal structure from a verein to a co-operative under Swiss law in 2003, then to a UK limited company in 2020. For Deloitte, PwC and Ernst & Young, the co-ordinating entity is a UK limited company. Those entities do not themselves perform external professional services, nor do they own or control the member firms. Nevertheless, these networks colloquially are referred to as "firms" for the sake of simplicity and to reduce confusion with lay-people. These accounting and professional services networks are similar in nature to how law firm networks in the legal profession work.
In many cases, each member firm practises in a single country, and is structured to comply with the regulatory environment in that country.
Ernst & Young also includes separate legal entities which manage its three geographic areas: the Americas, Asia-Pacific, and EMEIA groups. These entities coordinate services performed by local firms within their respective areas, but do ''not perform'' services or hold ownership in the local entities. There are rare exceptions to this convention; in 2007, KPMG announced a merger of four internationally distinct member firms to form a single firm, KPMG Europe LLP.

History of mergers

Since the 1980s, numerous mergers and one major scandal involving Arthur Andersen, have reduced the number of major professional-services firms from eight to four.

Big Eight

The firms which came to be known as the "Big Eight" originated in various UK and US audit firms established in the 19th or early 20th centuries and later merged. The firms' initial international expansion was driven by the needs of British and American based multinationals for worldwide service. They expanded by forming local partnerships, or by forming alliances with local firms. Arthur Andersen was the exception: the firm originated in the United States, and then expanded internationally by establishing its own offices in other markets, including the United Kingdom.
In 1932, Fortune published an article listing the 15 largest American CPA firms by number of public corporation clients. At this point in time, Price, Waterhouse and Co. was far and away the most successful of the firms with more than double the clients compared to the firms in the second and third spots.

Rank	Firm	Number of Clients	Most Notable Client	Today Part of
1	Price, Waterhouse and Co.	146	U.S. Steel	PwC
2	Haskins and Sells	71	General Motors	Deloitte
3	Ernst and Ernst	71	Chrysler	EY
4	Peat, Marwick, Mitchell and Co.	56	International Shoe	KPMG
5	Arthur Young and Co.	49	Swift and Company	EY
6	Lybrand, Ross Bros. and Montgomery	48	AT&T	PwC
7	Touche, Niven and Co.	27	Fox Film	Deloitte
8	Arthur Andersen and Co.	24	Montgomery Ward	N/A
9	Deloitte, Plender, Griffiths and Co.	15	American Sugar Refining Company	Deloitte
10	Barrow, Wade, Guthrie and Co.	12	Texas Gulf Sulphur	KPMG
11	Audit Co. of New York	11	Woolworth	PwC
12	Loomis, Suffern and Fernald	10	Adams Express	PwC
13	F. W. Lafrentz and Co.	10	Corn Products	KPMG
14	Miller, Donaldson and Co.	8	American Chicle	Deloitte
15	Leslie, Banks and Co.	7	American Brake Shoe and Foundry	PwC
N/A	All others	136	N/A	N/A
N/A	Companies not reporting names of auditors	355	N/A	N/A
N/A	Total	1,056	N/A	N/A

From the 1930s through the 1950s, audit firms expanded their national sizes and their service offerings. After the Wall Street crash of 1929, numerous regulations were put into place by the federal government to ensure that investors were able to view accurate and detailed financial information. As a result of the fierce competition between themselves, many of the firms merged to further expand their practices and geographic reach. These mergers led to a few name changes as the firms embraced a larger identity. In 1947, Touche, Niven and Co. merged with George Bailey and Co. and Allen R. Smart and Co. to become Touche, Niven, Bailey and Smart. In 1950, Barrow, Wade, Guthrie and Co. merged into Peat, Marwick, Mitchell and Co., which kept the more notable PMM name. In 1955, the Audit Co. of New York merged into Price, Waterhouse and Co., again keeping PW as the firm name. In 1958, two of the firms listed on Fortune list merged into larger firms: Loomis, Suffern and Fernald was assumed by Lybrand, Ross Bros. and Montgomery while Miller, Donaldson and Co. was assumed by Haskins and Sells. Finally, in 1960, TNBS merged with the Canadian accounting firm Ross to form Touche, Ross, Bailey and Smart.
By 1960, business among the CPA firms had consolidated such that the top eight firms audited about 80% of all firms listed with the SEC. Around this time the term "Big Eight" came to be used to describe these CPA firms' dominance of the market. Fortune published an article in the same year listing these firms along with their number of partners, offices, and estimated gross revenues.

Rank	Firm	Number of Partners	Number of Offices	Est. Gross Revenue
1	Peat, Marwick, Mitchell and Co.	190	60	45
2	Arthur Andersen and Co.	171	28	40
3	Ernst and Ernst	132	95	36
4	Price, Waterhouse and Co.	101	40	35
5	Haskins and Sells	176	36	33
6	Lybrand, Ross Bros. and Montgomery	126	35	28
7	Arthur Young and Co.	104	28	26
8	Touche, Ross, Bailey and Smart	71	27	17

In the following 20 years, the consolidation pattern continued. The two remaining firms from the top 15 in 1932 outside of the Big Eight in 1960 were merged in 1963 and 1967, respectively: F. W. Lafrentz and Co. with Main and Co. to form Main Lafrentz and Co. and Leslie, Banks and Co. into Lybrand, Ross Bros. and Montgomery. Six years later, in 1973, LRBM merged with the British Cooper Bros. and Co. to form Coopers and Lybrand. In 1978, Deloitte, Plender, Griffiths and Co. merged with Haskins and Sells to become Deloitte, Haskins and Sells and one year later Ernst and Ernst merged its practice with Whinney, Murray and Co. to become Ernst and Whinney. As 1980 arrived, the Big Eight were known as the following:

Arthur Andersen
Arthur Young
Coopers & Lybrand
Deloitte, Haskins & Sells
Ernst & Whinney
Peat, Marwick, Mitchell and Co.
Price, Waterhouse and Co.
Touche Ross

In the 1980s the Big Eight, each with global branding, adopted modern marketing and grew rapidly. They merged with many smaller firms. KPMG was the result of one of the largest of these mergers. In 1987, Peat Marwick merged with the Klynveld Main Goerdeler group to become KPMG Peat Marwick, rebranding in 1995 to simply KPMG.