Everyone knows the “Big Four” accounting firms — Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young and KPMG — dominate when it comes to auditing the books of publicly traded companies on the S&P 500.
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Everyone knows the “Big Four” accounting firms — Deloitte, PricewaterhouseCoopers (PwC), Ernst & Young and KPMG — dominate when it comes to auditing the books of publicly traded companies on the S&P 500.
They also do plenty of business with large privately held firms.
But it turns out they aren't only interested in providing accounting or consulting work to major companies.
To varying degrees, the Big Four have been chasing smaller clients for years, a trend that accelerated in the wake of the 2008-2010 recession, partly because some major companies went under or cut back on consulting services, leaving the Big Four to seek out new revenues.
Deloitte's managing partner in Hartford, Rich Tavolieri, said it'd be a misconception to think big firms haven't courted mid-sized clients over the years, but he confirmed that Deloitte has made “significant investments” more recently to attract the smaller end of the market.
“It's critical to our growth strategy,” Tavolieri said in a recent interview. “Growth in this space has probably outperformed growth in the public space.”
One smaller company that Deloitte recently signed on as a client is Farmington biotech startup Rallybio.
A business with about 10 employees would be an unusual presence on most Big Four rosters, but Rallybio, led by three former Alexion higher-ups, is not your typical mom-and-pop. It's in an industry that carries potentially explosive growth and its team has already raised $37 million in capital.
That means Deloitte could be in a good position in the future if Rallybio grows or does an initial public offering.
Jeffrey Fryer, a Rallybio co-founder and its chief financial officer who used to work as a CPA, said he could have picked a smaller firm to audit Rallybio's books, but he was drawn to the Big Four's biotech familiarity and “global firepower.”
“I think all the firms are revisiting their portfolios and as you look to continue to grow, partnering earlier on in a companies life cycle can be rewarding,” Fryer said.
Tavolieri concurs.
“If we help them early on in their life cycle, we build a relationship,” he said. “Those relationships can stand the test of time.”
Correction: A previous version of this story misstated Jeff Fryer's title at Rallybio. He is chief financial officer.
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