Deloitte Market Cap
What is Deloitte’s Market Capitalization? Is Deloitte Consulting a public company? What stock exchange is Deloitte listed on? These are all questions that people ask about Deloitte, and they are valid questions because Deloitte is a very large business. They are one of the 4 big public accounting firms and they make billions of dollars in revenue. Unfortunately, they are not a public company, they are not listed on a stock exchange and they don’t have a ticker symbol.
It’s much easier to find out Deloitte’s Fortune 500 ranking than it is to figure out their market capitalization. In order to try and figure out what their market capitalization would be if they were to IPO, we have to estimate it.
In order to understand what Deloitte’s market capitalization would be if they were public, we have to take a look at a few public companies and how their market capitalization is calculated.
Goldman Sachs – Ticker Symbol GS
First let’s take a look at Goldman Sachs. Goldman Sachs is similar in that they are a financial services firm that is also a partnership. Goldman Sachs has a market cap of $91 billion. Goldman’s revenue for 2016 was $30.6 billion. For 2015 they made $33.82 billion. For 2014 they made $34.5 billion dollars. Goldman is a little different in that they have far less employees than Deloitte. Goldman has about 34,000 employees. Deloitte has seven times more employees than Goldman. with a trailing price to earnings ratio of 14. For our purposes, this means that if you multiplied their earnings times 14 you’d arrive at their market capitalization.
Deloitte does have more revenue than Goldman though so that is a plus.
Now let’s look at Morgan Stanley. Morgan Stanley is also a professional services firm with many employees. Morgan Stanley made 34.6, 35.2 and 34.3 billion dollars in 2016, 2015, and 2014 respectively. They had net income of 5.5 billion, 5.7 billion and 3.1 billion in those years respectively. This shows that even the additional employees weighed on Morgan Stanley’s net income. The only problem with comparing Deloitte to these firms is that Goldman and Morgan do not make money off each employee. Morgan Stanley has a market capitalization of $80 billion with trailing p/e of 15.
Now let’s look at FTI Consulting. They are similar to Deloitte in that they are a consulting company, so they make money off each employee. They had revenues of 1.8 billion in 2016. They had net income of 85 million. They had employees of 4,600. That means they make about $400,000 per employee. They have a trailing price to earnings ratio of 20.
Huron consulting is another public consulting firm. They have 2,671 employees with revenues of 800 million in 2016. This means they make about 330,000 per employee which is somewhat similar to FTI. They have a trailing p/e of about 24.
What would Deloitte’s market capitalization be?
Given all this information, let’s analyze what Deloitte would like if we were to value them to go public.
They made 36.9 billion in 2016. They had 244,400 employees. That means that they made about $150,000 per employee. Now let’s assume that their average employee makes $100,000 which gives them $50,000 of revenue per employee. $100,000 per employee across the globe is a pretty aggressive metric since many of the partners and employees overseas don’t make that much money.
$50,000 times 244,400 would provide them with net income of $12.2 billion. If you multiply that times a conservative price to earnings ratio of 14 you would get a market capitalization of around $171 billion.
As you can see that the big 4 would be a pretty large public company. There’s a lot of factors that could change this number such as cost per employee, trailing p/e, and net income that we assume that Deloitte makes. Toggle any of those inputs to see where Deloitte would come out. They made more than Goldman Sachs last year, but they also have more employees than Goldman. You have to assume that they pay their employees much less than Goldman as well. Goldman pays their employees over $300,000 a year in compensation.
You have to also ask whether they are worthy of the same price to earnings as the consulting firms like FTI and Huron. If you multiply their net income times a price to earnings of FTI, the Deloitte market cap to be about $200 billion. If you use Huron’s price to earnings ratio, the Deloitte market cap would be above $250 billion. It will be interesting to see what Deloitte’s market cap will be if their is a Deloitte IPO one day.
I think Deloitte would be valued anywhere from $80 billion to $150 billion if they were to go public today.