BDO and Moore Stephens in ‘advanced’ merger talks to create UK’s fifth largest accountancy firm

BDO is preparing to merge with smaller accountancy rival Moore Stephens in a move that would create a new fifth-largest auditor in the UK.

The firms have confirmed they are advanced talks to create a £590m firm employing 5,000 people in a deal which would see it bump Grant Thornton off the fifth spot.

The firms said the merger relates only to Moore Stephens LLP comprising the London, Birmingham, Reading, Bristol and Watford offices and not the entire Moore Stephens UK network which is formed of independent businesses.

The proposed deal would create an enlarged team in Birmingham comprising 300 people.

BDO said the firm would be the “leader in advising the UK’s entrepreneurial mid-sized businesses” and also challenge its larger competitors for more complex audit, tax and advisory work.

The firm will take on the BDO brand, as it will remain part of BDO globally, the largest mid-tier accountancy organisation in the world with revenues of over $8bn and operating in 162 countries.

Partners of both firms have voted in favour of the merger, subject to final contracts.

Paul Eagland, managing partner, BDO, said: “If ever there were a time for firms to turbo-charge their growth, it’s now. As a combined firm, we offer greater choice, competition and scalability to the top-end of the market, and are better placed to deal with any economic disturbance from Brexit.

“It was clear from our first meeting that we share similar culture and values. As professional services firms, our people are our greatest asset and it is essential that we create an enlarged business that retains the best of our similar cultures. Both firms are full of innovative people who are experts in their field – this will continue.

“BDO is in a great position in the market, both in the UK and across the world as part of an $8bn BDO global organisation. In the last 12 months – in the wake of Carillion and the subsequent focus on competition in the audit market – the UK market now has a better appreciation of BDO’s capability and quality. This deal increases our credibility further and proves our commitment to competing in the top-end of the market.

“But we’ve always said that size isn’t a proxy for quality. A driver of this merger is one of sustainable and profitable growth that benefits our clients, people and capital markets alike.”

Simon Gallagher, managing partner, Moore Stephens LLP, said: “To be entering final discussions to create the largest UK accountancy firm focused on entrepreneurially-spirited and fast-growing businesses is exciting – and critical for market competition. The proposed merger provides a platform for continued, sustainable growth, as well as offering something different to the market at this important time.

“Clients are asking us to deliver an ever-increasing range and depth of solutions, provided globally. Combining with BDO makes providing that much easier.

“Moore Stephens is a very profitable business delivering double digit growth for several years in a row. This merger will allow us to remain on that kind of trajectory.

“It’s the people who will make this merger a success, which will translate into greater career opportunities and development, allowing them to deliver more valuable services to clients. BDO is also a very well-respected, financially-stable and focused firm, with an entrepreneurial heritage. Combined, we offer something truly unique and special.”