Boss says BDO still on the lookout for deals as it confirms ‘advanced’ merger talks with Moore Stephens
The managing partner of BDO said the firm is still on the lookout for further mergers and acquisitions, after it confirmed plans to join forces with audit sector rival Moore Stephens.
The firms have confirmed they are in “advanced” merger talks, which they say would “improve competition and quality” at the top end of the audit market.
The plan to combine the two firms, details of which were first reported over the weekend, would create a new fifth-biggest UK audit firm, taking the spot previously occupied by Grant Thornton.
Partners at both firms have voted in favour of the merger, which is now subject to final contractual checks. It is expected to be completed by spring next year.
Paul Eagland, BDO’s managing partner, told City PM that once the merger was complete, BDO would be open to further expansions.
The firm is “definitely always interested in speaking to like-minded people who want to combine forces”, Eagland said, but he added that any potential allies would need to have the “right cultural fit”.
He said the two firms has begun looking at the feasibility of a merger over the summer. Both agreed that the deal made sense despite uncertainties around the UK’s exit from the European Union. “We think we will be better off and stronger and more able to navigate any disruption from Brexit together,” Eagland said.
The deal marks a shift in the auditing landscape, as a series of reviews attempt to address issues of quality and competition within the sector.
The Competitions and Markets Authority is currently examining the dominance of the Big Four firms, which have a stranglehold on top company audit contracts, and a parliamentary select committee is preparing to launch an inquiry into the audit market.
By merging, BDO and Moore Stephens will consolidate shared expertise in sectors including energy and technology.
Eagland 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.”
Simon Gallagher, the managing partner of Moore Stephens, said: “Clients are asking us to deliver an ever-increasing range and depth of solutions, provided globally. Combining with BDO makes providing that much easier.”
The proposed deal would likely see BDO expand into the City. It plans on taking on a second office in addition to its headquarters on Baker Street, to accommodate growth and retain a presence closer to some of London’s biggest businesses.