BDO accounts for its big rival

THE UK’s big four accountancy firms are set to come under more pressure as BDO closes in on a merger with rival Moore Stephens.

The enlarged firm will overtake Grant Thornton as Britain’s fifth biggest accountant by revenue, behind PwC, Deloitte, EY and KPMG, and could trigger a further wave of consolidation in the sector.

The two firms are in advanced talks to create a business with gross annual revenue of £590million with 5,000 staff across the UK. It will take on the BDO brand and a deal is expected to complete next spring.

BDO said the combination would cement it as first-choice auditor for (junior market) Aim businesses and make it one of the country’s top auditors based on the number of UK-listed companies it audits.

Auditors have been brought into the spotlight after several high-profile corporate collapses including Carillion and BHS. Competition watchdogs are probing quality and choice in the audit market. The parliamentary business committee has launched a separate inquiry.

BDO chief Paul Eagland said: “If ever there were a time for firms to turbocharge 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.

“BDO is in a great position in the market, across the world as part of an $8billion BDO global organisation. In the wake of Carillion and the subsequent focus on competition in the audit market – the market has a better appreciation of BDO’s capability and quality.”

Moore Stephens boss Simon Gallagher 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.