BDO UK is considering acquiring the UK arm of PKF in order to
grow its market share and bridge the gap between it and the Big
Four, according to
the Telegraph.
According to the media reports, the broad
terms for the acquisition have already been agreed, however PKF’s
UK managing partner is yet put the deal forward to the firms 70
partners.
Both BDO UK and PKF UK said they do not wish
to comment on the rumours at this time.
In fiscal 2011, PKF UK reported revenue of
£140m and is the smaller of the two mid-tier firms. But if the
acquisition is successful the combined revenue for the new firm
would be about £430m ($674m) seeing it overtake Grant Thornton as
the largest mid-tier firm in the UK market.
However, despite this huge jump in revenues
the combined mid-tier firm would still be more than £1bn behind the
smallest of the Big Four firms, Ernst & Young, which reported
revenues of £1.5bn in 2011.
M&A has become increasingly common in the
accounting market with firms using it as a way to grow their market
share. The merging of mid-tier firms was also one of the solutions
suggested at the recent UK House of Lords inquiry into audit market
concentration with the Lords saying it would be an effective way to
introduce more competition into the market.
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