BDO and PKF are in advanced discussions to merge in the early part of 2013 to create a single firm with a strong national presence under the BDO brand.
The merger will create a leading accountancy and advisory firm, with some 3,500 people working in the UK generating revenues of £400m. The PKF brand will cease to exist as a result of the merger.
The move was first rumoured in August but both firms denied any moves to merge their operations at the time. However, there were similar moves in Australia earlier in the year, signalling a desire to create a stronger global presence.
A BDO spokesperson said the firms were 'in advanced discussions and definitely hoped that they would be able to confirm details of the merger before the end of the year'. At this stage, there is no detail on whether jobs will be lost or office restructuring, but it is likely that PKF's London operations will be absorbed at BDO's London headquarters.
This will be the first proactive strategic merger in the UK accountancy market for 15 years and reflects both firms' sustained commitment to growth in their mid-market heartland. The merged firm will be uniquely placed to offer greater choice and quality and demonstrates an appetite to invest. By merging the firms will generate estimated UK fee income of £400m, which would push them up the rankings to number sixth spot slightly behind nearest rival Grant Thornton, which reported June 2012 year-end revenues of £417m.
The merged firm will be a financially strong business with significant sector and geographical coverage across the UK, and will be a member of BDO International, the international network with revenues of over $5.7bn (£3.56bn) operating in 135 countries.
Simon Michaels, managing partner of BDO LLP, said: 'Our two firms share a closely-aligned vision to lead in the mid-market, as well as similar cultures and a commitment to deliver exceptional client service. The merged firm will have a strong balance sheet, as well as unrivalled sector and geographic strength in many areas.
'The PKF team will enhance and complement our offerings to clients, bringing consulting expertise along with wide experience across audit, tax and advisory arenas. This exciting development demonstrates that both firms are ambitious for growth.'
Martin Goodchild, managing partner at PKF (UK) LLP, added: 'This is a good strategic decision for both firms who have a desire to lead, from a position of strength, the inevitable consolidation of the mid -tier which is long overdue.
'PKF has built a strong national business dealing with a wide range of clients, particularly entrepreneurs and listed companies but including other markets such as public sector and not for profit.'