Rathbones has a market value of approximately £1.4bn and manages £32bn of client funds through Rathbone Investment Management. The deal attributes a value of approximately £600m to Smith & Williamson.

Smith & Williamson is somewhat unusual in that it operates both as a fund manager and an accountancy firm. It manages some £19bn in funds for clients, while according to Accountancy’s Top 75 firms survey, the firm’s accounting and tax operation has a fee income of £222.5m.

Both Smith & Williamson and Rathbones have confirmed to CCH Daily they are in ‘exclusive discussions’ over a possible ‘all share merger of the two groups’.

Both parties stressed that talks are ongoing and there is no certainty it would lead to a transaction.

‘These discussions have been underway for some time and the boards of both Rathbones and Smith & Williamson are confident that the combination would bring meaningful benefits for the stakeholders of both businesses, discussions are ongoing and there can be no certainty any transaction will be agreed,’ Rathbones said in a statement.

A Smith & Williamson statement added: ‘Smith & Williamson can confirm that it is in exclusive discussions with Rathbones regarding a possible merger of the two companies. A further announcement will be made as and when appropriate.’

If agreed, any such transaction will be subject to the approval of Smith & Williamson and Rathbones shareholders.

The combined entity would employ approximately 3,000 people in total.

Smith & Williamson's largest shareholder, AGF, said in a statement: 'AGF confirms that Smith & Williamson, a company which AGF currently owns 32.3% of, is in exclusive discussions with Rathbone Brothers regarding a possible merger of the two companies.