Merger discussions are fine, but the real fun comes after the ink has dried on the contract and two firms must become one
SO SPECULATION that BDO is set to acquire PKF has surfaced in the press.
Is this in the pipeline? Possibly. The ‘non-denial denials’ from the two firms certainly don’t quash the reports. In fairness to them, what choice do they have? If they say, ‘No, it’s definitely not happening’, they’ll end up being asked for a yes or no regarding every other firm in our Top 50 list.
While the idea of a ‘Merger Discussions Index’ on Accountancy Age’s website might sound quite fun, it would no doubt become very boring when you realise that there are conflabs between senior partners all the time – most of which never go beyond the very informal stage.
We know that in the current economic climate it’s hard for firms to grow organically. There are a few that have been treading water for years, and are struggling to sort out succession planning.
So deals are going to happen. The fun part is how they’ll be organised in relation to partners – which offices will survive; which international network is picked; and how efficiencies can be driven to create better margins.
These are the key points. As Smith & Williamson chairman Gareth Pearce told Accountancy Age this week, mergers are “hugely difficult to execute” and require a long time to bed in.
So expect more merger speculation. The fun, of course, comes in the detail. Does BDO need further geographic reach in the UK? Will a deal boost BDO’s non-audit line? Is this the right focus for BDO, when it makes such a noise about wanting the FTSE 350 audit marketplace opened up? We can speculate ahead of a deal, but the real fun comes after the contracts are signed.