Merger fever grips firm

A second wave of consolidation among top firms was signalled this week by the disclosure that KPMG and Grant Thornton were in secret takeover talks.

One source said the discussions revolved around the purchase of Grant Thornton which would then be retained as a going concern. ‘Grant Thornton is an attractive proposition to a Big Five firm, particularly for KPMG which has some relatively small regional offices,’ he said.

But KPMG senior partner Mike Rake said: ‘These rumours are not true.

They are our auditors and we have a good relationship with them, but anything further would not be a strategy we would follow.’ His denial was endorsed by Grant Thornton senior partner Will Lifford.

Speculation about the future of the ambitious Grant Thornton has increased following the recent spate of mid-tier mergers, all of which were initially denied by the firms involved.

January’s merger between BDO Stoy Hayward and Moores Rowland will knock Grant Thornton off its spot as the UK’s sixth biggest firm. It is also under threat by last week’s merger of Group A firms Robson Rhodes and Pannell Kerr Forster.

Arthur Andersen was also at the centre of merger speculation. If its divorce with Andersen Consulting goes ahead, it would slash the accountancy firm’s consulting fees, and Ernst & Young has emerged as its most likely partner.

The firm’s UK practice and several overseas practices have been linked with Andersens. Chairman Nick Land said: ‘Any moves like that would certainly be news to me.’

If the UK practice were to join Andersens, E&Y International could try to get together with Deloitte & Touche. Deloittes senior partner John Connolly said: ‘We will pursue any opportunity we are offered – including a merger.’ If that fell through, E&Y International is believed to be targeting BDO Stoy Hayward.