PracticeAccounting FirmsNearly a quarter of firms would merge this year

Nearly a quarter of firms would merge this year

Research shows mergers are on the radar for a quarter of firms looking to expand their operations

NEARLY A QUARTER of accountancy firms (24%) said a merger was likely or possible in the next 12 months, a recent study has shown.

The research by Bloomsbury Professional looked at the accountancy sector’s growth plans for the next 12 months.

“These mergers aren’t necessarily for aggressive expansion. Some firms are just looking to diversify away from a particular sector or business line to achieve economies of scale by reducing support staff and property costs,” said Martin Casimir managing director of Bloomsbury Professional.

Just 8% of firms were considering poaching rival and 15% are considering opening new offices. However, just 11% want to move into a new sector.

Although the majority of firms are not considering expansive plans for the coming year, many are focusing internally to raise their profitability.

More than half (58%) would initiate tighter credit controls, 61% are planning to cut unprofitable services and 73% are to focus on raising hourly fees.

However, on the plus side 86% said they were unlikely to make redundancies in the next 12 months.

“Firms understand that it will be tough to increase profits in the current market by growing turnover organically or by acquiring teams or smaller rivals. The lack of activity on poaching senior teams will have a dampening effect on salaries,” said Casimir.

“Firms do still need to find an edge though, and they are trying to find this by boosting margins. However, it may be easier said than done for firms to increase their hourly rates without running into opposition from clients.” 

The survey includes the responses of more than 60 firms. 

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