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BDO and Moore Stephens LLP sign merger deal

5th Feb 2019
Editor AccountingWEB
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Business contract

BDO and Moore Stephens have made their merger official, announcing this week that the deeds have been signed and the merged firm will now operate under the BDO brand.

When talks between the two emerged late last November, accountancy league table watchers were quick to calculate how such a deal would propel BDO ahead of its nearest rival Grant Thornton.

Welcoming the news in a statement BDO’s managing partner Paul Eagland commented: “Our clear sense of purpose and growth strategy will help our entire team make this merger a huge success.”

Combined revenue outstrips GT

Confirmation of the deal means BDO LLP in the UK now commands revenues of £590m, with the firm boasting $9bn across its international network -- numbers which cement BDO’s position as the UK’s fifth biggest accountancy firm.

Although Grant Thornton reported at the start of this year that its international revenues were up to $5.45bn, its UK revenue had reduced from £500m to £491m in the wake of a "tough year" which included a withdrawal from the bluechip audit market and a much-publicised change of CEO.

In addition to BDO's increased revenue, the merger also sees the firm’s workforce swell to 5,000 people. With Moore Stephens’ London, Birmingham, Reading, Bristol and Watford offices added to its roster, BDO now boasts 17 locations.

Confirmation of the merger also coincides with news that BDO has extended its lead as the number one choice as auditor for AIM clients.

Earlier today the AIM Advisers Rankings Guide confirmed that BDO leads the rankings with 152 clients during the first quarter of 2019, compared to KPMG with 118 clients and Grant Thornton with 111.

Targeting the 'economic engine' 

The firm also restated its focus on "mid-sized, entrepreneurially-spirited businesses", a mission statement backed by former Moore Stephens managing partner Simon Gallagher who is now head of advisory at BDO’s leadership team.

“From the moment we started our conversations, our shared ambition was to create a fully-integrated firm that our people are proud of and one which leads in serving what we call the UK’s ‘economic engine’ – the entrepreneurially-spirited, mid-sized businesses that are driving UK growth," said Gallagher.


When AccountingWEB first reported the merger news, former BDO partner Mark Lee revealed that staying ahead of Grant Thornton was always BDO’s aim. “This only started, however, after BDO first leapfrogged GT by merging with Moores Rowland in 1999,” he commented.

“Following that merger, BDO learned what GT had been protecting. That is the fact that an enormous amount of work goes to the biggest firm outside of the Big Four – when they are all conflicted. I suspect this remains the case.”

'Tightening of the mid-market'

In a salient post also from late last year, AccountingWEB member RedRooster concluded that this top ten merger represents a “tightening of the mid-market” and how the BDO network is now more global when compared to nearest “big seven” rivals RSM and Grant Thornton (GT).

“BDO has now overtaken GT in the UK and has grown exponentially in the US in the last 10 years (largely through taking over large regional practices). BDO would, therefore, seem well-placed to become the fifth worldwide player.”

And, as RedRooster further speculated, BDO could yet scale to another level. “They now have a large base in the US and UK. They have a large global network. If the collective partnerships are smart, they will invest a slice in strategic locations designed to win specific larger audit clients.

“Why not invest into the BDO brand globally? The firm members all pay their network rates and you take a slice off that. Use the capital to invest in those strategic location areas rather than asking partners to take an immediate capital injection.”

The battle for fifth place continues

As for the likes of RSM and Grant Thornton, RedRooster recommended that they try a network merger with a firm such as Mazars, who have a big European presence. “If you want to stay within the major mid-market (like the big seven and others do now) and scale up to the top end (Big Four), you need a bigger global footprint.”

Over the past year, we’ve seen an increase in firms using the merger and acquisition market to jostle their way up the accountancy league tables. As a case in point, Cogital-backed Baldwins, one of the most active players, started 2019 off as it left 2018, continuing its regional expansion with the acquisition of Stockport-based firm Booth Ainsworth.

Opportunity for other offices?

Beyond the coveted fifth place prize, the merger also presents an opportunity for those offices not included in the merger.

“It is always interesting to see which ones decide to go it alone and which ones look to join another national brand,” continued Mark Lee. “Much depends on the client base of the office, the age of the partners and their aspirations. For the more ambitious this could be a fabulous opportunity to do their own thing without the shackles and restrictions imposed by head office.”

Replies (2)

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By mkowl
06th Feb 2019 13:57

This is like the race for Europa League spots in the Premier League. Completely uninteresting for us that are in South Midlands League Div 1

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By ethancampbell
08th Apr 2019 11:49

The merger happened and now there are no more contenders to compete with BDO and moore stephens for accounting. They both were the only ones and now they are the sole king of their jungle. www.prodissertationhelp.co.uk

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