Accountancy firm BDO has acquired PKF East Coast Practice and there are more acquisitions on the agenda, with rumours of Moore Stephens also joining the BDO network.
The integration of the firms will take effect on July 1 and will combine the BDO and PKF offices in Brisbane, and also see PKF’s Melbourne and New South Wales offices adopting the BDO brand.
The acquisition re-establishes BDO’s presence in Sydney and Melbourne after BDO International revoked its licensing arrangements with its former practices in these markets, and will expand the accountancy firm to about 160 partners, more than 1,315 staff, and an estimated turnover of about $240 million.
BDO national chairman Tony Schiffmann told SmartCompany the firm would make further acquisitions in the “medium term”.
“We have had quite a few approaches from firms that have had an interest in joining us, but we have to have a period of time to bed this down first,” Schiffmann says.
While the acquisition of PKF makes BDO the country’s sixth largest accounting firm by revenue, Schiffmann says BDO does not plan to rival the big four firms.
“BDO has its own space. We have our own strategy, our own aspirations, and some of that overlaps with the big four, but I wouldn’t use those words,” he says.
“We saw PKF as a logical party to join and they had a fair degree of enthusiasm. There was no real doubt about strategy and culture fit. We just had to go through the detail and ask how we would do the transaction.”
The partnership vote at BDO to acquire PKF was “almost unanimous”, which Schiffmann says is “as good as it gets” in a professional services firm.
“It has been very positive. There have been many people in the profession and journalism who have been predicting [the acquisition] and they are right,” he says.
The acquisition represents a change of approach for BDO which earlier this year terminated the BDO Victoria and New South Wales offices, citing “unreasonable risks“, following a strategic review of the business taken over the previous 18 months.
Grant Thornton partners reportedly voted to pay $50 million in order to bail out BDO Melbourne Sydney, which was still struggling to deal with $100 million in debt. The new acquisition will put BDO neck and neck with Grant Thornton.
BDO and PKF East Coast Practice will integrate financially over the next two years. In the meantime, PKF Sydney-Melbourne will change its name to BDO, but still operate as a partnership.
BDO Queensland has bought PKF’s Brisbane practice outright for an undisclosed sum and 10 PKF Brisbane staff members were fired last week.
“The only consolidation of offices will be in Brisbane, so we will join physically in Brisbane,” says Schiffmann.
He says there will be no forced redundancies of staff.
Michael Grant, chief executive of PKF’s East Coast Practice said there were “natural synergies” between PKF and BDO in service lines and culture.
“It is this culture that positions BDO as one of the most respected brands in the Australian professional services industry and the PKF ECP partners see the natural fit with a firm like this,” Grant said.