Horwath, BDO jump on merger bandwagon

Recent murmurs of rationalisation amongst mid-tier accounting firms in Western Australia became a reality last week with the merger of the Perth offices of Horwath and BDO.

As reported in the November 30 issue of WA Business News, there was speculation that WA would not remain immune from the trend of rationalisation amongst mid-tier firms, with RSM Bird Cameron Perth office managing director Mark Conlan predicting there would be continued activity amongst mid-tier accounting firms in WA over the next couple of years.

The BDO-Horwath marriage is part of a national merger with the combined national entity forecast to turnover $180 million in the full 2007 year, placing it in a position between the mid-tier and the big four accounting practices.

The two firms are currently in advanced discussions, with the merger expected to take place on March next year 31.

News of the merger comes at a time of heightened merger activity amongst accounting firms.

It is has recently come to the attention of WA Business News that the global association of owner-managed, independent accounting practices Moores Rowland International (MRI), which includes Bentleys MRI Perth office, has formed an alliance with an international network which will give it global billings of approximately $US2.5 billion, ranking it at number six globally.

In Australia, big four accounting firm Deloitte has consolidated its position after raiding the offices of Horwath in Sydney and BDO in Melbourne earlier this year, while RSM Bird Cameron snapped up the Sydney office of Bentley MRI late last month.

BDO managing partner Rob Casamento said the merger with Horwath’s Perth office would enable the firm to provide greater statewide coverage, with the combined firm having 16 directors and 150 staff.

“[The merger] is a strategy of growth...Our clients are growing so we need to grow with them. We have been knocking back audit work simply because we have far too much work on, so the merger will enhance our ability to service clients.”

Horwath Perth managing director David Stevens said both firms brought different but complementary strengths, with the cultures of both firms being highly compatible.

According to the 2007 WA Business News Book of Lists, Horwath and BDO are currently ranked eighth and 11th in the WA market respectively in terms of number of accountants employed.

The merger would see the combined entity move to sixth position after RSM Bird Cameron.

Before the BDO and Horwath joining forces, the most recent merger activity in Perth took place in July last year, when Bentley MRI Perth’s audit division merged with fellow mid-tier accounting practice Hall Chadwick.