KPMG merges UK and Swiss firms to tap into wider market

KPMG has announced the merger of its UK and Swiss firms, creating a business with revenues of $4.4bn that hopes to tap into bigger markets and boost profits.

The Big Four accounting and consulting group said on Friday that partners in both countries voted “overwhelmingly” in favour of merging, after talks were first reported by the Financial Times in December.

The tie-up, which will come into effect in October, is the biggest strategic change at KPMG since UK chief executive Jon Holt took over in 2021. Holt, whose tenure was recently extended until September 2029, is seeking to increase profits, which have lagged behind rivals in recent years.

“This merger is a landmark moment for both firms,” Holt told the FT. “It gives us real scale [and] gives both firms access to a bigger market in sectors such as financial services and life sciences. We will also get a better return on our joint investments in things like technology.”

It is the latest attempt by KPMG to integrate its European member firms in order to reduce silos and provide a better service to large international clients across borders. In 2007, KPMG’s UK, German, Swiss and Liechtenstein businesses merged to form KPMG Europe, but the move was reversed after it failed to deliver the intended efficiencies.

KPMG said it will establish a new limited liability partnership that will bring together UK and Swiss equity partners, and will own the UK and Swiss business. The Swiss and UK partners will be paid from one profit pool, Holt said.

Rival Deloitte adopted the same structure in 2006, merging its UK and Swiss partnerships.

In the UK, KPMG has more than 17,000 employees and reported revenues of £2.96bn for the year to September 2023. Its partners were paid an average of £746,000 last year.

KPMG Switzerland employs about 2,600 and has 145 partners. It posted net revenues of SFr527mn (£480mn) in its latest financial year.

KPMG is the smallest of the Big Four accountancy and consulting firms and has faced a number of challenges, including a record £21mn fine in October for failings in its auditing of collapsed UK government contractor Carillion.

Holt will lead the new combined business, while Stefan Pfister, the current boss of KPMG Switzerland, will be his deputy.

A new group executive, made up of senior partners, will have decision-making responsibilities for the larger partnership, KPMG said. Members of the new executive will be announced in due course, it added.