KPMG’s getting married. To itself. KPMG UK’s 833 equity and salaried partners and 17,239 employees will be joining forces with KPMG Switzerland’s 2,603 employees and ?? partners to form a $4.4 billion MechaKPMG.
They’re doing this because according to them:
In a fast-paced, globally focused business environment driven by new technology and increasing regulatory complexity, clients’ needs have also evolved. To meet these, both firms will bring their complementary strengths and technology solutions together to enhance the range of services offered across audit, tax and legal, and advisory. With a wider geographic coverage, the new firm will be able to expand its service and sector expertise complementing the already deep local market understanding for its national and international clients.
Partners at both firms voted “overwhelmingly” for the merger. “This will make the firm the second largest in the KPMG network by some distance,” said the press release. That distance being about $32 billion behind KPMG US’s $36 billion in revenue. [disregard, we’re dumb and used global revenue here]
You may recall a dubious rumor floating around last year that KPMG US, UK, and India were exploring merging their advisory practices. After we included a link to an Economic Times of India story about so-called Project Himalaya, this was quickly debunked by a KPMG spokesperson who reached out to us saying “KPMG is a network of member firms, which are independent of each other. We are, as always, focused on opportunities for greater collaboration within our existing India-based client delivery network.”
A potential UK/Switzerland deal, however, was correctly floated by Financial Times back in December:
KPMG is planning to merge its UK and Swiss businesses in a tie-up that executives hope can boost growth and profits at the smallest of accounting’s Big Four.
Partners in KPMG’s operations in the two countries were told last Friday that the firms were in discussions over a possible combination, people familiar with the matter told the Financial Times. Rank-and-file employees were given a more limited briefing on Monday.
The merger, which would be subject to partner votes in both countries, would be the biggest strategic shift at the Big Four accounting firm since UK chief executive Jon Holt took over in 2021 after the sudden resignation of his predecessor Bill Michael.
Holt is seeking both to repair KPMG’s reputation, after a series of fines and scandals, and to boost profits, which have lagged behind those of rivals.
Quick refresher on what happened with Bill Michael:
Related: KPMG UK Asks Staff to Stop Snitching to the Media When the Firm Does Something Stupid
Although total revenue was up nine percent from the year prior, KPMG UK laid off six percent of its deals people in October and froze pay for 12,000 staff across all service lines while reducing bonuses for some. So they’ve had a rough go of it lately and that’s not counting the tongue-lashings and fines they’ve received from regulators in recent years.
Of the news, the press release of course has complimentary quotes from the CEOs.
“This marks a historic moment for both firms,” said Jon Holt, chief executive and senior partner of KPMG UK. “We will be stronger as one combined firm and together we will have the scale to significantly enhance our ability to deliver great outcomes for our clients both internationally and within our domestic markets. Merging brings huge benefits for our clients, our people, and our partnership and means we can now grow faster, be more profitable and invest together to create new services in a sustainable way.”
“Both partnerships have made an important decision today, which will evolve and future proof our firms for the global business challenges ahead,” KPMG Switzerland CEO Stefan Pfister said. “Together we will be more agile and can bring the best of KPMG’s multidisciplinary model and sector expertise to clients nationally and internationally while at the same time maintaining our local market understanding and execution power.”
As for the structure of the merged firm, KPMG will establish a new limited liability partnership comprised of equity partners and the LLP will own the existing UK and Swiss firms. Jon Holt will lead the new partnership as Group CEO and Stefan Pfister will get the consolation prize of the title Group Deputy CEO.
October 1 will be MechaKPMG’s first official day.