The deal, which had been the subject of speculation for several months, will create an accountancy firm of some 3,500 people working in the UK and revenues approaching £400m.
From today, the combined business will take the BDO name, and cover 24 UK offices and 300 partners. The parties have said it is the first proactive strategic merger for 15 years.
Simon Michaels, managing partner of BDO LLP, said, “It’s time for people to think again about BDO. Merging with a firm of the quality and size of PKF has created one of the strongest firms focused on the mid-market, with the breadth and depth to work with ambitious businesses that want exceptional service and access to impressive UK and worldwide networks.
“We’re proud to be at the forefront of the change in the market and, with the Competition Commission reporting back on its remedies to the FTSE 350 audit market, we will also be looking for opportunities to work with more FTSE listed businesses than ever before.”
The combined firm will be a member of BDO International, which has revenues of over $6bn and operates in 138 countries.
The mid-tier rivals announced that they were in advanced discussions to merge at the beginning of November. Later that month they confirmed that the two firms would also join forces in China.
In October, PKF saw its overall income fall by £5m to £103.3m over the year to 31 March 2012, due to lower revenues in all of its practices except assurance and advisory. PKF cut its staff numbers by 45 over the year to a total of 1,279 and reduced staff costs by £1.6m to £52.5m.