Two of Britain’s biggest accountancy firms – both with significant operations in Birmingham – have announced they are close to agreeing a merger.

The deal between BDO, the UK’s sixth largest accountancy firm, and PKF, the 12th, would create a company with 3,500 British staff and £400 million revenues.

PKF’s UK operations will be separated from its international operations and incorporated into BDO. In a joint statement the firms said the proposed merger reflects their ‘sustained commitment’ to growth in their mid-market heartland.

Simon Michaels, managing partner of BDO, said: “The merged firm will have a strong balance sheet, as well as unrivalled sector and geographic strength in many areas. The PKF team will enhance and complement our offerings to clients, bringing consulting expertise along with wide experience across audit, tax and advisory arenas. This exciting development demonstrates that both firms are ambitious for growth.”

Martin Goodchild, managing partner at PKF, added: “This is a good strategic decision for both firms who have a desire to lead, from a position of strength, the inevitable consolidation of the mid–tier which is long overdue.

“This combination will ensure a strong profitable business, creating opportunities for all of our people and our clients, as it will enable them to benefit from new expertise and increased global reach.”