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Mazars has agreed to merge its US business with Forvis, a top 10 American accounting firm by revenue, as part of a deal to create a global audit and advisory network with around $5bn in annual sales.
Partners at both firms voted through the tie-up on Monday according to a person familiar with the matter, in the latest evidence of dealmaking in an industry undergoing a wave of consolidation.
Firms are rushing to build scale in order to invest in technology and compete internationally, at a time when demand for some of their services has slowed.
As well as merging in the US, Mazars and Forvis have also signed an agreement to work together in a global alliance, under the brand Forvis Mazars.
The agreement will give Forvis, which predominantly operates in the US, a presence in international markets. In turn, Paris-based Mazars will gain a stronger position in the US, where the firm has struggled to gain a significant foothold, after first entering the market in 2010.
Hervé Hélias, chief executive and chair of Mazars Group, said the combination gave Mazars “the scale and expanded presence that we have been striving for in the US”.
The global network will be overseen by a new global board, including an equal number of senior partners from both firms with a three-year rotating chair.
However the two firms will still be owned by their respective partnerships and, outside of the US, will retain their existing management structures below the new global board. The profit pools at both firms will remain separate.
The agreement, which will create a top 10 global audit and advisory network by revenue, will come into effect from June next year.
It follows a raft of dealmaking among mid-market US accounting firms, as growing labour and technology costs have pushed them to seek economies of scale to compete. In January the global head of RSM, the world’s sixth-largest accounting firm also said she was open to merger talks with rivals.
BDO USA recently abandoned the traditional partnership model in favour of a structure more like a typical company, in search of tax advantages and greater flexibility to do deals.
Forvis has small offices in Toronto and London but primarily operates in the US. Mazars, which was founded in France in 1945, has a sprawling network with offices in more than 95 countries, including in Europe, Asia and the Middle East. It has struggled to penetrate the US market, however, with just 1,120 staff based there compared to Forvis’ 6,000.
Mazars USA has slipped down the rankings of US accounting firms by revenue, from 24th five years ago to 30th today with a little over $260mn in annual revenue, according to a ranking compiled by the publication Accounting Today.
This is despite creating what it called a “North American alliance” in 2019 designed to improve its ability to work for multinational clients.
Mazars’ work for former client Donald Trump has also brought it unwelcome scrutiny in the US in recent years. Last month, a Mazars USA partner appeared as a witness in the New York civil trial of Trump over alleged fraud at the former president’s business empire.
The firm decided last year that it would no longer work for the former president, and said that a decade’s worth of financial statements for the Trump Organization could “no longer be relied upon”.
Forvis was formed last year from the merger of BKD and Dixon Hughes Goodman, and ranks at number 9 by revenue in the US.
Tom Watson, chief executive of Forvis, said the two-firm network was an “opportunity to better serve our clients, especially those with international needs”.
