The ability to meet partners’ profit expectations is considered the single most important issue facing firms in the next five years, according to a recent survey

The report, carried out by professional and financial services group Smith & Williamson, found that partners predict consolidation between firms to continue for some time. Of the respondents, 71 per cent expected merger activity to either remain static or to rise next year. This represented a drop compared with 2001, when the corresponding figure was 84 per cent.

Meanwhile, 76 per cent said they had either approached or been approached by another firm in the past two years and 21 per cent said they were actively seeking to merge.

The survey revealed that the main influential factors when firms decided on a merger were complementary areas of business, increased profitability, greater economies of scale, and better job security for partners and staff.

The survey also found that 78 per cent of firms thought their professional indemnity cover would increase and 36 per cent did not have risk procedures in place.