Financial advisory and insurance group SFG Australia is in talks with accounting services company WHK about a possible merger.

“The discussions are preliminary and incomplete and there can be no assurance that a transaction will eventuate,” SFG said in a statement.

The move is in line with SFG’s stated aim to expand through acquisition.

WHK told insuranceNEWS.com.au it “has not made any decision in relation to the approach and is currently assessing its strategic and financial merits”.

Both groups have appointed advisers, with SFG choosing Investec and Yorkway Capital Partners for financial advice and Clayton Utz as its lawyer, while WHK has appointed Greenhill as its financier and Herbert Geer its lawyer.

SFG has slightly more firepower than WHK, with a market capitalisation of $332 million and an after-tax profit of $28.6 million in the last financial year. WHK has a market capitalisation of $259 million and net profit of $10.2 million.

SFG’s business includes financial and insurance advisory, investment, corporate superannuation and lending and stockbroking. WHK has accounting services, plus investment and insurance services.

The market reacted well to news of the talks, with SFG’s shares rising 3.3% and WHK’s jumping 7%.