The deal creates agency CardewChancery with more than 50 clients spanning crisis comms, investor relations, M&A and financial services.
While agency bosses are keen to stress the deal was a merger of equals, it is understood Cardew - the bigger and more established business, founded in 1991 five years before Chancery - bought Chancery in a stock swap, although details have not been disclosed.
The deal brings together Cardew founder and chairman Anthony Cardew and Chancery chairman David Waller, who will act as chairman and CEO respectively.
Chancery's 12 staff are set to move into Cardew's London-based offices this week.
Waller said the two firms were introduced by creative services marriage broker Rupert Ashe, one of the founders of Madsen Gornall Ashe.
Cardew said the deal enables the agency to increase in size while remaining independent: 'It was time to increase the size, expand our headcount and bring in another company.'
Waller said no conflict of interest issues have resulted from the merger.