KPMG has shrugged off the disappointment of its failed merger withe of 17%. Ernst & Young to report a rise in UK fee income of 17% to #726m.
Colin Sharman, the firm’s senior partner who spearheaded the merger plan, saw his income jump by #134,000 to #904,000, also a rise of 17%. Average earnings for each partner in the firm rose by #50,000 to #256,000.
In the year to September, Sharman, who is also KPMG’s global chairman, received a salary of #510,000, pension payments of #206,000 plus a #188,000 share of last year’s #145m profits.
Mike Rake, the firm’s chief operating officer, said: ‘We stuck to growing the business. We committed as few people as possible to the merger talks and that is reflected in the profits.’
The results were a significant improvement on the previous year when KPMG only grew by 6% following a collapse in management consultancy fee income.
But management consulting, along with transaction services which deals with transfer pricing and due diligence, was the main growth area last year, with consulting fees rising by 36% to reach #153.2m.
Significantly for KPMG partners, Sharman announced that in May they will be asked to sanction the formation of a new international organisation to take over ownership of the firm’s intellectual property, methodologies and technology.
It will also own a ‘golden share’ in each member firm around the world, which Sharman hopes will stop any attempts to override management decisions or quit the network.
One insider at the firm commented: ‘This is an attempt to give KPMG a ‘top-down’ corporate structure rather than allow democratic decisions to hold up developments.’
The structure is designed to overcome difficulties suffered by Andersen Worldwide, where Andersen Consulting said it could divorce Arthur Andersen and take its technology, name and intellectual property if it substantiates certain grievances.
Sharman said he also wanted to raise about #200m in the debt markets to fund the development.
BUT ANDERSENS HURDLES 20% BARRIER – AGAIN
Rivalry between Andersen Consulting and its sister firm Arthur Andersen was heightened this week after the consultancy firm reported a 25% jump in revenues to $6.64bn (#4bn). The firm said it was the fourth consecutive year that growth exceeded 20%.
Income in Europe rose by 23% to $2.31bn while UK revenues grew 30% to $444.7m – 11% of total revenues.
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