PracticeConsultingPwC sells US corporate consulting arm

PwC sells US corporate consulting arm

PricewaterhouseCoopers has sold off its US corporate consulting division to leading finance house Standard & Poor's, due to tighter regulations on auditor independence.

The move will be viewed as the first stage in a restructuring process PwC promised to begin last year.

PwC’s Corporate Value Consulting which encapsulates corporate restructuring, finance and consulting, among others, could not provide any services to clients audited by the Big Five firm. Since a large portion of major companies in the US are audited by the firm, the only way for CVC to grow was through a sale.

CVC reported a revenue of about $100m in 2000 with around 400 employees working in 13 different offices around the US. It is estimated that CVC services a $1bn global market for corporate value consulting.

James Schiro, PwC’s chief executive, said: ‘We built CVC into a $100m business and now, free of the audit-related regulatory constraints the unit faced as part of our firm, its market potential can be further unleashed.’

The SEC launched one of the most indepth investigations into the accounting profession last year after thousands of violations were discovered at Big Five firms. PwC last year pledged to restructure to avoid further conflicts, but it has yet to sell off its global consultancy business.

PwC’s consultancy arm has been up for sale for over a year and the only serious offer from IT company Hewlett Packard collapsed last December when HP’s share price plummeted.

Harold McGraw III, chairman, president and chief executive of The McGraw Hill companies, of which S&P is a part, said: ‘The acquisition of CVC represents a major step forward in our strategy to extend the globally respected Standard & Poor’s franchise into related areas of financial analystics and information that are enjoying strong growth.

‘CVC is an excellent strategic and cultural fit for Standard & Poor’s and provides us with the opportunity to further enhance the growth of our financial services business.’

Links

US audit independence questioned

Auditor conflicts concern SEC’s UngerPwC Consulting axes more staff in US

SEC releases finalised independence rules

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