The last 12 months may not have boasted any heavyweight mergers of the scale of last year's union between Price Waterhouse and Coopers & Lybrand, but 1999 has still seen its share of turmoil, rumour and counter-rumour.
First into the fray were Moores Rowland and BDO Stoy Hayward, who finalised their nuptials in January following an announcement the previous (which month).Next up were mid-tier firms Robson Rhodes and Pannell Kerr Forster who announced their intention to form Pannell Robson, a £120m firm in March and declared a confident 1 May for the link up.
PKF managing partner Martin Goodchild said that clients increasingly demand firms with a global reach and cited this factor as a key driver behind the merger. In fact, both firms had reported less than glowing fee income results: PKF’s 2% in income rise in the year to April 1998, and Robsons’ fee income in 1997 had collapsed by more than 20%.
The merger plans stumbled in late April just days before partners were due to vote. Both parties blamed disagreements over international structure and strategy. When asked if he was looking for alternative partners, PKF chairman John Wosner said: ‘We are not actively looking for a merger, but if the right opportunity comes along we will look at it.’
HLB Kidsons managing partner Peter Douglas had a similar line when he announced Kidsons’ strategy for strengthening its presence in the IT, e-commerce and corporate finance work. ‘We are not completely abandoning the idea of a full merger with another Group A firm but we’re are certainly not making it a top priority,’ he said in November.
It has become a refrain that may cover a wider set of possibilities than a straight merger, however. Also in November mergers and acquisitions broker Jobtel announced plans to act as a catalyst for a UK-wide brand in the style of the much reported US consolidators – Amex, H&R Block and Century Business Services. As Jobtel courted senior partners in the mid-tier another possible consolidator, stockbroker Raphael Zorn Hemsley, also stepped into the ring. Convergence in the mid-tier is by no means limited to tie-ups between single firms.
Meanwhile all has been far from quiet at the bigger firms. February the newly-merged PwC was sent reeling by a record fine of £3.5m imposed by the Joint Disciplinary Committee. The JDS censured four former Coopers partners for their role in the Maxwell collapse and charged fines and costs amounting to £100,000. Some 600 former Coopers partners took the £3m-plus hit.
The success or failure of the PwC remains an open question. The giant firm lost and won audit clients, but mutterings of future lay-offs persist.
Rumours of the Big Five becoming the Big Four will never be far off, but in the main, the big firms have been focussing their efforts on other ways to bring capital into their businesses. KPMG had its plan to float its consulting wing in a £77m issue squashed by the DTI. But a deal with US systems company Cisco, which has bought a 20% stake in the consulting arm, will bring a pledged $1bn investment in the firm’s internet services business.