Coopers & Lybrand, Price Waterhouse, Ernst & Young and KPMG have all advanced the same arguments in defence of their proposed mergers.
All four say they need to be global to compete and only size will give them the ability to invest for the future. Each of them pointed to the success of Andersen Worldwide, the world’s number one global business services firm.
But that was before the simmering row at Andersens between its consulting arm and accountants Arthur Andersen, broke out into open fratricide. As the lawyers move in, Andersens looks much more like a dire portent than the shining model the would-be Big Two sought to emulate only a few months ago.
The Andersens split is not without its irony. In an echo of arguments being put to regulators by the four merger partners, Arthur Andersen is preparing to argue that it is not a global firm. In an effort to deflect Andersen Consulting’s attempts to put the dispute to binding arbitration, it is arguing that it is in fact a collection of local firms sheltering under a single marketing umbrella.
More important, the falling out shows the danger at the heart of all accountancy mergers. Partnership is often said to be the strength of the profession. But the events at Andersens shows just how brittle partnership can be when things go wrong. Whatever the regulators say, the merger firms may find the toughest task will be to stay together after the mergers are signed.
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