PracticeConsultingEditorial – When two into one doesn’t go

Editorial - When two into one doesn't go

So the plan to create the largest accountancy firm in the known world is off. Speaking minutes after the news broke, Nick Land, Ernst & Young’s senior partner said his firm’s merger with KPMG had foundered on cost, regulation and client hostility. Fighting to be heard amid a metaphorical chorus of ‘We told you so’, Land said it had all proved far harder than anyone had imagined.

From the start the question hanging over the KPMG/E&Y merger was why it was worth doing at all. Despite broad hints that the two firms had been talking for months longer than their merger rivals at Price Waterhouse and Coopers & Lybrand, there were accusations that it was just a grand spoiler. Even as it was being levelled, that charge looked unconvincing.

The sheer cost of preparing the merger proposals, to say nothing of consulting partners and drafting submissions to the European Commission, would have made it one of the most expensive spoilers on record.

The truth is likely to be much more prosaic. A lot of work went into the merger before E&Y decided to pull the plug. At best that looks like a brave decision. At worst the whole plan looks like a misjudgment.This was certainly not the first accountancy merger to end in tears. But being so high profile its failure will not have done either firm’s reputation any good. Accountancy firms are meant to know about things like business strategy and getting their own wrong will hardly inspire the confidence of clients.

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

5m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

11m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

12m Kevin Reed, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

12m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

12m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

1y Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

1y Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

1y Stephanie Wix, Writer