Leader - The crying wolf game - again

Are we on the verge of another wave of accounting firm mergers? The signals remain confused. Senior partners issue strong denials while colleagues, who hint they are involved in talks, mutter darkly off the record.

In the week in which ‘Shakespeare in Love’ won seven Oscars, it is tempting to say, with the bard, that senior partners of accountancy firms protest too much. As Mandy Rice-Davis put it, they would say that wouldn’t they?

The problem is that each major merger has been preceded by trenchant denials that it had even crossed the participants’ minds, much less that they were sitting in a smoke-filled room hammering out the details. Yet that is just what they were doing, even as those denials were being issued.

In the daily cut and thrust of the business world, there is nothing wrong with issuing a strategic denial, however untrue, in order to buy time to close the deal. But it is naive for accountancy firms to behave like outraged maiden aunts when the marketplace treats these routine falsehoods with deserved scepticism. Commercial organisations are entitled to protect their own affairs and use their press offices to mislead the media. Journalists are paid to resist and seek after reality.

Strategic denials should be used with care. Every time a denial is followed by a merger, senior partners will find, as did the little boy who cried wolf, that people are less willing to believe what they say.