E&Y makes a pledge on growth

Ernst & Young has said that the firm will continue to expand its consultancy arm despite the collapse of its merger with KPMG.

“The basic growth strategy will continue, we will not be complacent,” said Nick Land, senior partner at Ernst & Young. “Ernst & Young and KPMG was not going to be the biggest firm, but we had to ensure that we were not at a complete disadvantage, so now continuing to grow our business is crucial.”

Land said that, once the firms realised that integration would take five years, it became obvious that the cost benefits of the merger did not stack up.

A source at Ernst &Young said that there were differences between the firms that could not be overcome within a short time period, and that it was not only a regulation question.

“There were some big cultural differences that would have taken much longer to sort out. Then it would have been a question of getting the momentum back,” he said.

Now that the merger is being dropped, the firm aims to change its recruitment policy. Over the last six to seven years the firm has taken on senior partners, but it is intent on taking on more graduates.

“We will be recruiting more graduates and will have bigger programmes for them. We are not particularly big in the volume game; at the moment the management consultancy in the UK numbers 800 people,” said Land.

“We have been bringing in graduates as research associates, but we will see that model changing.”

While merger negotiations were underway, Ernst & Young was recruiting partners from the Price Waterhouse/Coopers & Lybrand fall-out, Land said.

The firm is also expanding its environmental consulting arm. It has just recruited Paul Wenman from Environmental Resources Management (ERM) to grow its practice. The expanded practice will seek to give clients a value-added service and help them understand the impact of environmental issues.

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