PracticeAccounting FirmsMore merger hurdles for Andersen and KPMG

More merger hurdles for Andersen and KPMG

The emergency rescue deal brokered between embattled Andersen and its Big Five rival KPMG is just the beginning of a long process, warn rival partners.

The details of the tie-up between the two firms are still vague but the obstacles that will have to be overcome are becoming clear.

A senior partner at PricewaterhouseCoopers, who was at the firm during the merger between Price Waterhouse and Coopers & Lybrand, said: ‘You have to work very hard to make big mergers work. It’ll be interesting to see what the merger will include.’

Competition issues are clearly one of the greatest stumbling block to any future marriage.

John Tiner, managing director of the Financial Services Authority, this week voiced concerns over the limited choice multinationals would have with just four global firms. After the PW and Coopers merger, the European Commission said it would not allow further consolidation in the accountancy market. This stance is not expected to alter.

But practical issues are also vital to the success of the tie-up.

After a merger, all client engagements must be formally transferred which involves the resignation of the current audit firm and then its reappointment, said a partner in a rival firm.

This could just be a paper exercise, but with many of Andersen’s clients reviewing whether to retain the firm, may prove more difficult.

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