In spinning off – possibly selling off – its consultancy arm, PwC has sought to jump before it is pushed. With the US Securities and Exchange Commission’s concern about audit independence still very much alive – and other regulators also questioning the viability of the status quo – all PwC has done is bring forward the inevitable.
Some will see this as a sign that the wheels are coming off the juggernaut that is PwC and the merger is not the success the firm has sought to portray. But the ground-breaking move is less about that than about the changing face of business and regulation.
Capital markets drive businesses which drive professional firms. There are other factors – from the House of Lords ruling on Chinese Walls in the Prince Jefri case to the e-business gold rush and the rich seam of consulting revenues waiting to be mined. But it is the market – and its regulators – that rule supreme.
In the short-term PwC risks surrendering its position as the world’s largest professional-services firm. After all, its consulting arm – which is growing at three times the rate of audit and advisory services – contributed more than a quarter of its $17.3bn global revenues last year.
Any surrender, however, would only be temporary. It is not a question of whether other big firms will follow suit, but when.
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