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News
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PwC Consulting to go public
graphic January 31, 2002: 7:40 a.m. ET

PriceWaterhouseCoopers becomes latest Big 5 firm to spin off consulting unit
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  • Special Report: Enron's Collapse
  • Delta considers replacing Andersen - Jan. 29, 2002
  • Andersen CEO: Enron cost firm business - Jan. 28, 2002
  • IPO Focus: Big Fivec-- Dec. 1, 2000
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  • PricewaterhouseCoopers
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    NEW YORK (CNN/Money) - PriceWaterhouseCoopers confirmed Thursday it will spin off its consulting arm this year, following the route set by rival KPMG.

    New York-based PwC, the largest of the Big Five accounting firms, plans to file the registration statement for the IPO sometime this spring, company spokesman Dave Nestor told CNNfn.

    PwC Consulting will be the third consulting unit shed from an accounting firm. Accenture (ACN: Research, Estimates), which split from Arthur Andersen in August 2000, went public last July while KPMG LLP spun off KPMG Consulting (KCIN: Research, Estimates) last February. Other members of the Big 5 include Ernst & Young and Deloitte & Touche.

    PwC has long been weighing options for the management consulting unit. In December 2000, the accounting firm had considered selling the business or finding a strategic investor. Hewlett-Packard ended talks with PwC in November 2000 that would have had the computer maker paying $17 billion to $18 billion for the accounting firm's consulting unit.

    PwC also hopes to avoid apparent conflicts of interest by spinning off the consulting firm. The accounting industry has come under fire recently because firms earn more from consulting than from accounting services. However, Big 5 firms sometimes perform dual duties, serving as an auditor while also providing the same client consulting services.

    For example, defense contractor Raytheon paid PriceWaterhouseCoopers $3 million for auditing services and $48 million for non-auditing services in 2000, according to the Wall Street Journal.

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    "We recognize, like so many people, that the Enron failure has created a huge crisis in confidence," said PriceWaterhouseCoopers' chief executive, Samuel DiPiazza, according to the paper. "This is a response to the crisis around the Enron failure and the confidence crisis in our own profession."

    The consulting unit being split off reported $6.67 billion in revenue in 2001 and employs 35,000 people. The arm represented a third of PriceWaterhouseCoopers' revenue and a fifth of its work force, the Journal reported.

    In addition, PriceWaterhousCoopers said it will endorse any proposal to ban firms from providing accounting services and technology services to the same client, the paper reported.  graphic

      RELATED STORIES

    Special Report: Enron's Collapse

    Delta considers replacing Andersen - Jan. 29, 2002

    Andersen CEO: Enron cost firm business - Jan. 28, 2002

    IPO Focus: Big Fivec-- Dec. 1, 2000

      RELATED LINKS

    PricewaterhouseCoopers





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