Price, Waterhouse, Coopers
An audit firm may split into three companies
The British newspaper Financial Times reported: the world's largest auditing and consulting firm PricewaterhouseCoopers (PwC) allegedly intends to split into three independent companies. The message is very scandalous: firstly, not even two years have passed since the no less high-profile merger of PriceWaterhouse and Coopers & Lybrand, and secondly, FT connects rumors about the fragmentation of PwC with alleged violations of American law by the company's employees.

The merger of PriceWaterhouse and Coopers & Lybrand was a notable event in 1998. Prior to this, two other members of the Big Six, Ernst & Young and KPMG, had hatched similar plans, but US antitrust authorities considered them a violation of the law.
But the deal between PriceWaterhouse and Coopers & Lybrand did not cause any complaints from the EU Commission, and since 1998 the two companies began to operate under the same sign. All the more intriguing was the FT report about the fragmentation of this giant with a staff of 150 thousand people who work in 150 countries. According to the newspaper, PwC will split into three firms, one of which will deal with auditing, another with consulting, and the third with “other services”. Considering that PwC has long separated its legal services into a separate business, renaming it Landwell, then, most likely, “other services” should be understood as information technology and e-commerce. Moreover, according to the FT, PwC intends to “strengthen ties between its advisory division and technology companies in response to the December announcement of cooperation between Microsoft and Sun Microsystems.”
Adding to the intrigue is the news of an ongoing US investigation by the Securities and Exchange Commission (SEC) into the fact that a number of PwC partners and employees own shares in firms where PwC conducted audits. This is a violation of US laws and, if confirmed, could cause serious damage to the company's reputation.
So far the FT has been unable to obtain any comment from PwC management. The Russian division of the company adheres to the same policy. However, in a conversation with a Kommersant correspondent, Leonid Boguslavsky, a partner in the Moscow office of PwC, noted that his company had already given explanations regarding the alleged abuses. Their essence is as follows: the SEC requirements are so stringent that they do not even allow relatives of audit firm employees to have shares in client companies, and this is purely physically impossible to track. As for the rumors about the splitting of the company, Leonid Boguslavsky noted: “If splitting options are being considered, it is not at all because the 1998 merger was unsuccessful, but with the aim of more efficiently serving clients.” The official position of PwC will be announced by the company's management before the end of February.
Meanwhile, even on the eve of the merger between PriceWaterhouse and Coopers & Lybrand, many analysts doubted the benefits of the costly merger of the two companies into a monolithic monster. Current trends show that temporary alliances are sufficient to increase market share. Moreover, modern business is increasingly characterized not by universalization, but by specialization and achieving excellence in narrower areas. Which is obviously what PwC is trying to achieve.
VLADIMIR Kommersant-GENDLIN

Newspaper "Kommersant" No. 27 dated 02/18/2000, p. 5