PWC Gets With The ‘In’ Crowd -- Finally

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After sitting in Mommy and Daddy's basement for the last year-and-a half watching its friends go out and find success on their own, it looks like PWC Consulting is finally ready to take that big step toward independence.

On Thursday, auditing giant PricewaterhouseCoopers announced plans to separate its $6.7 billion PWC Consulting unit from its core auditing business, with the hopes of spinning the entity off as a public company later this year. In preparation for the move, PWC COO Thomas O'Neill will step in as new CEO of PWC Consulting, taking over for former CEO Scott Hartz. O'Neill is charged with positioning the entity for legal separation and, hopefully, Wall Street success.

In making the announcement, PWC company executives cited the Enron/Andersen fiasco as a driving factor in the decision to separate its auditing and consulting businesses. In one sense, that's probably true, as the energy trading giant's collapse and the role Andersen played in it has resurrected SEC concerns about auditor independence. So it's only natural that under renewed critical inspection, PWC execs decided the time is right to move forward on the split--something they've been looking to do for some time anyway.

Now I can't deny the fact that it's big news when a $22 billion firm like PWC, arguably the world's largest accountant, decides to chop off what amounts to one-third of its business. But in some ways, I can't help feeling like the announcement is anti-climactic as well.

Those who decree the PWC Consulting split as the end of Big Five consulting are forgetting one simple fact: Big Five consulting is already dead and buried, at least for the most part. The successful IPOs last year of Accenture (formerly known as Andersen Consulting, for those of you living under a rock) and KPMG Consulting, as well as the acquisition of Ernst and Young Technologies by European integrator Cap Gemini saw to that. Take those moves into account, and PWC Consulting's action seems likely, if not inevitable. Where's the big surprise?

It wasn't always this way for the $6.7 billion consultant. More than two years ago, in late 2000, it looked like PWC Consulting was destined to be a trendsetter, among the first of its peers to make the big break, with Hewlett-Packard interested in buying it for a reported $18 billion.

The deal, which was roundly criticized by analysts and industry watchers as a bad idea on both ends, ended unceremoniously after only two months of courtship, with HP citing poor market conditions, not to mention crummy quarterly earnings, as reason to bail out. (For the record, HP CEO Carly Fiorina at the time said she refused to subject her company to the "continuing distraction of pursuing this acquisition." Then less than a year later, amidst even tougher market conditions, HP announced its intention to merge with competitor Compaq. I don't know about you, but it seems to me that on the distraction level, the ongoing saga over 'HP-Compaq--Will It Or Won't It?' makes the PWC courtship seem like a gnat buzzing past your ear. But I digress.)

Since being dumped by HP, PWC Consulting has been relegated to waiting in the wings without a suitor, sitting back and watching its Big Five consulting peers make high-profile moves and enjoy success on their own terms. For those still counting, that leaves PWC and Deloitte Touche Tohmatsu as the only true remaining Big Five consultancies (Okay, Okay. I know what you're thinking. Andersen has its own consulting outfit, too. But that's a whole different issue for another day).

If PWC does indeed make its grand debut, do you think DTT will be far behind? You can count on it.

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