14
Friday, October 13, 1989 / University Daily Kansan
Mergers compact Big Eight to six
By Steve Buckner Kansan staff writer
The merger trend that has redrawn the U.S. corporate landscape during the 1980s is closing out the decade by which the nation's largest accounting firms.
The eight largest U.S. accounting firms, commonly known as the Big Eight, became the Big Seven this summer when Ernst & Whinney combined with Arthur Young to become Ernst & You. And now they will become the Big Six when the merger of Deloitte, Haskins & Sells with Touche Ross is completed. The new company will be known as Deloitte & Touche.
And the Big Six almost became the Big Five as Arthur Andersen and Price Waterhouse came close to
merging, but failed to reach an agreement in September.
Accounting industry analyst James Emerson, who publishes Emerson's Professional Services Review in Bellevue, Wash., said there were several reasons behind the firm's mergers.
"Company clients are asking their company to be more specialized," he said. "Globalization is another reason. Business used to be enacted in the United States, and now coming from Europe and South America to the United States."
Emerson said another reason for mergers was that the clients were demanding strategic advice from the firms and that larger firms were better equipped to meet their client's needs.
means having to make a big investment." he said.
"To deliver what the clients want
The mergers have rearranged the standings of the accounting firms, Emerson said. Ernst & Young passed Arthur Andersen as the largest U.S. firm, although an Andersen-Price Waterhouse merger would have put them at No. 1, he said.
"They've gone through a great deal of trauma." Emerson said of Arthur Andersen and Price Waterhouse.
The merger was scuttled because both companies could not work out details before their annual partners' meetings this month, he said. Price Waterhouse emerged the hardest hit from the failure to merge, Emerson said.
"Price Waterhouse is now the smallest firm," he said. "It's a
An employee of Price Waterhouse in Kansas City, Mo., said that the company would not comment about the company's relationship from the company's headquarters.
trauma for them to go from a chance to be number one to dead last."
"It did not have any particular affect on our plans in Kansas City," he said. "We have not changed our scenario."
Ron Wade, office managing partner for Arthur Andersen in Kansas City, Mo., said that his office would be affected by the lack of a merger.
Wade said that his office was involved in some international business and that he thought it would continue.
Emerson said that he expected the Deloitte-Touche merger to be completed by the end of the year.
88 Revenues in $Billions
United States Worldwide
1. Ernst & Young* $2.0 KPMG (Marwick) $4.2
2. Arthur Andersen 1.7 Ernst & Young* 3.9
3. KPMG (Marwick) 1.64 Deloitte, Ross & Thomatsu** 3.8
4. Deloitte & Touche** 1.62 Arthur Andersen 2.8
5. Coopers & Lybrand 1.2 Coopers & Lybrand 2.5
6. Price Waterhouse 1.0 Price Waterhouse 2.2
1988 Revenues in $Billions
BIG EIGHT ACCOUNTING FIRMS BECOME BIG SIX
*Combined 1988 Revenues of Ernst & Whitney and Arthur Young.
*Combined 1988 Revenues of Ernst & Whitney and Arthur Young
**Combined 1988 Revenues of Deloitte, Haskins & Sells and Touche Ross.
Recent mergers have shrunk the number of Big Eight accounting firms to seven, and that number soon will become six.
But some KU faculty members maintain that the number of graduates who find jobs with the firms will be affected greatly by the changes.
Source: James Emerson, Publisher of Emerson's Professional Publishers Review.
Fred Madaus, director of the placement center in the School of Business, said that interviewing team
Kevin Masten/KANSAN
"I're probably too early to tell what the effects are going to be," he said. "For the most part, what we're getting from people is that it will not affect entry level positions. Mergers of large companies show their greatest effect at the top side."
"The they have decided, but are cautious as how to combine resources," he said. "They will do joint recruiting with clients (before merging)."
Emerson predicted that the 1990s would have merging activity among the seven second-tier firms. He said that he doubted the Big Six would continue merging because of possible anti-trust lawsuits.
By Beth Behrens Kansan staff writer
Corporate mergers won't affect graduate placement, officials say
told him they don't plan to change the number of students hired.
Madaus said that all of the Big Eight firms already had visited KU to interview prospective employees. Recruiting teams said that the amount of work at the entry level had not changed, he said, so the number
Bruce Bublitz, director of the accounting division in the school, said that he thought the mergers would not affect KU graduates much, but that his top priority was to make sure accounting students got exposure to all opportunities available to them.
of placements would not change drastically.
"Usually when there is change, one has fears," he said. "But the mergers may have very little effect on placement. Usually in these mergers, it's with one firm that's strong
on KU and one that is less strong. So in that respect, it might be good."
James Emerson, publisher of Emerson's Professional Service Review, Bellevue, Wash., said that KU would see significant changes in the kind of presence that mega-firms would have on campus.
He said the many mergers taking place would, over time, create a need for more accountants with strength
He said that once the Deloitte & Touche merger was completed, the firm would have a presence on campus unmatched in its history.
in computer sciences and training in the international market.
If the mergers would adversely effect the number of graduates hired, Madaus said, changes for the students interviewing would be reflected in tougher competition for position. But, he said, this would not necessarily be a change for the worse.
"I think it's going to give smaller accounting firms a shot at some of the people who may have otherwise gone Big Eight," he said. "If students get nervous, they may start interviewing with a broader brush.
"The best strategy students can have is to search for jobs in the regional firms and in industry."
Regional firms are firms with offices operating in more than one city. Madaus said there were also thousands of travelers and wherever money was handled.
Bub扎让 said that the accounting club held a Regional Firm Night last spring to give the firms a chance to understand what they had to offer students.
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