‘It’s a mess,’ said a very senior partner of one of the Big Four firms to me the other day. He was referring to the idea that EY, another Big Four firm, could pull off an audacious plan to split itself in two and float its advisory arm on the stock market. Partners would steadily, and happily, sink beneath the resultant piles of dollar bills scattered over them.
It was never likely to work. It has, after all, been tried before. I recall a lunch in a very sprauncy Mexican restaurant in Chicago with the chap in charge of Andersen Consulting, then the other arm of Arthur Andersen. Remember them? Brilliant firm that vanished down a reputational sinkhole after its Houston office shot itself in the foot over the Enron scandal. He was ebullient: advisory, not auditing and tax, would take over the world, and partners would stride high, wide and handsome in the consultancy world.
In fact, in Andersen’s case, after many years of bitter strife, it did, as the Accenture successor consultancy firm. But that success depended on the calamitous and unforeseen demise of the original Arthur Andersen firm. Disaster cleared the way.
The idea that an ego-driven multitude of partners could agree has ended in a quagmire
Plodding but vital
The concept of the exciting part of a global accounting partnership ridding itself of the plodding but reputationally vital arm of the firm has always been the catalyst for disastrous ambition. With EY, the cat-herding idea that a global multitude of individual ego-driven partners, some 13,000 of them, each claiming their share, could ever come to a consensus, and a vote, ended in a management quagmire.
The vaunting ambition of the advisory firms still works against them. The EY split plan, currently on hold, is called Project Everest. What the leaders of Project Everest have probably failed to grasp is that climbers ascending that mountain these days invariably pay a fortune to do so and, there being so many of them, are guided in a plodding queue to the peak.
The man hours and billions expended on the project has become a distraction
The man hours and billions of dollars expended on Project Everest by EY has become a fractious bind and distraction. EY pulls in some US$45bn of fees worldwide, has 365,000 employees and 13,000 partners. If the firm is to split, which teams go where? How should the windfalls, which are diminishing as stock market valuations fall, be allocated? The retired partners now want a share too. What are auditors worth? Which way does tax expertise go? And so on.
Culture clash
It is not just the day-to-day nonsense that is using up hours of Teams or Zoom activity. It is the cultural differences. The US accounting profession is a very different beast with very different roots in its business world to that of the UK, or continental Europe, let alone, for example, China.
Suddenly the partnerships all profess to be close-knit voting alliances. Yet if they are ever threatened by massive lawsuits they all maintain they are separate entities within the loosest of frameworks.
We are back to the bitterness of the Andersen Consulting and Arthur Andersen tensions
We are back to the bitterness of the Andersen Consulting and Arthur Andersen tensions. All the partners are astonishingly well remunerated on any business scale. Yet one bunch feel themselves superior and worth shedloads more than the others. Concepts like partner votes (in the UK, the firm needs a 75% majority) become huge stumbling blocks rather than democratic affirmations. If you are not trying to herd cats, you are opening cans of worms. As the man said: ‘It’s a mess.’
