PricewaterhouseCoopers nabs tiny start-up

But in the dot com economy, John Carey's start-up fit PricewaterhouseCoopers' bill just fine. With fewer than 10 employees, Carey's Dallas-based Studio Interactive was scooped up yesterday by the huge consulting company for an undisclosed sum.

The five-year-old firm, which designs Web sites, interactive presentations and kiosks, will now serve as an independent division of PricewaterhouseCoopers Consulting, completing work for the company's e-business customers. Plans to expand Studio Interactive are underway and a spin-off could come down the road, though it's not in the immediate plan, said Carey, who will be managing director of the division.

The deal comes at a time when New York-based PriceWaterhouseCoopers, along with its rivals Deloitte & Touche, KPMG, Andersen Consulting and Ernst & Young, are moving quickly to build their e-business practices. Just last month, PricewaterhouseCoopers said it would cut 1,000 administrative and internal support jobs as it further shifts its focus to e-commerce consulting. The firm last month also bought 12 percent of Web designer Methodfive, a move that makes sense considering that PricewaterhouseCoopers executives said in a recent interview that they expect e-commerce projects to account for 50 percent of the firm's consulting work by next year, compared with about 30 percent now.

The acquisition of Carey's company falls in line with Pricewaterhouse's plan to meet those goals, a representative said.

Despite the deal, Carey, a 41-year-old Cleveland, Ohio native, former rock guitar player and recording engineer, plans to keep Studio Interactive in Dallas' media gulch. He said he has no fear that the acquisition will change the small firm's casual, innovative culture that has sparked creativity on projects such as building interactive kiosks for cosmetic giant Mary Kay's memorabilia museum in Dallas.

"I think there are prejudices people bring [about the] Big Five--that they're stodgy men in gray suits," said Carey, who is married to a PricewaterhouseCoopers partner. "That's not been my experience. " Carey said he expects to market Studio Interactive's skills to focus mainly on planning Web sites and providing Web design, video and animation.

Prior to today's deal, the company had done laptop presentations for PricewaterhouseCoopers' consulting group last year--along with other a la carte projects for American Airlines and a Web site design project for Manhattan Construction. But many of their projects were limited by the company's limited resources--namely its few employees, Carey said.

"When you're real small and people are asking you for more than you can do it's a challenge," he said.

In doing work for PricewaterhouseCoopers, Carey mingled with some of the company's e-business executives--who eventually pitched the idea that a smaller company like his could grow alongside their e-business practice and prove a better fit than an established 300-person design firm, he said.

"[The team] realized they needed to reach out and pull in some new ideas, particularly in design and media production," Carey said. "This is not an arena they have played in. They liked our culture and they saw us as a real good formula in an incubator."

So the two parties called in the lawyers to draft the cash deal.

Carey said he expects the lion's share of the division's future business to come from providing services to PricewaterhouseCoopers' clients. The company plans to also continue doing independent work, as well as Web design for PricewaterhouseCoopers.

"We could conceivably have lots of offices within our division," within a year or two, Carey said.