Citing a tight credit market and an uncertain economic climate, Deloitte Touche Tohmatsu said Friday that discussions have ended to separate Deloitte Consulting through a buy-out by the consulting group's partners.
?We gave this our very best efforts, but concluded, with advice from our outside legal and financial advisors, that it is just not prudent to complete this transaction in this environment,? Deloitte Touche Tohmatsu CEO James Copeland said in a statement. ?We began this process at a time of more robust consulting, capital and credit markets--all of which have deteriorated in the past 14 months due to economic uncertainty exacerbated by the war in Iraq.?
Last February, Deloitte Touche Tohmatsu said it intended to separate Deloitte Consulting. The consulting group provides services including technology integration, information technology outsourcing and business process outsourcing.
The decision to keep the unit in-house makes Deloitte Touche Tohmatsu the only top accounting organization not to have split off its consulting wing. Pressure to divide consulting operations from auditing functions became intense in the wake of the Enron scandal, as critics focused on the way Arthur Andersen provided both types of services to the disgraced energy trader.
Even before the Enron scandal, there was momentum to separate consulting operations from accounting operations at top audit companies as a way to increase shareholder value. For example, BearingPoint was separated from KPMG in 2000 and went public in early 2001.
In a statement Friday, Deloitte Touche Tohmatsu said Deloitte Consulting partners will continue to provide a broad set of professional services, principally focused on nonaudit clients. The company also said member firms, including Deloitte Consulting, will continue to fully comply with the form and substance of the Sarbanes-Oxley Act of 2002 and the SEC's independence rules in the United States and with all regulatory and legislative requirements in other countries.
Ernst & Young's consulting arm was sold to Cap Gemini; and PricewaterhouseCoopers sold its consulting wing to IBM.
Consulting company Accenture was formed when a group of Arthur Andersen partners started a separate entity called Andersen Consulting in 1989. Andersen Consulting changed its name to Accenture in 2001. After 1989, Arthur Andersen formed its own consulting practice.
Deloitte Touche Tohmatsu is a professional services firm offering services such as auditing, tax advice and risk consulting. Its U.S. national practice is Deloitte & Touche.
Deloitte Consulting has 15,000 professionals in 33 countries. Its clients have included the state of Michigan, health care organization Kaiser Permanente and computing giant Hewlett-Packard.