September 20, 2019

Let’s Discuss: Big 4 Merger Rumors

We have the luxury (and giddy pleasure) of receiving more crazy ass emails than the average Tom, Dick or Harriet (see: PwC Houston Partner). Some of the stories turn out to be true, some turn out to be rumors. That’s just the way things go.

One reoccurring rumor that continually keeps us guessing though is that of a mega-merger among a Big 4. Frankly, we take a agnostic approach to these rumors (that’s probably shocking for some of you) but they never fail to pique our curiosity. You can drop us a line with your wild-ass theory about tri-firm merger between KPMG, Moss Adams and Baker Tilly to form MGMT but we can probably debunk it with a couple of emails and phone calls. Plus, the firms will deny ’til they die on any of these rumors anyway.

EisnerAmper is a perfect example.


They played coy with rumors around their merger for about a week and didn’t roll out the BIG NEWS until Monday when they could issue their boilerplate press release on cue (the video was a nice touch, however).

Lots of accounting firms are looking to grow through combinations or purchases in this impotent economy (WeiserMazars, Marcum & UHY, hosts of regional combos) but are the Big 4? Our intuition says no but the rumor mill provides us with whispers of talks occurring between the largest firms.

It’s not completely unheard of for the largest firms, as is evidenced by McGladrey’s purchase of Caturno & Co. that C.E. Andrews was so excited about in his interview with the Minneapolis Star-Tribune’s. Also, Barry Salzberg told the Journal that Deloitte is actively looking (granted, it’s for the consulting practice) but these are small potatoes.

No, the stuff we hear about has a Big 4 firm going with a second tier firm to either leapfrog other Big 4 firms or to inch closer to them. The difference between PwC (#1 in global revenues) and KPMG (#4) is around $6 billion. Depending on how aggressive a firm wanted to be in its merging efforts, the gap could be close quickly or a new #1 could be crowned.

But forget about revenues and the auspiciousness of the being the biggest firm for a second. Can a Big 4 firm realistically merge in a second tier or top 10 firm successfully? Never mind the logistics of office location, files, people etc. What about culture? What about service methodologies? The mere thought of matching up those pieces is a mind job for the people that actually have to deal with them. The bigwigs at the top might play off the problems that such a transaction would create for those in the trenches. Make adjustments would take years.

But it’s been done! Coopers & Lybrand and Pricewaterhouse in ’98 being the most recent. KPMG and E&Y tried it in ’97 and failed so it’s unlikely that the idea of another huge merger doesn’t cross people’s minds every once in awhile.

So let’s talk this out. Are these rumors completely unfounded or are is it understood that there are talks ongoing? If they are rumors, where the hell do they come from and what’s the motivation to spread said rumor? People in the know are encouraged to bestow wisdom in the comments and get in touch with us. And if you’re a vet from a merger of any size, share your thoughts on the experience and how your firm handled it.

We have the luxury (and giddy pleasure) of receiving more crazy ass emails than the average Tom, Dick or Harriet (see: PwC Houston Partner). Some of the stories turn out to be true, some turn out to be rumors. That’s just the way things go.

One reoccurring rumor that continually keeps us guessing though is that of a mega-merger among a Big 4 or second tier firm. Frankly, we take a agnostic approach to these rumors (that’s probably shocking for some of you) but they never fail to pique our curiosity. You can drop us a line with your wild-ass theory about tri-firm merger between KPMG, Moss Adams and Baker Tilly to form MGMT but we can probably debunk it with a couple of emails and phone calls. Plus, the firms will deny ’til they die on any of these rumors anyway.

EisnerAmper is a perfect example.


They played coy with rumors around their merger for about a week and didn’t roll out the BIG NEWS until Monday when they could issue their boilerplate press release on cue (the video was a nice touch, however).

Lots of accounting firms are looking to grow through combinations or purchases in this impotent economy (WeiserMazars, Marcum & UHY, hosts of regional combos) but are the Big 4? Our intuition says no but the rumor mill provides us with whispers of talks occurring between the largest firms.

It’s not completely unheard of for the largest firms, as is evidenced by McGladrey’s purchase of Caturno & Co. that C.E. Andrews was so excited about in his interview with the Minneapolis Star-Tribune’s. Also, Barry Salzberg told the Journal that Deloitte is actively looking (granted, it’s for the consulting practice) but these are small potatoes.

No, the stuff we hear about has a Big 4 firm going with a second tier firm to either leapfrog other Big 4 firms or to inch closer to them. The difference between PwC (#1 in global revenues) and KPMG (#4) is around $6 billion. Depending on how aggressive a firm wanted to be in its merging efforts, the gap could be close quickly or a new #1 could be crowned.

But forget about revenues and the auspiciousness of the being the biggest firm for a second. Can a Big 4 firm realistically merge in a second tier or top 10 firm successfully? Never mind the logistics of office location, files, people etc. What about culture? What about service methodologies? The mere thought of matching up those pieces is a mind job for the people that actually have to deal with them. The bigwigs at the top might play off the problems that such a transaction would create for those in the trenches. Make adjustments would take years.

But it’s been done! Coopers & Lybrand and Pricewaterhouse in ’98 being the most recent. KPMG and E&Y tried it in ’97 and failed so it’s unlikely that the idea of another huge merger doesn’t cross people’s minds every once in awhile.

So let’s talk this out. Are these rumors completely unfounded or are is it understood that there are talks ongoing? If they are rumors, where the hell do they come from and what’s the motivation to spread said rumor? People in the know are encouraged to bestow wisdom in the comments and get in touch with us. And if you’re a vet from a merger of any size, share your thoughts on the experience and how your firm handled it.

Have something to add to this story? Give us a shout by email, Twitter, or text/call the tipline at 202-505-8885. As always, all tips are anonymous.

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