Genealogy of the Big 8 Consulting
Firms
11/01/2007
Genealogy of Consulting Firms
Phil Osborn, Principle
IT Management Consultants
Jack D. Becker, UNT
w/editorial assistance from
BCIS 4690 Class; Summer, 2008 & Summer, 2010
Version 4; July, 2010
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Preview
• Timeline
• Major Players in Accounting Industry
– Beginning of Consulting
– Big 8 Formed Companies
– Main Trends
• Infamous Moments
– Intermediate Mergers
– Big 4 Players
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Ernst and Young
Deloitte Touche Tohmastsu
KPMG
Price Waterhouse Coopers
– IT Consulting Players
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IBM (Price Waterhouse Coopers)
Cap Gemini (Ernst & Young)
Accenture (Arthur Anderson)
Bearing Point (KPMG)
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
Left out the sale/exit of Big 8
consulting businesses
Timeline
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“The Birth of Management
Consulting”
• A.T. Kearney
– Orginially Kearney & MicKinsey in 1922
– A. Thomas Kearney kept the name after
McKinsey left to be CEO of Marshall Fields
– McKinsey starts with there beginning after
A.T. Kearney, makes it appear as if they
were first.
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
The Big 8 [circa 1970]
1.
Arthur Anderson
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1913- Founded as by as Andersen, DeLany & Co
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1918- Name changed to Arthur Andersen & Co
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2001- Andersen consulting forced to change name to
Accenture
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2002-Convicted for shredding documents related to its
audit of Enron.
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2005- Conviction overturned by Supreme Court due to
flaws in the jury instructions
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2010- Andersen has not returned as a viable business
even on a limited scale
2.
Coopers & Lybrand
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1957 merger of Cooper Brothers & Co; Lybrand, Ross
Bros & Montgomery and a Canadian firm McDonald,
Currie and Co
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1998 merged in with Price Waterhouse to form
PricewaterhouseCoopers.
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The Big 8
3.
Deloitte Haskins & Sells (Haskins & Sells)
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1845- Deloitte founded by William Deloitte
1952-Agreement reached to merge the businesses of
Deloitte, Plender, Griffiths & Company and Haskins &
Sells in the U.S., under the name Deloitte Haskins & Sells.
1992- Coopers & Lybrand Deloitte became Coopers &
Lybrand
Deloitte Haskins & Sells was a predecessor firm of
Coopers and Lybrand UK and Deloitte Touche Tohmatsu
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4.
Ernst & Whinney (Ernst & Ernst)
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1903- A.C. Ernst in 1903, joined with his brother,
Theodore, to start Ernst & Ernst. Accounting firm
Whinney, Smith & Whinney had been closely allied with
Ernst & Ernst since the 1940s, and in 1979 Whinney
Murray, Ernst & Ernst, and Turquands Barton Mayhew
joined together as Ernst & Whinney, creating the fourth
largest accountancy firm in the world.
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
The Big 8
5. Peat, Marwick, Mitchell
– 1867- Robert Fletcher establishes accountancy firm which
later becomes Peat Marwick Mitchell
– 1925- Peat and Marwick Mitchell & Co join to create a
transatlantic firm
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The Big 8
6. Touche Ross (1960-1985)
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1960-Touche, Niven, Bailey & Smart merges with George
Touche & Co. (Britain) and Ross, Touche & Co. (Canada) to
form Touche, Ross, Bailey & Smart
1969- Adoption of the name Touche Ross & Co., mergers
completed with more than 50 other firms in the U.S. and
formal associations created with national firms in 55
countries.
1975- Agreement reached with Tohmatsu Awoki & Co into
Touche Ross
1982- David Moxley and W. Grant Gregory became the
leaders at Touche Ross
1984- J. Michael Cook became managing partner of Deloitte,
Haskins & Sells.
1985- Edward A. Kangas, a management consultant, was
appointed managing partner of Touche Ross
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Genealogy of the Big 8 Consulting
Firms
6.
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Touche Ross (Continued; 1989-1993)
– 1989- Deloitte Haskins & Sells in the USA merged with
Touche Ross in the USA to form Deloitte & Touche. The
merged firm was led jointly by J. Michael Cook and
Edward A. Kangas. Led by the UK partnership, a smaller
number of Deloitte Haskins & Sells member firms rejected
the merger with Touche Ross and shortly thereafter
merged with Coopers & Lybrand to form Coopers &
Lybrand Deloitte (later to merge with Price Waterhouse to
become PwC). Some member firms of Touche Ross also
rejected the merger with Deloitte Haskins & Sells and
merged with other firms
– 1993- the international firm was renamed Deloitte Touche
Tohmatsu to reflect the contribution from the Japanese
firm as well as agreements to use both of the names
Deloitte and Touche
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Touche Ross (Continued; 1995-2010)
– 1995- the partners of Deloitte & Touche decided to create
Deloitte & Touche Consulting Group (now known as
Deloitte Consulting)
– 2002- Arthur Andersen's UK practice, the firm's largest
practice outside the U.S., agreed to merge with Deloitte's
UK practice. Andersen's practices in Spain, the
Netherlands, Portugal, Belgium, Mexico, Brazil and Canada
also agreed to merge with Deloitte. The spin off of Deloitte
France's consulting division led to the creation of Ineum
Consulting
– 2009- Deloitte purchased the North American Public
Service practice of BearingPoint (formerly KPMG
Consulting) after it filed for bankruptcy protection.
– 2010- The firm took over the UK property consultants
Drivers Jonas
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Genealogy of the Big 8 Consulting
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The Big 8
7.
Price Waterhouse
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1849 - Samuel Lowe Price creates firm in U.K.
1865 - Samuel Price partners with William Holyland and
Edwin Waterhouse.
1997 - Price Waterhouse and Coopers & Lybrand
announce plans for a global merger and integration.
1998 - Price Waterhouse and Coopers & Lybrand
complete a global merger and the name of the new firm is
PricewaterhouseCoopers
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8.
Arthur Young
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1906 Arthur Young & Company was set up in Chicago
1989 Ernst & Whinney the fourth largest accountancy firm
in the world merged with the then number five, Arthur
Young, to create Ernst & Young
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Infamous Consulting Events
• Equity Funding Scandal (1973) precipitated
computer audit practices
• Saving and Loan Crisis (Started in 1980 fell 1988)
• Y2K January 1, 2000
• The Enron Scandal of 2002 brought to light problems
in accounting auditing and was the precursor of the
fall of Arthur Anderson the companies primary
auditing firm (Filed Bankruptcy in November 2002)
• MCI Scandal of 2002 found $3.8 billion fraud;
• By 2003 it was estimated that MCI’s assets were
inflated by $11 billion
• Sarbanes Oxley Effective July 30, 2002
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Genealogy of the Big 8 Consulting
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The 3 Intermediate Mergers
Three Mergers
• KPMG Peat Marwick
• Ernst & Young
• Deloitte & Touche
The three holdouts (only
room for two)
• Anderson Worldwide
• Coopers & Lybrand
• Price Waterhouse
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Big 4
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Ernst and Young
Deloitte Touche Tohmastsu
KPMG
Price Waterhouse Coopers
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
Ernst & Young
Note: Slogan from E&W
• 1989- Two biggest accounting firms merge
– Arthur & Young & Co and Ernst & Whinney
• 1996- Consulting sector splits from management Service
Activities
• 2001- Major take over of tax consultants
• 2003- Audit firm “Swaelen & Co” joins Ernst & Young
• 2004- Ernst & Young sells its Actuarial Division to Lane,
Clark & Peacock.
• Ernst & Young sells its Association Management
Department to The Kellen Company, creating Kellen
Europe.
• Ernst & Young Belgium sells its interim management
department ‘Executive Temporary Management’ (ETM) to
the management team and Michel Van Hemele.
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Deloitte Touche Tohmastsu
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1952-Agreement reached to merge the businesses of Deloitte, Plender, Griffiths & Company and Haskins
& Sells in the U.S., under the name Deloitte Haskins & Sells.
1952- Nobuzo Tohmatsu qualifies as a certified public accountant in Japan and becomes a partner in a
foreign
affiliated accounting firm.
1972- Touche Ross Chairman Robert Trueblood chairs a committee that leads to the establishment of the
Financial Accounting Standards Board — the FASB.
1990- Merger that creates Deloitte & Touche.
1993- International firm is named Deloitte Touche Tohmatsu.
1996- Deloitte & Touche Eastern Europe divided into two organizations — Deloitte & Touche Central
Europe and Deloitte & Touche CIS
1997- Deloitte & Touche Central America is established
2000- Deloitte Touche Tohmatsu became a founding member of the United Nations Global Compact,
which seeks to promote responsible global citizenship by advancing universal values in business
operations around the world
2002- Eloitte Touche Tohmatsu’s global revenues were US$12.5 billion
2003- A decision to not separate Deloitte Consulting allows Deloitte Touche Tohmatsu to maintain its
wide and deep range of multidisciplinary capabilities
2005- On September 1, Deloitte Touche Tohmatsu China merges with Pan-China Schinda, the second
merger in the Mainland that year following a deal with Beijing Pan-China CPA Ltd
2006- Deloitte Touche Tohmatsu announces aggregate revenues of more than US$20 billion in the fiscal
year ending 31 May 2006, an increase of 10 percent over 2005. It is the fourth consecutive year of doubledigit revenue growth and the 13th consecutive year of continued growth
2007- On June 1, James H. Quigley is named Chief Executive Officer of Deloitte Touche Tohmatsu,
succeeding William G. Parrett. In addition, John P. Connolly is named the new Chairman of the Board of
DTT, succeeding Piet Hoogendoorn.
2008- Deloitte Touche Tohmatsu announces aggregate revenues of US$27.4 billion in the fiscal year
ending 31 May 2008, an increase of 18.6 percent over 2007. It is the sixth consecutive year of double-digit
revenue growth. In addition, Deloitte grew by approximately 15,000 people in the past year, with
considerable growth in emerging markets.
2010- Deloitte purchased the North American Public
Service practice of BearingPoint (formerly KPMG
Consulting) after it filed for bankruptcy
protection.[9] The firm also took over the UK property consultants
Drivers Jonas in January 2010.[10]
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
KPMG
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1876- Robert and Sydney Stokes establish Stokes Firm
1987- Firm becomes part of firm accountancy mega-merger
1999- KPMG Peat Marwick shortens its name to KPMG LLP, a branch
of KPMG International
2000- Consulting wing becomes an independent firm
2002- Merger lead to enlargement of firm
2008- Won “Best Big Company to Work For” in he prestigious Sunday
Times Best Companies award
2009- KPMG was ranked #2 on the list for “Best Places to Intern”
2010 KPMG, an Irish partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative ("KPMG International"), a Swiss entity
2010- KPMG made DiversityInc's Top 50 Companies for Diversity for
the third consecutive year in 2010, moving up 6 spots to No. 15
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PriceWaterhouseCoopers
• 1849- Founded in London
• 1890- New York office opened
• 1990- coopers & Lybrand merged with
Deloitte Haskins & Sells in the United
Kingdom
• 1998- Formed from merger between Price
Waterhouse and Coopers & Lybrand
• 2002- PricewaterhouseCoopers' partners
approve sale of PWC Consulting to IBM
• 2004- PriceWaterhouseCoopers
implements the Connected Thinking
methodology
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
IT Consulting Players
• IBM (Price Waterhouse Coopers)
– No merger between Arthur Anderson and Price
Waterhouse due to cultural differences
• Cap Gemini (Ernst & Young)
– Grew out of services offering
• Accenture (Arthur Anderson)
– Faced legal challenges after Enron
• Bearing Point (KPMG)
– No deal when it tried to joint venture with CISCO
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Conclusion
• Consulting opened new industry
• Industry movements lead to mergers
• IT needs own consulting area
– Driven by regulatory acts
– Big IT Consulting is captive to IT product
vendors and outsourcers, no longer
independent
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
Bibliography
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"About Ernst & Young - History - Timeline - Belgium - Ernst & Young Belgium." Advisory, Assurance, Tax, Transaction Services - Ernst &
Young - Global. Web. 08 July 2010. http://www.ey.com/BE/en/Aboutus/Our-history/History---Timeline---Belgium
"Campus: KPMG Awards." KPMG Campus. Web. 08 July 2010.
http://www.kpmgcampus.com/whoweare/awards.shtml
"History." Deloitte | Audit, Consulting, Financial Advisory, Risk
Management and Tax Services. Web. 08 July 2010.
<http://www.deloitte.com/rss/en_GX/global/about/overview/history/ind
ex.htm>.
"PricewaterhouseCoopers History and Milestones."
PricewaterhouseCoopers US: Audit and Assurance, Tax and Advisory
Services with an Industry Focus. Web. 08 July 2010.
http://www.pwc.com/us/en/about-us/pwc-corporate-history.jhtml
PricewaterhouseCoopers US: Audit and Assurance, Tax and Advisory
Services with an Industry Focus. Web. 08 July 2010.
http://pricewaterhouse.com
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Footnotes Follow
• Peachel Dawkins
– July 9, 2010
– Extra Credit Assignment
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Genealogy of the Big 8 Consulting
Firms
11/01/2007
50 Bonus Pts
• Due: 7/8/2010: May be sent by Email to me.
• Requirements:
• 1. Update the Consulting History through
July 2010.
• A. Update These Slides; Add as many new
slides as needed to complete this presentation.
• B. Include a 1000 word narrative
summarizing the significant changes
• C. Include an annotated Bibliography to
substantiate the events noted.
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