Ernst & Young votes on Andersen merger

Professional services firm Ernst & Young Australia is voting this afternoon on a proposed merger with Andersen Australia, indicating any resulting integration is set for May 27.

The $700 million merger announced in late March is believed to be edging towards management approval at Ernst & Young Australia.

In a final step towards the deal's closure, the firm's 300 Australian partners will vote by post today on whether the proposed merger between Ernst & Young and Andersen Australia will proceed, according to an Ernst & Young spokesperson.

If the vote is approved, the combined company would be Australia's second largest professional services organisation next to PricewaterhouseCoopers.

Andersen Australia follows two other national Andersen operations -- New Zealand and Russia -- to join Ernst & Young.

The question of how the firm will integrate Andersen Australia's information and IT systems is yet to be discussed. Ernst & Young remained silent on the topic, indicating both firms are working towards a seamless integration.

The companies said more specifics on their integration plans would be available closer to 'integration day'.

In Australia, the merged entity will have around 5000 employees - 3000 from Ernst & Young and 2000 from Andersen.

Both firms, however, refused to discuss any impact the deal will have on staff from both organisations, nor would they comment on how the combined organisation will address issues like duplication of IT consulting business in terms of business process and expertise.

As the professional services market gets more competitive, the upshot will be aggressive pricing, industry analysts predict.

Todd Ellerman, president of US-based Systix Consulting, said companies will get much better service from smaller services providers that used to serve only the middle market.

Ellerman pulled no punches about what he thinks were many instances of poor service from the Big Five's consulting divisions. "It's an opportunity for mid-market companies like us to service these larger accounts."

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