By Tony Cripps

PricewaterhouseCoopers LLC looks set to seek a public flotation for its $4bn management and IT consulting business. While no definite plan has been made, New York-based PwC is known to be undertaking an internal review that is due to conclude in early 2000. Maintaining the current company structure in which the consultancy lacks clear autonomy from PwC’s traditional auditing business is thought not to be an option.

PwC is following in the tracks of two of its fellow Big Five accountancies. Both KPMG and Andersen Worldwide have already embarked on similar break-ups as a way of increasing their growth potential in the face of renewed competition, both established service providers such as IBM Global Services and EDS, and ‘new media’ consultancies such as the US’s Razorfish and Germany’s Pixelpark.

Spinning-off the IT consultancy business is also seen as a necessary action to free these fast growing operations from the internal drain on resources from their much slower growing auditing businesses. PwC, has seen growth of 41.5% in its consulting division as opposed to a relatively slow 10% in its auditing business in the year to June 30, 1998. IT consulting and systems integration currently make up around 55% of the total revenue of PwC’s consulting business.

However, PwC could yet face similar difficulties to those experienced by its rivals. KPMG’s first attempt to split off its consulting interests was blocked by the US Securities and Exchange Commission in January. However, it has since accepted a $1bn equity investment from San Jose-based network hardware giant Cisco Systems Inc for its consulting division’s e-commerce business that has again raised the possibility that its will seek a public offering (CI No 3,721).

Meanwhile, Andersen Consulting’s battle to win independence from Arthur Andersen (the constituent parts of Andersen Worldwide), which is currently at the hearing stage, looks likely to result in a final, albeit expensive, separation (CI No 3,713). As yet neither Ernst & Young nor Deloitte & Touche has announced similar plans.