PricewaterhouseCoopers has discredited published reports that it has definitively decided to go public.
In a story in the March 15 issue of Consulting Alert, a managing partner in PwC’s global management consulting practice was quoted saying that his firm was “actively working” toward an initial public offering of its $6.6 billion consulting unit. But a spokeswoman at PwC denied the statement, insisting that the publication had taken the partner’s statement out of context.
Rather, the PwC spokeswoman stresses that the company is considering one of three options for its management consulting practice: An IPO, an outright sale, or a “consortium of investors.”
The company is “looking at the IPO option as vigorously as the other [options]” but has by no means made a final decision yet, she asserts.
What’s more, she insists that a decision won’t even be made until the new fiscal year begins on July 1. “In the new fiscal year, we expect to make more progress than ever,” the spokeswoman contends. “We have kept it a moving target because of market conditions, the general slowdown in the consulting industry, and other factors that are out of our control.”
She declines to provide more specific information about the possible options, or where the company stands in its decision-making process.
Given that KPMG Consulting recently completed a $2 billion IPO–the second largest ever on Nasdaq as measured by market value–PwC has probably been licking its chops at the prospects of following suit. But unfortunately for PwC, in the IPO world timing is of the essence. And market conditions today are hardly what they were only a month ago. So, if the company ends up deciding that an IPO is in its best interest, there may be no action until the sun comes out again.
But an outright buyout is not out of the question either. It is possible that a buyer may come out of the woodwork, scooping up the consulting firm at a relatively favorable price in the midst of a depressed market.
However, the spokesperson concedes that in this environment, “There is a limited universe of companies that could pull off an acquisition.”
The third option—selling an equity stake to a consortium of investors— therefore appears to be the choice of last resort. She would not specify the likely size of the stake the company is willing to sell or the nature of the potential investors. “The field is wide open at this point,” she adds.
In any case, the PwC spokeswoman concedes that the SEC auditor independence rules are playing a key role in deciding to break off the consulting business.
“Since we’re still tied to the audit function we cannot pursue strategic alliances, partnerships, or equity relationships with lots of movers and shakers that happen to be audit clients too,” she notes. “By separating our businesses, we are opening up a whole world of relationships that can help us be more competitive.”
But for now, news of an IPO has proven to be nothing but a false alarm. Stay tuned for more.