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HP Inc. Message Board

  • billyliar66 billyliar66 Jan 31, 2002 5:53 PM Flag

    PWC to Spin Off Consulting Arm

    Smart move. Way ahead of the SEC/Congressional mandate. They'll get their organizational headaches over while the economy is still sleeping.

    Their sales are down, currently.

    Bet you could buy them for a lot less than $18B.

    Too bad HWP is distracted with nonsensical CPQ acquisition.

    PWC actually know what they're doing and culture of excellence would mesh with HWP.

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    • My response was based my interpretation of the Bloomberg version of the report. I found a copy at:
      http://afr.com/marketwrap/ipos/2002/02/04/FFXCH8TP7XC.html

      The pertnent clause was:
      "The IPO could raise between $US5 billion ($9.8 billion) and $US10 billion, people familiar with the company said."

      The statement in this press release implied the amount of cash raised would be between 5 - 10B. Which is different from the value of the company.

      Since it is my belief that a majority of the consulting partners would want to convert their partnership to stock, then half or less of the issued shares would be released for IPO.

    • If you read the quote, the value of the business was given as 5 to 10B.

      Why would you pay 18B for something that's worth 10B. I'm done, argue with the guy that wrote it.

    • >Bet you could buy them for a lot less than $18B

      Probably not. Partners have to buy into the partnership. So the amount paid for the consulting arm of PWC has to be enough to pay of the consulting partners for the PV of their full share of the partnership (since you want them to stay with the consulting arm, you really do), and compensate the accounting partners for the loss value in their partnership share because of the divestiture of the consulting practice.

      • 1 Reply to perfnerd
      • mike_rubsam said he hear in the $7-8B range.

        The partnership equity usually points at hard assets, not goodwill and crap like that. I doubt that they would want to leave 18B laying around in quick assets. after all its desks, portables and servers. How many billion can you tie up in furniture, portables and servers?

        I heard the big problem with PWC was the partners and upper management made way, way, more than the equivilent person at HP.

        This will continue to be a problem. You won't attract and keep or even grow 'closers' while paying them 2/3 of what they could get elsewhere.

    • In case you did not know it, Arthur Anderson spun off its consulting division, AA Consulting, which then changed its name to Accenture. Arthur Anderson then started another consulting division.

      Maybe PWC will structure their spinoff differently than AA, but until the audit partners have no stake in the fees generated directly or indirectly by the consulting partners, you will have a problem. Auditing is not all that profitable and is much more people intensive than consulting.

      As a distant #2 to Accenture, it will be interesting to see their numbers.

      • 1 Reply to tpf1349
      • More info.

        AC was spun off a couple of years ago, big issues over the name Andersen. AA or 'Arthur' as they're called at Accenture, wanted billions for it. Funny. Today its worth essentially nothing.

        Audit fees are going to skyrocket, thanks to Enron. Most audit fees are negotiated, but smelling blood in the water, they will pile on with much deeper and longer audits.

        By the way, Arthur Andersen shredding working papers is equivilant to erasing the source code for a program.

    • Reports say the asking price is $7-8 B. For an expansion into services, it wouldn't be a bad pickup at those prices. When the economy turns, it will be a good business.

 
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