And Then There Were Five Merger Of Coopers, Price To Create Accounting Giant

Reducing accounting’s Big Six to the Big Five, Coopers & Lybrand is merging with Price Waterhouse in the industry’s first reshuffling since the 1980s.

The deal, which needs final approval of partners at the two firms, will create the world’s biggest accounting company, surpassing Andersen Worldwide. Financial terms and a possible name for the new company were not disclosed.

The planned marriage comes at a time when accounting firms are battling intensely to increase consulting revenue as the growth of their auditing and tax businesses lags.

Prior to the 1980s, services like auditing were 70 percent of the accounting business. But that’s down to 50 percent at some firms as accountants evolve from bean counters into providers of higher-profit management advice.

The two companies said consulting would be a strong focus of the merged company. Executives said they also hope to attract clients by having a bigger global presence.

Although a tiny part of its business, Price Waterhouse might best be known for tabulating the results of the movie industry’s Academy Award voting each year.

“Together, Coopers & Lybrand and Price Waterhouse will have the global reach, the global strength, and the integrated management structure to meet the future challenges and opportunities our clients will face,” said Nicholas G. Moore, chairman of Coopers & Lybrand.

Industry watchers said the combination will help the two firms achieve the kind of growth they need to compete more effectively with their bigger competitors. Based on 1996 revenues, Price is at the bottom of the Big Six while Coopers is fifth.

The Big Eight shrunk to six in the late 1980s through two deals: Deloitte, Haskins & Sells merged with Touche Ross and Ernst & Whinney combined with Arthur Young, resulting in Ernst & Young.

Price Waterhouse was considered more of a niche player rather than a global competitor, while Coopers was growing slower than other Big Six firms because it moved slower into consulting, he said.

With more than $13 billion in annual fees, the combined firms have about 135,000 employees worldwide, including more than 8,500 partners.

Pending a definitive agreement, regulatory review and approval by partners, the merger is expected to be completed early next year, the companies said.