| Entering a Big 4 Firm is a lot like entering a secret | | | | other firms in various markets. One of the key |
| society or fraternity. There are traditions and secrets | | | | mergers was the combination of Touché Ross (as |
| that are shared by the members and passed down to | | | | it was then known) and the Japanese firm, Tohmatsu |
| new recruits. This feeling of comradery and heritage | | | | Awoki & Co in 1975. |
| is one of the most special parts of working for a Big 4 | | | | In 1989, the firm then known as Deloitte Haskins & |
| firm and what separates the experience from working | | | | Sells broke up. The majority of the individual |
| for a regional or local firm. | | | | partnerships that had made up the firm, including the |
| As you begin your journey it will do you good to learn | | | | U.S. piece, merged with Touché Ross to form |
| a bit of the history of these firms. Knowing where | | | | Deloitte & Touché. Some of the smaller |
| these firms have been will help you understand the | | | | partnerships that were against the merger of |
| role that you will be taking on as a new recruit and the | | | | Touché Ross merged with Coopers & |
| legacy you will continue. | | | | Lybrand. In 1993 the firm was renamed to Deloitte |
| While you will most likely not be held responsible for | | | | Touché Tohmatsu, due to the growing influence of |
| this information in an interview, learning these basic | | | | the Japanese brand. |
| facts will provide you with an easy way to impress | | | | The firm now employs over 165,000 people in 140 |
| the Big 4. | | | | countries and had worldwide revenues of $27.4 billion |
| PricewaterhouseCoopers (aka PwC, “P Dubs”) | | | | in fiscal year 2008 |
| The history of PwC dates back to the 19th century | | | | Ernst & Young (aka E&Y, EY) |
| London. Samuel Lowell Price, the son of a Bristol | | | | As is the case with PwC and Deloitte, E&Y in its |
| stone potter, was born in 1821. Entering the | | | | current state is a result of a series of mergers. One |
| accounting profession at an early age, Price was a | | | | difference with E&Y, however, is that the major |
| member of several smaller firms before striking out on | | | | players and namesakes of the firm are American |
| his own as a sole practitioner. | | | | rather than British. In 1903 an accounting firm was |
| Meanwhile, a young English accountant, Edwin | | | | formed in Cleveland by brothers Theodore and Alwin |
| Waterhouse (b. 1841), was making a name for | | | | Ernst. In 1906 the firm Arthur Young & Co. was |
| himself. The son of lucrative mill-owning parents, and | | | | established in Chicago. These two firms individually |
| brother to Alfred Waterhouse, a prominent London | | | | joined forces with well-known British firms. Ernst |
| architect, Edwin rose quickly in the ranks to the London | | | | merged with Whinney Smith & Whinney and |
| accounting elite. | | | | Young joined forces with Broads Patterson & |
| Around this time, another accountant by the name of | | | | Co. In 1989, the successors of these firms merged to |
| William Cooper established a rival firm in London with | | | | create what we now know as Ernst & Young. |
| his three brothers. Across the ocean in the U.S., | | | | The firm now employs over 137,000 people in |
| William Lybrand and others created yet another firm. | | | | worldwide and had revenues of $24.5 billion in fiscal |
| These firms merged in 1957 into what would be | | | | year 2008 |
| known as Coopers and Lybrand. | | | | KPMG (aka Klynveld, Peat, Marwick, Goerdeler) |
| Price and Waterhouse joined forces in 1874 to create | | | | By now I’m sure you can see a pattern here: |
| Price, Waterhouse & Co. The firm became | | | | two or three dominant US and British firms join forces, |
| well-known as one of the finest in London and | | | | go through a series of mergers and achieve |
| eventually opened their first U.S. office in 1890 in New | | | | world-wide status. KPMG is no different. The key |
| York. The firm began to establish separate | | | | information to note is the following: |
| partnerships across the globe. | | | | Prominent British Founder – William Barclay Peat (b. |
| In 1998 Coopers & Lybrand merged with Price | | | | 1852) |
| Waterhouse to form, PricewaterhouseCoopers. The | | | | Key Mergers: |
| firm now employs over 146,000 people in 150 countries | | | | - William Barclay Peat merge with Marwick Mitchell Co. |
| and had worldwide revenues of $28 billion in fiscal | | | | (1911) to form Peat Marwick Mitchell & Co. |
| year 2008. | | | | - Thomson McLintock firm forms a group of |
| Deloitte Touche Tohmatsu (aka Deloitte, D&T, | | | | independent European firms known as KMG (1979) |
| Deloitte & Touche) | | | | - KMG and Peat Marwick Mitchell & Co. join |
| Back to London….let’s meet William Welch | | | | forces in largest accounting firm merger to date to |
| Deloitte. Born in 1818, Deloitte was the grandson of | | | | form KPMG (1987) |
| Count de Loitte, an expatriate of France who left | | | | - Renamed to KPMG Peat Marwick (1991) |
| during the French Revolution. Deloitte was a quick | | | | - Renamed back to KPMG (1995) |
| learner and began his career at the age of 15 in the | | | | It is interesting to note that KPMG and E&Y were |
| bankruptcy courts of London. Deloitte opened his | | | | all but ready to merge in 1997 as a power play against |
| own office at the age of 25 with a focus on the | | | | the merger of Price Waterhouse and Coopers |
| railway industry. In fact, Deloitte was employed as | | | | Lybrand. However, this merger eventually fell through. |
| the first external auditor EVER appointed and | | | | The firm now employs over 123,000 people in |
| developed a system of safeguarding records to | | | | worldwide and had revenues of $19.8 billion in fiscal |
| protect investors. | | | | year 2008. |
| Deloitte would go on to become president of the | | | | Phew….that is all for the history lesson. The |
| Institute of Chartered Accountants and open a U.S. | | | | common theme here is that these firms are all |
| practice in 1893. | | | | founded by the best and the brightest of their time. |
| Sir George Alexander Touche (b. 1861), an accountant | | | | The accounting profession as we know it today would |
| from, you guessed it…London, opened a practice in | | | | not be what it is without good old Sam Price, Billy |
| 1899. He later spread the practice to New York, | | | | Deloitte, Teddy Ernst and Bill Peat. These men are |
| capitalizing on the growing demand for income tax | | | | the founding fathers of public accounting and it is their |
| preparation. | | | | legacy you will continue when you join on of these |
| Over the course of the 20th century, Deloitte and | | | | great firms. Their stories are a lesson in excellence |
| Touches’ separate firms merged with a number of | | | | and their influence is still felt to this day. |