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Author: Madhav Srinivasan Article source: http://www.articlealley.com/. Used with author's permission.
Just last month, we saw another interesting development in the creation of niche tax and consulting firms.
Andersen alumni launched True Partners Consulting (TPC), a tax and advisory consulting firm in Chicago, headed by Cary McMillan, former head of the Chicago office for Andersen. McMillan had left Andersen a few years ago after a rapid rise through the firm's audit ranks to become the CFO for Sara Lee, an Andersen audit client, moving offices across downtown Chicago. He then went on to lead one of Sara Lee's business units before leaving the company.
The firm has 25 other former Andersen partners and personnel, with a stated goal of creating a "new kind of tax and business advisory firm to help public companies and private enterprises navigate the numerous federal and state tax laws and increasingly complex financial regulations". TPC's niche will be providing the quality of services that clients receive from the Big Four without any Sarbanes-Oxley-related conflicts, which the Big Four run into when they wish to offer a combination of tax and consulting services to the ir current audit clients. TPC has six prior Arthur Andersen senior executives who have at at least one time in their careers been associated with the firm.
Why the name? According to the firm, this embodies a philosophy based on the types of relationships it forges with its clients and its people. Moreover, TPC does away with the hierarchy from partner down to associate, normally associated with the larger Big4 firms. MDs are shareowners and actively involved with associates to create customized client solutions.
The firm plans to offer five different kinds of services, with a strategy of offering niche advisory where the Big Four may not have strong presence or have not paid adequate attention:
§ Consulting: helping with filing practices, business restructuring or bankruptcy for potential tax consequences.
§ Compliance: helping comply with federal, state and local laws and regulations requiring reporting and payment of taxes and fees.
§ Unclaimed Property: helping address all aspects of unclaimed property including compliance, planning and audit defense.
§ Refund Reviews: helping clients identify tax refunds, effectively reduce tax exposures, penalties and interest.
§ Audit Defense and Support: helping clients analyze potential tax exposure, recommend appropriate audit strategies and review or prepare responses to tax audit inquiries.
Clearly, operating in a post-SOX world for the Big Four firms has created a drastic change in the way non-audit practices find their clients. The audit channel was always a reliable way to meet key client decision makers and sell tax, consulting, IT and legal advisory services. With clear demarcations needed between auditors and advisory service providers, non-audit services have to find other ways to obtain clients. This can be a challenge when there are no prior and established relationships to lean upon.
Independent firms such as Huron Consulting and Protiviti, also started by Andersen alumni, have taken advantage of this situation and carved out a niche for themselves. One of their main selling points is the absence of a conflict, combined with the technical pedigree of a true Big Four firm. An appealing combination indeed.
Obviously, this must have made sense to more than one professional service firm. True Partners is supported by $20 million of venture financing from private equity firm Waud Capital Partners. True Partners also received a $900,000 grant from the Illinois Government. Silver Lake supported Huron Consulting and was able to find a good exit when Huron went public.
TPC's performance in the marketplace will bear close watching.
For more articles please visit :
http://www.big4.com/Big4newsletter.aspx
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