Deloitte Consulting To Split From Parent Firm

Deloitte Consulting will divest itself from parent company Deloitte Touche Tohmatsu. The $3.5 billion management and IT consulting firm made the decision Tuesday amid growing criticism about the ethics of operating in such close proximity to Deloitte & Touche, Deloitte Touche Tohmatsu's accounting and auditing business.

"Deloitte Consulting will separate from the Deloitte Touche Tohmatsu family so that we don't put our clients in a position to have to choose between Deloitte Consulting's and Deloitte & Touche's services," says Stephen Sprinkle, global director of strategy, innovation, and eminence for Deloitte Consulting. Sprinkle says there are essentially five options for Deloitte Consulting's future, although the firm hasn't committed to any at this time. These alternatives are remaining part of Deloitte Touche Tohmatsu but breaking all financial ties to the parent firm, becoming a consulting company specifically for Deloitte & Touche, launching an initial public offering, getting an outside investment to dilute the firm's ownership, or selling or merging with an outside business.

Although it's debatable how much rival firm Andersen's heavily scrutinized relationship with Enron Corp. contributed to Deloitte Consulting's decision, Sprinkle says it's clear that public perception of impropriety by firms that provide accounting and consulting services is a concern. One potential Deloitte Consulting client rescinded a contract offer to the firm over concerns about hiring a consultant that could run into legal difficulty down the road. Sprinkle says Deloitte Consulting has approached that client again since revealing its decision to break from Deloitte Touche Tohmatsu.

Public outcry over Enron and Andersen has forced Deloitte Consulting to play its hand, says Tom Rodenhauser, lead analyst for Consulting Information Services. "Deloitte Consulting continues to make an eloquent argument for keeping the company together, but it's a mob mentality out there now."