New Challenges to the Big 4 and the Questionable Responses

Narrator: Welcome to Consulting Uncensored, the podcast that pulls back the curtain on the good, the bad and the ugly of the consulting world. This is where real conversations happen about leadership, strategy, culture and careers in consulting. Hosted by industry veteran Neil McNamara, each episode features candid discussions with consultants, executives and firm leaders who are building, challenging and reshaping the industry from the inside. No filters, no fluff, just honest insight into what actually works and what needs to change. This is Consulting Uncensored.

Neil McNamara: Here's Neil for many years now, I've been writing about the good, the bad and the ugly of the Big Four. And for those of you who are unfamiliar with that vernacular, the Big Four refers to the four largest consulting firms in the world, PwC, EY, Deloitte and KPMG. Now, some argue that I spend outsized time on the bad and the Ugly, for which one could have a rebuttal of Sometimes they make it just way too easy to go there. In all seriousness, I do my best to call balls and strikes layered with my own personal knowledge and experience from having worked in one of these large firms for 20 years. Now I'll also be interviewing guests on their personal, unique and under the tent experiences in these firms for, of course, an uncensored view, an inside look as to what it's like in the largest firms in the world that have historically dominated our industry. Today, though, I want to touch on a couple of recent events. One literally came out the day of this recording, so we'll start with that one. It was announced today that a formal global practice leader at EY is starting his own tax firm, WTS uk. Also confirming that accountants are still not creative at all in coming up with names for their firms. Name aside, this firm has been backed by one of the largest private equity funds in all of Europe, eqt. This continues the trend of senior partners leaving Big Four firms to form competing firms. Now, this is a relatively new development in our industry. Boutique firms have been founded by former Big Four partners for a number of years now, but it's only recently that they are forming firms to directly compete against the Big Four. Until recently, boutique consulting firms were formed by people that were going after either a new or underserved market. This is what I did when I found my firm. I found a firm to be completely different than the Big Four in effectively every way, from its talent strategy to its compensation to its execution model and ultimately to the end market that we were serving. Now, building a firm to compete head to head with your former firm comes with some serious complications, primarily due to the serious handcuffs that are put on Big Four partners if they ever do want to leave. Which leads nicely into the next news topic on firms being founded to compete against the Big Four, Unity Advisors. This is a firm that was recently launched by the former head of Eyuk and the former chief operating officer for PwC UK. They are also backed by another global private equity fund, Warburg pincus. Well, now PwC is threatening serious legal action against Unity and taking specific action against former partners that have joined Unity, including withholding, deferred compensation and what some are rightfully referring to as a bit petty eliminating their access to their healthcare plans. So listen, these partners sign partnership agreements and they should be compliant with these partnership agreements or deal with the consequences when they choose not to. I had to deal with this myself in founding my own firm and for almost three years. I know for a fact that there were leaders at KPMG speaking to former employees and colleagues of mine and were told to keep an eye out and ensure that I wasn't competing with the firm in any way. That said, this is much more complicated than just simple legal agreements. Many of these former partners are retired. Many of them have very good friends that remain at their former firms. What are the current partners to take from the firm so aggressively and viciously attacking former retired partners? What does that do to a firm's culture? What does this say to the market? Does this potentially look like a firm just being a big bully and trying to come after a new startup competitor because they're concerned about the competitive landscape? And something else that I haven't seen written about yet, but I have to think is is involved here is what about the relationship with a global private equity firm like Warburg Pincus? Uh, at Warburg Pincus Size, I have to think that it's a multimillion dollar account for pretty much most of the Big four? So when you are suing a company that your global client owns that seemingly would come with some serious risk to the client relationship. Well, we clearly have many more questions here than answers, but as these industry matters evolve and develop, we will continue to report, analyze and give our opinions as this is a very exciting time in our industry.

Narrator: And that's it for this episode of Consulting Uncensored with Neil McNamara. Want to join the conversation? Connect with Neil on LinkedIn to share your thoughts on today's episode and join a community of consulting professionals who want to cut through the bs. Uh, thanks for listening. There's a new episode every other Wednesday. We'll see you then.