"We will continue to have a good relationship with them (the partners setting up separate operations)," he says. Deloitte, with 94 Australian partners to Touche's current 100, is widely viewed as the most profitable of the two firms because it has already undergone its painful restructuring.Įdwards says the partner-shedding boiled down to business strategy. The gambit is similar to moves made by Deloitte in 1986, when it shed partners and small-fee clients while considering a merger with Price Waterhouse.Īlthough the merger flopped, the firm went on to profit from the cuts. The memo says the departures are "part of the firm's business strategy to divest itself of low-margin business", clients with billings of less than about $5000 a year. Kolatchew and Bennett joined the partnership in July 1988, and all of the partners named are far from "retirement" age. Interestingly, some are leaving after joining the firm only twelve months ago. The retiring partners are Gavan Smith and Michael Hadaway (Sydney), Martin Roughley (Parramatta), Paul Kolatchew (Newcastle), Campbell Bennett(Melbourne), John Rogers and Brian Waters (Box Hill) and John Hutchins (Moonee Ponds). However, according to one inside source, there is some doubt whether an offshoot Melbourne office actually will be established. Edwards denies the contention.Ī Touche internal memo claims the departures are "taking place with good will on the part of all concerned, and with the understanding that there will be a close working relationship between the new practices and Touche Ross in the future".
BRW believes other partners have been offered incentives to leave the firm, but are standing their ground.
Some were offered the incentive of taking some of the firm's small-fee clients - which do not fit in with Touche's expansion plans - to help set up their own practices while retaining informal Touche links.Įdwards says the departures are a "mutual arrangement" and it is still unclear whether any of the eight jumped or were pushed. Touche Ross's partners board chairman, Bruce Edwards, denies they have anything to do with the proposed merger.Īccording to internal Touche Ross memos, four of the partners from the firm's Melbourne business consulting section, two Sydney audit partners and one business consulting partner each from the Parramatta and Newcastle offices are leaving before December 31. The departures are the first solid evidence of partner-shedding following the spate of Big Eight merger announcements. Deloitte has imposed the condition that Touche reduce partners and increase profitability as a precondition to any merger. Eight partners are retiring, apparently after being given incentives too good to refuse. Giant accounting firm Touche Ross has cut its partnership ranks by almost 10%, and more blood-letting is likely in the run-up to its proposed merger with Deloitte Haskins & Sells.
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