Ernst Young Acquires Local Arthur Andersen Office
Andersen’s consulting arm of the business was not part of the deal as Ernst & Young sold its consulting practice two years ago, said Keith Burns, managing partner of Ernst & Young’s Grand Rapids office.
Burns would not reveal the exact date discussions began.
The company also announced Monday its acquisition of Andersen offices in Detroit, Ann Arbor and Toledo. About 160 Andersen employees across the four offices, including 14 partners and principals, agreed to join Ernst & Young as a result.
Andersen’s Chicago office issued a statement saying the transaction “is consistent with the firm’s plan to move forward as a smaller and different firm aligned with the reforms we have outlined, and the smaller scale of our client base.”
The company said it is reducing the scope and scale of its U.S. practice to sustain an ongoing business. As part of its plan, the firm will separate substantial portions of its consulting and tax business.
David Hoogendoorn, managing partner of Andersen’s Grand Rapids office, would not say how many people were employed in Andersen’s local tax and audit practices.
Ernst & Young would only say that the two firms combined will have more 145 personnel in West Michigan.
Hoogendoorn said he couldn’t speak to the fate of Andersen’s local consulting practice and that all the “people questions” have to be directed to Andersen legal counsel in New York.
He also said he couldn’t speculate as to what might have happened to the firm’s local office had Ernst & Young not come forward with the buyout offer.
Arthur Andersen LLP, one of the Big Five accounting firms, is now in federal court on charges of obstruction of justice. It is the first criminal trial stemming from Enron Corp.’s collapse last year.
Hoogendoorn said Andersen’s Grand Rapids employees found the Ernst & Young transaction attractive because they saw it as an opportunity for them “to continue to offer world-class professional services” to their existing clients.
He said Andersen’s employees did not have the legal option to buy the firm’s local office.
Both companies’ offices are at 171 Monroe, which Burns says is a fortunate coincidence. He said the two firms are familiar with each other not only as building mates but through their professional interaction in the community and the mutual services they offer.
Ernst & Young plans to stay in its current location downtown. Burns’ office will assume the lease on Andersen’s Monroe Avenue office as part of the deal and will physically integrate its staff over the next several weeks.
Some limited training is in store for Andersen employees to orient them to Ernst & Young’s administrative and technology procedures, which Burns said will likely take about 10 days.
Had Ernst & Young been looking to expand locally?
Burns responded that Ernst & Young is always looking for new opportunities and the Andersen acquisition represented a good one because it brings more experienced professionals on board. At the same time it expands the firm’s tax and audit client base locally.
“We’re very excited about having these experienced and capable professionals join us,” Burns remarked. “We’re very focused on serving the market and adding these resources will allow us to serve better.”
Hoogendoorn said his office had not experienced any client fallout in the local market in the months since Enron’s troubles surfaced.
“We didn’t lose any clients in West Michigan as the result of Enron,” he said.
Even during the uncertainty of the past few months, Andersen’s Grand Rapids clients remained loyal to the accounting firm, which Hoogendoorn attributed to “ the commitment, competencies and integrity” of Andersen’s client service teams.
“As Andersen employees become Ernst & Young employees, we believe clients of both firms will experience continuity and distinct commitment to professional excellence that will only grow stronger,” he said.