When four of the ’big six’ accountancy and management consultancy
firms recently announced their merger plans they knew that they faced a
huge communications task as their own employees and the world’s media
seized on the implications. Coopers and Lybrand and Price Waterhouse,
the first of the four to announce their merger, and KPMG and Ernst and
Young have all identified PR as a key part of their plans to merge.
Perhaps most obviously they are trying to address the objections of some
sections of the media, their own clients and partners such as concerns
over reduced competition and job losses. Though the recently proposed
merger between Swiss banks UBS and SBC has eased concerns over global
mergers, there is still a large and varied PR task for the four
accountancy firms planning similar moves.
Business benefits for the four companies are clear. They will create
economies of scale in sectors that are seeing a constant erosion of
For instance, Coopers and Price Waterhouse have predicted their business
will grow at 20 per cent a year and create 50,000 jobs over the next five
years. This will help to fuel expansion into eastern Europe and the former
It is these positive facets of the proposed mergers that the involved
firms have attempted to highlight as part of their communications
Importantly, there is a big internal relations task in terms of convincing
partners of the worth of the mergers.
Media relations across national boundaries is an intricate business
because of the global nature of the deals, and lobbying has become vital
following the announcement that the European Competition Commission is to
investigate the proposed deals.
Jeremy Wyatt, director of corporate communications at Price Waterhouse
Europe, says: ’The external media work involved is very different to that
which supports a quoted company.’ For these firms, with their partnership
structures, are not using the media to address shareholders and
However, the diversity of global media attitudes to the mergers remain
vitally important. Wyatt says: ’The anti-competition issue has surfaced in
the UK. Together with Coopers, we’d service just under 50 per cent of FTSE
companies so that’s what has driven finance directors to say that they’ll
get less choice. What we’re trying to say is look at it globally.’
Price Waterhouse’s PR for the merger is handled primarily in-house. Wyatt
oversees communications across Europe, with Sam Jaffa, formally of the
BBC, spearheading the press function in the UK. Coopers has taken a
different approach. It has a strong in-house team, but has also used
retained agency Citigate to help on the merger.
Bridget Juniper, head of corporate PR at Coopers and Lybrand, says:
’Citigate had a good knowledge of us through their work with our corporate
finance division and have a great deal of experience from past mergers
It’s good to have some outside views because you become entrenched in your
own ideas otherwise.’
Citigate also provides the practical solution to the sheer volume of work
created by the merger announcement. Juniper estimates that the
communications workload has doubled since the merger was made public.
This task also involves internal communications. Price Waterhouse’s and
Coopers’ 8,500 worldwide partners have already voted, on a global level,
on the proposed merger. They are expected to approve, but the
communications task of distributing information and voting papers is a
The Ernst and Young and KPMG merger was announced some weeks after the
Coopers/Price Waterhouse plans. Tim Roberts, director of media relations
at KPMG, says: ’The merger between Coopers and Price Waterhouse was
announced prior to our own and had been clearly planned. The KPMG/Ernst
and Young announcement was accelerated by this deal. We had less time to
prepare than the other parties. Also, by this time the media here had
decided they didn’t like big mergers.’
Roberts emphasises that communications is handled as a joint effort across
KPMG and Ernst and Young. ’The communications task is difficult because it
is global. There’s no such thing as a global journal and we operate in 150
countries around the world. The reasons for the merger are just as
important in Kazakhstan, Szechwan and Indonesia as they are in Belgium,
the UK and the US.’
Roberts says he is focusing on communicating the global benefits of the
merger through the press: ’The merger makes sense in global terms. We
don’t have enough money to invest in Russia and China,’ he says.
He also agrees with Wyatt that the anti-competition issue has been more of
a PR problem in the UK than anywhere else: ’In the UK there is a tradition
of looking at the competition issue very closely. In Greece, let’s say,
it’s not a huge issue. Most European countries want their companies to be
as large as possible.’
This may be because many multinationals are listed in London and finance
directors have a larger voice. But it may also be the result of a uniquely
British insecurity when faced with the prospect of change and large-scale
However, the competition issue cannot be dismissed. The European
Commission is now involved and all the companies have been asked to submit
reports to the European Competition Commission. The four firms are taking
a similar approach to this by stressing the number of jobs the mergers
would potentially create.
There are signs that the communications effort by the four is changing
opinion. Simon Brocklebank-Fowler, managing director of Citigate
Corporate, says: ’Two themes are evolving. One is that this merger is not
about the UK audit divisions. While 40 per cent of the new group fee would
be from audit there are fast growing parts outside this.
It will make Coopers & Lybrand highly competitive in management
consultancy and niche corporate finance activity such as
He adds: ’The second theme is that this merger is very good for
The major management consultancies, such as McInsey and Cap Gemini, are
It is likely that ten of the new Coopers/Price Waterhouse top management
team will be European. This will result in a firm with a dominant European
culture, something which Coopers has attempted to communicate.
Brocklebank-Fowler believes the communications task is being fulfilled:
’The UK press has focused on the regulatory debate because it’s been easy
for them. But we’ve begun to see a shift in the last months as we focus on
the other issues.’
Juniper agrees. She says that in the UK and across Europe Coopers has
developed a communications strategy centred on talking to journalists
individually. ’We’re picking off the press one by one,’ she says. ’Once
they’ve analysed the arguments involved, many of their original concerns
don’t hold water.’
Roberts works on key media issues and liaises at least once a week with
Ernst and Young’s team. Neil Sherlock, KPMG’s director of internal
relations handles internal issues such as getting information out to
partners and other employees.
Claire Gilbert, Ernst and Young’s media relations manager, says: ’We have
a panel of communications experts which is fully integrated with KPMG.
This contains communications representatives from in-house offices, and
staff and client relations people.’
This panel reports directly into Ernst and Young’s senior UK partner, Nick
Land, and KPMG’s UK chief operating officer, Mike Rake. ’Our
communications strategy is constantly evolving,’ says Gilbert.
’We’re currently working on a submission to the EU and there is an ongoing
pattern of events on which to focus communications.’ The next of these
events is the impending vote by the two firms’ US partners.
KPMG works mostly in-house, but like Coopers it is using some external
advice. Sir Tim Bell has been advising its senior UK partners separately
from the communications working party: ’KPMG has an ongoing relationship
with Tim Bell. He works with the senior partners on possible future names
for the merged group and its brand positioning,’ says Roberts.
This provides some insight into how the communications task may
As time goes on, the PR task is likely to shift toward communicating brand
positioning and the relative strengths of the groups and their
management structures. For now, however, they are focusing upon pushing
through the mergers themselves.
WATCHING THE WATCHMEN: BRINGING THE FSA UP TO SPEED
The Financial Services Authority, the new City ’super-regulator’, is set
to become operational this spring. It will work with the Bank of England
to sustain confidence in the UK financial services industry, protect
consumers by ensuring firms are competent and reputable, promote public
understanding of the risks and benefits of financial products, and
monitor and detect financial crime.
It is a broad remit considering that the FSA also has a huge internal
communications task ahead as nine regulatory bodies are brought together
under one roof. The man charged with orchestrating the FSA’s internal and
external communications effort is Philip Robinson, currently chief
operating officer at IMRO, the investment management regulator which is to
become part of the FSA.
Robinson is to become its director of communications and corporate
He says: ’Our job is not just after the event explaining. We have to have
a clear view internally of what the issues are and relate this to our role
externally.’ The FSA’s initial focus will be on internal communications
and it is in the process of appointing a head of internal communications,
responsible for a wide programme going far beyond the usual staff
newsletter. It will attempt to educate members of staff on how their roles
have changed in light of the new regulatory structure, a potentially
massive job given that it will employ around 2,000 people.
While it is true that the press offices of the regulatory bodies will be
rolled together, it is unlikely that job losses will occur due to the
sheer weight of work in the first two years of the FSA’s existence.
Also, the Bank of England and the Personal Investment Authority will
retain their centralised public affairs resources separate to the FSA.
Observers are watching with interest to see the style of communications
adopted by Robinson. While all regulatory bodies are subject to
constraints - they mustn’t divulge privileged or confidential
information - some are more open than others.
So is the PR style of the new body likely to be open and proactive?
Robinson hopes so: ’It’s my policy to be as open as possible,’ he
This view is endorsed by financial PR people. Henry Gewanter, managing
director of Positive Profile, says: ’Philip Robinson as an individual is a
good choice both for his personal outlook and the IMRO ethos which is to
be honest and open.’ Gewanter adds that Robinson will be able to draw on
the experience of Judy Delaforce, IMRO’s current head of PR.
One financial PR figure expressed relief at the appointment: ’Basically
regulators spend a lot of time suppressing the truth. The SIB has been
terrible in this respect and it would have been awful had it got control
of the communications function at the FSA.’ The signs seem good for a
period of structured and open communications at the FSA.
CODE OF CONDUCT: THE HAMPEL REPORT
Since its inception in 1995, the Committee on Corporate Governance has
striven to establish a code to ensure companies always serve and protect
its investors’ interests.
The subsequent Cadbury and Greenbury Committees identified a number of key
areas to be addressed to facilitate a workable code, and another committee
was founded to review the implementation of these. Chaired by Sir Ronnie
Hampel, it is due to publish a final report in late January.
John Healey, Secretary of the Hampel Committee, says he ’cannot anticipate
what the report will bring,’ and adds that respective parties, ’will just
have to wait and see.’ But he says that all submitted responses to the
preliminary Hampel report, published in August this year, have been given
The report’s remit is to promote high standards of corporate governance,
to protect the interests of investors and to establish recommendations for
the involvement of shareholders in a company’s business.
One certainty, according to Graham Williams, secretary of the Investor
Relations Society, is that ’corporate governance is here to stay’ and, as
such, more accountability at all levels comes into effect.
The discipline of investor relations (IR) was conceived as the interface
between a company and its investors and to facilitate accountability at
all levels to the investment base.
In its response to the preliminary Hampel Report, the Investor Relations
Society recommended the Committee include a reference to the management of
Whether the Committee acts on those recommendations, Williams argues that
by simply raising the profile of corporate governance, the role of IR also
rises. He adds that it is already more valued by companies.
’Big institutions like Standard Life and Hermes have already appointed
people as IR (specialists),’ he says. ’Most companies accept that
corporate governance is here to stay so it’s much more productive to have
someone trained in this area rather than having managers use their
With this perceived growth will come even higher standards for IR, says
Williams, who argues there may eventually be a need for professional exams
for executives working in some of the more complex sectors of the
To supplement this, further training courses may be offered through the
Investor Relations Society and perhaps through companies themselves.
Other areas of potential re-education lie in the area of technology.
The Investor Relations Society has already suggested that technology
should be used in due course to allow all investors to participate in AGMs
from their homes, which Williams says will present another challenge for
Keith Williams, director of Interface, which provides independent investor
relation services to a broad spectrum of businesses, agrees that the role
of investor relations is set for new horizons. He argues that the
establishment of a workable code will take companies out of the ’box
ticker syndrome’ that has sometimes existed.
’The creation of principles alone is not enough to prevent box-ticking,’
he says, ’the final report should incorporate an adequate framework of
compliance that can be monitored.’
With greater transparency at all levels, Williams says the brief of all IR
pracitioners, especially the independents, will become more extensive.
’The skills of investor relations are quiet varied already, but they may
need to provide other areas of expertise, perhaps at consultancy level and
even greater research services,’ he says.
Tony Hollingworth, director of investor relations at Lowe Bell Financial,
agrees and adds that another off-shoot of the Hampel Report will be
greater definition of the role of the in-house executive and that of the
retained investor relations agency.
’The brief of the investor relations (manager) remains the same,’ he says.
’But agencies may find themselves called upon to provide a completely
objective summary of company accounts, which an in-house executive may not
always be perceived to do.’ Another argument for greater dependency on
external expertise is the huge contact base that it immediately provides,
thereby allowing companies to bring their achievements in the whole sphere
of corporate governance to a greater audience.
’Of course all companies will want to show a policy of good corporate
governance and the more people that know about it the better,’ he
’But looking to outside expertise won’t distract from the work of the
in-house executive whose understanding of the intricacies of a company
is far greater. The skills are mutually complementary.’
Tim Melville Ross, director general of the Institute of Directors, is
hopeful that Hampel will provide more guidance in the area of long-term
incentive plans, so that boards are much more aware of what constitutes
acceptable and challenging performance criteria.
’The preliminary report has made a genuine case for good governance in all
companies, whatever the size,’ he said, ’complex decisions have to be made
to run a company and it is important that investors know how these
decisions come about.’ David Gould, manager of investor relations with the
National Association of Pension Funds, says that the provision of a
consolidated code will make the whole area of communication easier. ’With
the criteria of corporate governance clearly defined, it will be easier to
explain a company’s actions to shareholders and the press,’ he says.