And then there were five.

The Big 6 are about to become the Big 5. Coopers & Lybrand and Price Waterhouse announced plans to merge their practices, effective early 1998. Nicholas G. Moore, chairman of C&L International, will be the new entity's chairman and James J. Schiro, chief executive officer of PW, will be its CEO. The merge is subject to approval by the firm's partners and by regulators.

The resulting practice will become the largest in the world, surpassing Arthur Andersen. Judging from both firms' 1996 figures, the combined firm will have $11.8 billion in revenues, 8,557 partners and over 129,000 employees.

What it means

"When the story broke, I was meeting with a group of financial executives from around the world," Gary J. Previts, professor of accountancy at the Weatherhead School of Management, Case Western Reserve University, Cleveland, told the Journal. "And one of the executives turned to me and said, `Slim pickin's.' His point was that global enterprises now will have fewer suppliers to choose from for a wide variety of services. However," he continued, "it's becoming more expensive for service entities, such as CPA firms, to exist in an increasingly complex global environment. Firms at this international level are still seeking an optimal size--and that size is going to be larger."

"I'm not surprised at all," J. Curt Mingle told the Journal. A member of Clifton, Gunderson LLC, in Ephraim, Wisconsin, Mingle was chairman of the American Institute of CPAs special committee on regulation and structure of the profession. "It was inevitable and makes all the sense in the world," Mingle said, noting that a need for increased resources, especially people, led to this merger. "Right now there's a shortage of talent for entry-level and experienced positions. You need a lot of resources to performs services at the Big 6 international level. Maybe the world doesn't need six firms providing the same services." He pointed out that the United States used to have 12 major automakers. Now it has only 3--an "economy of size." He predicted that in the next decade it will be the Big 4, with perhaps 15 regional firms. Previts and Mingle agreed more mergers would take place among the top 20 firms.

Fallout

Although Mingle thinks the merger was in both firms' interests, an immediate result could be some defections of staff and partners. For example, in a city where one firm's office is much larger than the other's, the staff at the smaller office may feel overwhelmed when combined and seek positions at other firms. "Midsize firms such as ours may look for dissatisfied staff end partners--even whole offices," Mingle said. Clifton, Gunderson has about 120 partners.

"In the end, I don't think the merger means much of a change for the profession," he said. "At our firm and others of a similar size, we'll continue to work with entrepreneurs and family-owned businesses while the Big 5 continue to work with the multinational giants. This merger simply makes that breach wider."

RELATED ARTICLE: Business/Industry Article Best Year

"Getting Beyond Counting," a wake-up call to accountants that tells them to move beyond working exclusively with historical data, has received the Lawler Award for best Journal of Accountancy article of the year. Authors William L. Reeb, CPA, and Michaelle Cameron, PhD, received a plaque and a check for $500 each for their December 1996 article. Saying up front that "bean counting" comes "uncomfortably close to describing the tasks management accountants have performed historically," the article advises CPAs to take on roles as artists, educators and visionaries. One of the Journal's editorial advisers called the article "an excellent vision of what accountants should be."

Reeb is a shareholder in the firm Winters, Winters Reeb, in Austin, Texas, and a member of the American Institute of CPAs management consulting service executive committee. Cameron is assistant professor of marketing at Saint Edwards University, Austin.

The award is named after John L. Lawler, a former Journal editor and AICPA senior vice-president. The winning article is chosen each year by the magazine's editorial advisers.