Why Deloitte Didn't Divide

On Mar. 31, accounting giant Deloitte Touche Tohmatsu abruptly abandoned plans to split off its consulting business. In remaining a combined firm, Deloitte stands alone. All of its rivals have split up -- either by selling consulting units or spinning them off as independent public companies -- and although it's not illegal for the two to remain joined, the Securities & Exchange Commission generally forbids accounting firms to do consulting for audit clients. Deloitte says it will abide by that rule. It has little choice. Pushed reluctantly toward splitting, it waited too long and lost its chance.

Chairman James E. Copeland Jr. had long argued that audits were improved, not tarnished, by association with consultants. So it wasn't until early 2002 that Deloitte decided to do a management-led leveraged buyout of its consulting practice, which at least left the consulting partners in charge of their business.