Big Accounting Firm Plans Layoffs
NEW YORK (AP) _ The accounting giant KPMG Peat Marwick has told its 1,875 partners that it plans to dismiss about 300 of them, the company confirmed today.
The move is the latest example of contraction in the accounting industry that has already seen several leading firms merge and two midsized firms go out of business.
The New York Times reported today that Peat told its partners in a memo last week that, ″In spite of the dislocation it will cause for those affected and the near-term costs involved, this is a positive move for our firm.″
″The program was made necessary by the changing business environment that this decade has already introduced. Just as important, it will be essential for creating a partnership team that is focused on bringing value and needed services to the marketplace,″ the newspaper quoted from the two-page memo.
Barbara Kraft, a spokeswoman for the firm, confirmed the account today and said the firm was taking the action to ″make sure our strong position is maintained.″
″We are anticipating that there is a changing business environment. We made a strategic evaluation of our partnertship and our firm’s business objectives and decided this was the best course of action,″ she said.
She said the firm felt it had ″an overcapacity of partnership in some areas″ and wanted to make sure ″we have the appropriate skills and services that meet our client’s needs.″
The report said the cutbacks would drop Peat to third place from second place in terms of partners among the nation’s biggest accounting firms.
Jon C. Madonna, the San Francisco partner who took over as Peat’s chairman in October, told the Times in an interview that the cutbacks were a difficult decision but were necessary to improve Peat’s productivity. He said Peat lagged behind other large accounting firms last year in revenue per partner. He said Peat’s profits have been flat for at least 18 months.
Ms. Kraft said the firm had $1.83 billion in revenue in the United States last year and $5.4 billion worldwide.
The firm has undergone two waves of cutbacks in the past six years. In 1985, the firm then known as Peat Marwick Mitchell & Co. dismissed about 85 older partners.
When the firm merged with KMG Main Hurdman, the American arm of the British-Dutch firm in 1987, the combined firm KPMG Peat Marwick gradually trimmed 215 of the 390 Main Hurdman partners that it inherited.
The Times story said the roughly 100 managing partners who run the firm’s American offices will comb each location to come up with a final list of names which could total slightly more or less than 300.
″We don’t have the exact names right now,″ Madonna told the newspaper. ″It’s not a quota.″
Those being laid off are to be notified by March 1, the firm said.