Turnaround private equity firm Allegro Funds is to acquire the Australian government, education and healthcare consulting practice of under-fire big four professional services firm PwC for $1.
PwC has agreed to the deal in an attempt to end the ongoing reputational damage flowing from revelations that, while it was advising the federal government on restructuring tax avoidance rules, it was also advising clients on how to circumvent the proposed new rules.
The sale is believed to involve up to 100 PwC partners and as many as 1,000 other staff, a total of around 10% of PwC Australia.
Key value in the new firm will be its ability to bid for federal government contracts with PwC now excluded from doing so. This will require PwC not to apply usual restraint clauses to partners leaving to join the new firm. Such a concession would be essential to make the deal attractive so is assumed to be included in the deal. Whether the new firm will be able to bid for work outside of federal government contracts is, so far, unknown.
Already this year Allegro has acquired law firm Slater & Gordon (ASX: SGH) for $78 million and exited the Pizza Hut business in Australia to Flynn Restaurant Group of California for an unknown sum.