Amid mounting pressure from clients, Deloitte announced plans to complete the privatization of its consulting unit by the end of this quarter. The separation is structured as a management buyout.

The announcement follows closely on the heels on a change in auditors by Deloitte's long-time audit client Clorox Company due to the firm's inability to separate its auditing and consulting businesses by the end of the year. Previously, Deloitte had said it hoped to complete the separation by the end of 2002. But the timing was delayed by the tough financing market and regulatory hurdles in the more than 30 countries in which the firm does business.

In an unusual move, Clorox chose to keep Deloitte as its consultant rather than its auditor. Deloitte Consulting has been designing a system-wide software program described by a Clorox spokeswoman as "very critical." The value of the consulting business was several times the value of the audit. For the fiscal year ending June 30, 2002, Deloitte billed Clorox approximately $1.5 million for auditing services and $3.5 million for consulting services.

Deloitte is the last of the Big Four accounting firms to split its consulting and audit practices. It chose the name Braxton for the new consulting firm, which will be privately held by the partners.

A spokesman for Deloitte Consulting said the firm is putting the finishing touches on the deal, including financing from a consortium of banks. Once the deal is complete, Deloitte will keep a minority stake in Braxton of less than 20% for less than five years, similar to other large accounting firms that have spun off their consulting arms. (Deloitte's Consulting Arm Targets Spinoff By End Of 1Q, Wall Street Journal, January 21, 2003.)