Like a lot of companies that provide services to Internet startups, Andersen Consulting has realized that it might make more money working for stock instead of cash.
That's the strategy behind a new venture the firm launched Wednesday that will focus on linking young Internet startups with part of Andersen's staff of 65,000 consultants.
Within the next three years, Andersen plans to provide an estimated $1.2 billion worth of services in exchange for equity or a combination of cash and stock.
"That equity, we hope, will be worth $10 billion," said Mary Tolan, managing partner of growth and strategies at Andersen and head of the new venture.
Tolan said Andersen's startup consultants will work with companies that already have received their first round of funding. At that stage, most clients want to expand their business, strike deals with more established firms, and become better known.
Andersen is not alone in this market. A number of large services firms have created divisions for startups or are setting up incubators where new companies pay for services with stock.
It isn't the first time Andersen has accepted stock as payment from its consulting clients. The company has a stake in the business-to-business e-commerce company Commerce One, a top new stock market performer last year, as well as stock positions in a handful of other Internet firms. Andersen didn't disclose whether its employees will also receive equity.
Andersen said its new venture will put extra emphasis on strategies for global expansion among its Internet clients. The company is forming 17 offices in Europe, Asia, the United States, Africa, and South America that will help Internet companies set up shop or provide them with consulting.
"We think the next big round in Internet growth is going to be globalizing and global cloning," Tolan said. "You see a lot of businesses in the U.S. that are consumed with what it takes to be a market leader in this market. They haven't been able to devote the time and skills to other markets."
The company doesn't plan to focus on Internet companies in any particular sectors, but it will weigh a client's prospects for going public. Executives hope the majority of startups will have initial stock offerings within a year of signing on with Andersen.
