Andersen, one of the Big Five accounting firms, with more than $9 billion in sales last year and 85,000 employees, arguably has a lot to offer a merger partner, say industry competitors. Notwithstanding its current problems, the firm boasts a roster of sterling clients and top talent that would be attractive to one of the other Big Five - KPMG Peat Marwick, Deloitte Touche Tohmatsu, PricewaterhouseCoopers and Ernst &Young.

However, despite speculation that Andersen, whose CEO is Joseph Bernardino, is holding merger talks with rivals, most observers say that potential liabilities make it too risky for a deal to take place any time soon.

"I think it would be very difficult if not impossible for Andersen to solve its liability issues and another firm would be loathe to take on those liabilities," said an insider at a rival firm.

Morton Pierce, partner and head of the merger practice at Dewey Ballantine, agrees. "The buyer would have to get comfortable that the liabilities it was assuming were not going to destroy the value it believed it was getting through the merger."