EY chiefs are close to deciding to move forward with their audit and advisory division
EY’s global leaders are preparing to greenlight a plan to break up the audit and consulting business, bringing partners in the Big Four group closer to multi-million dollar payments as part of its two-decade radical overhaul.
The company’s global executive committee met Monday morning in New York to discuss the deal, according to people familiar with the arrangements, with a decision to go ahead with the split expected this week.
On Monday, EY said discussions were continuing and “no decision has been made on moving to the next stage.”
However, planning has begun to announce the decision as soon as this week along with calls to brief customers on the next stages of the process once the decision is confirmed, according to people at the company.
A decision to go ahead with the split will pave the way for the company to gain further approvals at the regional and national levels, including a country-by-country vote by the nearly 13,000 partners who own and operate the business.
Carmen Di Sibiu, EY’s global president, had been hoping the company’s global leadership would reach an agreement to move forward with the split several weeks ago, telling the Financial Times in mid-July that he hoped to get their approval within weeks.
But the schedule has fallen back repeatedly as partners disagreed over how to split the multibillion-dollar commitments and company advisers struggled to resolve a slew of regulatory issues in various jurisdictions, including China.
If approved, the plan would lead EY to separate, and likely publicly list, its advisory business, which provides corporate advisory, deal advice and managed services.
This move aims to free the consulting business from the conflicts of interest that prevent it from winning work with EY’s audit clients.
The split will result in seven-figure cash payments to audit partners and multimillion-dollar stock awards to thousands of partners who will transition into the new consulting business.
A person familiar with the matter said job offers to potential consulting partners, which depended on new entrants being offered £7m to £10m of equity in the newly formed business, had been put on hold pending a decision. the operation. But this person said outside candidates have given a signal in recent days that the breakup is likely to continue, meaning they will receive their share prizes if they join.
The ratification of the agreement by the Global Executive Committee this week does not guarantee the continuation of the separation. The proposed division would still need the consent of the partners in each country, with those countries that reject the division being excluded from the division.
The entire breakup plan would collapse if partners in a major jurisdiction, such as the United States or the United Kingdom, rejected it. The partner vote is expected to take place between November and January, later than initially scheduled.
“There is still a long, long way to go,” said one person familiar with the planning. “It’s very complicated.”
EY’s competitors, Deloitte, KPMG and PwC, who together have dominated the global accounting industry for 20 years, have so far rejected the idea of following their rival by breaking up their businesses.