EY global leaders are preparing to give the go-ahead to a plan to split up its audit and consulting businesses, bringing Big Four group partners closer to multimillion-dollar payouts as part of its most sweeping overhaul in two decades.
the of the company The global executive committee met Monday morning in New York to discuss the deal, according to people familiar with the arrangements, with a decision to proceed with the split expected this week.
HEY He said Monday that discussions were continuing and “no decision has been made about moving to the next phase.”
However, planning has begun for an announcement of the decision as early as this week, as well as calls to inform clients of the next stages of the process once the decision has been confirmed, according to people at the firm.
A decision to go ahead with the split would pave the way for the company to seek further regional and national approvals, including country-by-country votes from the roughly 13,000 partners who own and run the business.
Carmine Di Sibio, EY global chairman, had hoped the company’s global leadership had reached an agreement to proceed with the breakup several weeks ago, telling the Financial Times in mid-July that he hoped to get their approval. in a “couple of weeks”.
But the schedule was repeatedly pushed back as partners disagreed on how billions of dollars in liabilities should be divided and company advisers struggled to resolve. a host of regulatory issues in different jurisdictionsincluding China.
If approved, the plan would result in EY spinning off, and most likely going public, its advisory business, which offers corporate consulting, deal advice and managed services.
The move is intended to rid the advisory business of conflicts of interest that prevent it from winning work with EY audit clients.
A split would result in seven-figure cash payments to audit partners and multimillion-dollar stock awards for the thousands of partners moving into the new advisory business.
Job offers made to potential advisory partners, which depended on newcomers being offered £7-10m worth of shares in the newly spun-off business, had been on hold in practice awaiting a decision, said a person with knowledge of the process. But outside candidates had been given an indication in recent days that the breakout was likely to continue, meaning they would receive their stock awards if they joined, the person said.
The ratification of the agreement by the global executive committee this week would not guarantee that the separation would continue. The proposed split would still need the approval of the partners in each country, and those countries that reject the split will be excluded from the split.
The entire breakup plan would collapse if partners in a key jurisdiction like the US or UK were to reject it. The member votes are expected to take place between November and January, later than initially planned.
“There’s a long, long way to go,” said one person briefed on the planning. “It’s very, very complex.”
EY rivals Deloitte, KPMG and PwC, which together have dominated the global accounting industry for 20 years, have so far rejected the idea of following his competitor breaking up their business.
