EY partners will vote on breaking the Big Four firm into separate consulting and audit businesses in a landmark moment for the firm.
Voting is set to begin on a country-by-country basis in late 2022 and conclude in early 2023, EY said in a statement on 8 September.
It’s a confirmation that EY’s top brass are pressing ahead with the split after months of negotiations with partners.
“Having carefully considered various options, we firmly believe that we can embrace the changing landscape, build businesses that redefine the future of our professions, create exciting new opportunities, and deliver greater long-term value for EY people, clients and communities,” EY said.
Discussions will continue with partners until the end of the year around the process, but plans have been in train since at least early this year around a potential separation.
High-level staff have flocked to the likes of the five-star Royal Lancaster hotel on Hyde Park for closed-door discussions. But a variety of roadblocks have been hit, delaying a decision that sources with knowledge of the discussions told Financial News was initially set to be made earlier this summer.
READ EY partners get top-secret briefing on firm break-up at Hyde Park hotel
To compensate for a reduction in salary, partners at the new consulting firm, which would be floated, would be given shares in the business. But hammering out the details has proved tricky in such a complex split, with clarity requested from those inside the firm as to when the shares could be vested, pension entitlements, and where staff in areas such as tax, actuarial, and valuations — who work across both parts of the business — would end up sitting.
Hywel Ball, EY’s UK chair said: “The creation of two strong, independent businesses would help us to better meet the needs of our clients; create compelling careers for our people; and serve the public interest by providing greater choice in the market and a global response to regulatory concerns…The needs of our clients, people and stakeholders are changing and I’m proud that we are reviewing the shape of our business in the UK and globally so that EY is well positioned to build on its success into the future.”
Discussions have taken place in an environment where global regulators are taking an ever-firmer line over conflicts of interest in the audit and consulting profession.
In the UK, an operational split between audit and advisory work will be required by 2024. Freed from audit conflict obligations, talk of splits at professional services firms has also been motivated by the desire to pick up more lucrative consulting work with clients.
The long road to a breakup
EY’s UK-based partners set for briefing on break-up plans
EY ropes in Magic Circle law firms to advise on potential break-up
EY executives on the brink of signing off split
EY talks on multi-billion-dollar split drag on amid snags: ‘It’s a very lengthy process’
EY partners get top-secret briefing on firm break-up at Hyde Park hotel
EY plan to split audit and consulting arms slowed down by leadership shifts, debt
EY partners set for windfall amid breakup plans
EY’s biggest shake-up in decades could force Big Four to follow
EY eyes splitting global audit and consulting businesses amid regulatory pressure
To contact the authors of this story with feedback or news, email James Booth and Justin Cash