EY partners will vote to split the Big Four into separate consulting and audit businesses in a historic moment for the firm.
Voting is set to begin on a country-by-country basis in late 2022 and end in early 2023, EY said in a statement on Sept. 8.
It is confirmation that EY’s top executives are moving ahead with the split after months of negotiations with partners.
“By carefully considering different options, we firmly believe 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 people, clients and communities of EY,” EY said.
Discussions will continue with the partners until the end of the year about the process, but plans have been in place since at least early this year about a possible split.
Senior staff have gathered at the five-star Royal Lancaster Hotel in Hyde Park for closed-door discussions. But a series of roadblocks have been hit, delaying a decision, sources with knowledge of the discussions said Financial News it was originally set to take place earlier this summer.
read EY partners receive a top-secret briefing on the firm’s Hyde Park Hotel break-up
To compensate for the pay cut, the partners of the new consulting firm, which would go public, would be given shares in the business. But disclosing the details has proved tricky in such a complex division, with clarity sought by those inside the firm about when shares can be granted, pension rights and where staff work in areas such as tax, actuarial and valuations. in both parts of the business – would end up sitting.
Hywel Ball, UK chairman of EY 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 customers, people and stakeholders are changing and I am proud that we are reshaping the shape of our business in the UK and globally in so that EY is well positioned to build on its success in the future.”
The discussions have taken place in an environment where global regulators are taking an increasingly strong line on conflicts of interest in the auditing and consulting profession.
In the UK, an operational separation between audit and advisory work will be required by 2024. Freed from audit conflict obligations, talk of separations at professional services firms has also been motivated by a desire to take on more lucrative advisory work with customers.
The long road to separation
EY’s UK-based partners are set to brief on the break-up plans
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EY partners receive a top-secret briefing on the firm’s Hyde Park Hotel break-up
EY’s plan to split audit and consulting arms slowed by leadership changes, debt
EY partners set for windfall amid plans to break up
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EY looks at divesting 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