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EY bosses approve plan to take consulting business public

2022-09-09T04:16:02.360Z


The separation operation of the audit will allow the partners to achieve millionaire profits EY has officially kicked off its spin-off. The firm intends to separate the auditing business from the consulting business and take the latter to the stock market. This will allow the value created in the firm to crystallize over the years and the partners to achieve millionaire profits in the form of bonuses or shares. For now, the firm's global executive committee has approved the operation, whi


EY has officially kicked off its spin-off.

The firm intends to separate the auditing business from the consulting business and take the latter to the stock market.

This will allow the value created in the firm to crystallize over the years and the partners to achieve millionaire profits in the form of bonuses or shares.

For now, the firm's global executive committee has approved the operation, which has been discussed for a few months.

Now it's up to the approximately 13,000 members to vote for it.

The firm anticipates that the country-by-country vote will begin at the end of 2022 and conclude at the beginning of 2023. Before that, it will give more information to the partners about the implications of this separation.

EY has announced that calendar and the separation "into two different and multidisciplinary organizations" in a statement in which neither the audit business, nor the consulting business, nor the IPO plans are cited.

“Having carefully considered various options, we strongly believe we understand the changing landscape to build businesses that redefine the future of our professions, create exciting new opportunities and deliver greater long-term value for EY professionals, clients and communities,” he says. the signature on your statement, something ethereal.

Conflicts of interest

The presence of auditing and consulting businesses in the same firm has advantages and disadvantages.

It gives scale and recurring income, but at the same time it is a source of conflicts of interest.

If one of the Big Four (EY, Deloitte, KPMG and PwC, the four big professional services firms) takes over the audit of a large company, it cannot just provide consulting services, operations advice, tax and legal services and other services due to potential conflicts of interest.

The consulting business grows faster, but it is also more exposed to swings.

Despite everything, EY is alone at the moment in this idea of ​​​​separation.

The rest of the Big Four have denied, more or less emphatically, that they are considering a similar movement.

Directors of some of them see something questionable that the current partners capitalize to a great extent the value accumulated over the years by the firm through the operation.

Some also link the operation to the risk of multimillion-dollar fines and lawsuits for the audit branch due to reviews of Wirecard, in Germany, and NMC Health, in the United Kingdom.

According to

The Wall Street Journal,

EY Global CEO Carmine Di Sibio stands to make tens of millions of dollars.

Di Sibio himself explained to the New York newspaper that EY plans to raise some 11,000 million dollars by placing 15% of the capital of its consulting business on the stock market.

That would give a valuation of about $73 billion.

The firm also plans to borrow some $18 billion, according to Di Sibio.

Most of those funds will go to the partners, although the manager declined to specify how much.

He himself stands to make several tens of millions of dollars from the operation, which comes shortly before he was scheduled to be statutorily retired.

The professional services firm plans to go public with its consulting business by the end of next year if market conditions are right.

Before, and assuming that the partners vote in favor of this plan that will provide them with millionaire profits, they will have to carry out the separation of the businesses and obtain the regulatory permits, a process with some complexity.

Also, decide the fate of its more than 300,000 employees.

While in some cases the assignment is clear to one business or the other, many are in a gray area, serving both businesses depending on the circumstances.

Once the consulting division is listed, the firm also plans to grant stock incentives linked to growth and profitability targets, which may come at the expense of cash payments but pay off for partners.

Source: elparis

All business articles on 2022-09-09

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