Most EY partners seen approving consulting split

Marie-Laure Delarue, EY's global vice chair for assurance. Picture: Getty Images

Partners in auditor EY are expected to give approval for spinning off the company's consulting arm and listing it on the stock market by the end of the year, a senior EY official has said. 

Over 13,000 partners — out of EY's 365,400 staff — are due to vote on the divestiture plan in April with the outcome known quickly, said Marie-Laure Delarue, EY's global vice chair for assurance and member of the company's global executive.

"We expect a massive approval, but it's not to say there is still not a lot of work to do," Ms Delarue said. "A lot of our clients tell us it makes total sense, but you have to do it right. Regulators are, in general, supportive."

Just over half of EY's 145 country networks, including partners of the Irish network, will vote on splitting each national network into separate auditing and consultancy units. It is a move which does not make sense for all networks, Ms Delarue said. 

EY, formerly known as Ernst & Young, is one of the world's Big Four auditors, along with Deloitte, PwC and KPMG. It had revenues of $45.4bn (€42bn) in the year to June 2022.

Country networks which vote to reject splitting up would stay with what remains of EY, which will include advisory, tax and sustainability services alongside auditing, she said.

The "Newco" will account for $25bn of revenue and 7,000 partners, with what's left of EY representing $20bn and 6,000 partners.

Staffing

The divestiture has raised questions over attracting and retaining auditors when the consulting side has traditionally been better paid, an issue Ms Delarue said regulators have raised.

"We are going to take this as an opportunity to reinvigorate the attractiveness of the profession," she said.

The aim is for "Newco" to be ready for a stock market debut and issuing bonds by the end of the year, she said, declining to give any detail on where the stock would be listed.

The timing will depend on market conditions and could move into 2024, but will likely mean partners reaping windfalls worth millions of dollars each.

The other Big Four firms have indicated they will not be following suit, for now at least. 

Reuters