Although EY had “one of the most successful years in the history of the organization with record global revenues and continued significant growth” according to their own revenue announcement in September, the firm also had a $500 million hole bored into its collective pockets by Project Everest (maybe less depending on who does the accounting and what level of wizard they are). The US and UK arms of the global body were Everest’s biggest and most vocal cheerleaders right up until the point it went bust so it makes sense they might be expected to tighten the old belts.
Ahead of the global revenue announcement, EY UK informed staff not to expect much in the way of bonuses and raises this year, we just had to wait to see if the same austerity measures would be extended to partners come payout time. Surprisingly, they were.
Reported Bloomberg yesterday:
Ernst & Young LLP partners in the UK saw their share of profits drop for the first time in three years as the Big Four audit firms face economic uncertainty.
Partners at the accounting firm’s UK arm pocketed an average of £761,000 ($923,000) last year, compared with £803,000 the year before. The firm also cut its pay rise and bonus pool by about 30% to £155 million.
Not quite the $1.7 million to $3.6 million for audit partners and $5.95 million to $8.1 million for consulting partners they were expecting when Everest was in play this time last year.
Going by the press release EY UK put out this morning they didn’t have a bad year, reporting record revenues of £3.8 billion ($4.6 billion):
EY has achieved a second year of double-digit revenue growth, with UK revenues up 16% and fee income increasing to a record £3.76bn from £3.23bn the previous year. This market leading performance has been underpinned by long term investments in people, audit quality and technology. Distributable profits before tax increased 4% to £659m.
EY achieved strong growth across all of its service lines in the UK. Tax revenues grew by 20%, Consulting 18%, Assurance 17% and Strategy and Transactions by 8%. EY has also seen strong demand across its industry sectors with stand-out performances from Energy (28% UK revenue growth), Government & Infrastructure (26%), Technology, Media & Telecoms (15%) and Financial Services (12%).
Compare this to global service line growth for the year ended June 2023:
- Assurance: $15.1 billion, 11% growth
- Consulting: $16.1 billion, 21.6% growth
- Strategy and Transactions: $6.1 billion, 8.4% growth
- Tax: $12.1 billion, 12.2% growth
Was it economic uncertainty that hurt EY UK partners’ pockets this year or was it Everest? When the split’s biggest cheerleaders conceded the loss in April, WSJ wrote about leadership going out of their way to assure partners their payouts would be protected best they could:
Global leaders of the company sought to reassure partners that they are working to cushion the financial impact from the abandoned project. That cost mostly fell on EY’s U.S. and U.K. partnerships, which did the lion’s share of the work on the breakup.
Executives at EY’s global unit said on an internal call that they plan to use a combination of bank borrowing and accounting maneuvers to ensure that the dead-deal costs have “minimal” impact on partner earnings.
£42,000 when you make almost a million does in fact seem pretty minimal. Still, it’s got to hurt. Our thoughts and prayers to them during this difficult time.