Australian Financial Review has published slides shown to EY staff in a July global webcast led by Carmine Di Sibio and in them we learn more about EY’s plan — code-named Project Everest — to split off consulting and audit.
First up, the why. “The transformative forces reshaping professional services are evolving at unprecedented speed and scale – there is an imperative to consider strategic options now,” it reads. Translation: this will let us sell consulting services to audit clients without pesky regulators being up our asses about it.
Earlier Financial Times coverage stated the advisory side — horribly dubbed “NewCo” — would be 70 percent partner owned, have about $25 billion of revenue, and would aim for strong double-digit percentage growth. This lines up with what staff saw in the webcast slides.
Audit partners are expected to receive a cash payout of $2 million while consulting partners could receive shares in ‘NewCo’ worth up to $8 million.
Part of the EY split strategy includes $1.5 billion in cost cutting measures and cleaning up “middle layers” of management. “We don’t envision a lot of job cuts,” Carmine Di Sibio told Financial Times, adding that some partners in management roles would be pushed back into client work.
Repeated across these slides is the message of value, how the split will unlock value for the business enterprise, member firms, partners, and EY people. Di Sibio has said if EY doesn’t split, the firm is leaving $10 billion a year on the table; a split would effectively double what consulting is bringing in now ($11.1 billion in 2021, up 6.4% from 2020.
Independence restrictions get a shout-out in the summary slide, acknowledging that the split would open up a huge market segment currently out of EY’s reach due to said independence restrictions.
And of course the firm answers the most important questions of all: what’s in it for me? The slide claims faster promotions, better mobility, and there’s a big sack of money clip art so that must mean it will pay off for firm employees.
EY was expected to make a decision by the end of summer however it looks like things may be dragging out a bit longer than anticipated and could come as late as December. According to the slides, the whole thing could be a done deal by calendar end 2023, not to be confused with EY fiscal year end which falls in June. Though sources are telling WSJ the firm has debt problems holding up any deal.
In discussion of this global webcast on Reddit, sentiment seems to be that NewCo is cool and AssureCo is the red-headed stepchild of the split. I mean duh, look at the kind of money audit brings in compared to consulting, and that’s with independence rules holding them back.
Also of note while we’re talking about the peanut gallery, ever since Wall Street Journal first broke the story of the potential split students considering EY and current interns have been understandably spooked and wondering if the split will impact them. This could mean trouble for EY’s campus recruiting at least until the split is complete.
Rest easy, young one, audit is universally considered inferior wherever you go. Particularly by auditors.
The seven slides EY used to pitch its split to staff [Australian Financial Review]
Best lines ever published by Going Concern – and it is so true!
>>Rest easy, young one, audit is universally considered inferior wherever you go. Particularly by auditors.<<
The only thing consider lower is tax and if you really want to be an amoeba according to the rest of the firm get a career in tax compliance!
Looks like the same generic tautological tripe they pump out for everything from their sub par intellects in Big 4.
Audit is inferior when the economy is strong. As soon as there’s a recession, consultants will suck your dick for a job.
Audit is only inferior when the firms, and their staff, accept themselves as inferior. If the firms and their staff weren’t so fucking lazy, auditors could be as respected, appreciated and well paid by our society as doctors and lawyers.
One word: Greed.
Companies complain about staffing problems – Gen Z & milleneals etc. being lazy. I guess this generation refuse to be monetize.
Get sick (burnout) for working or get injured, and they (corporate/company) will replace you immediately. And then what, they say next gen is entitled. I think it is the other
way around. Huh! Ironic
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