Financial Times is reporting that EY Israel is joining EY China in rejecting the proposed split of audit and consulting services. “From our point of view in the Israel business, the split will not create benefits,” said EY Israel Managing Partner Doron Sharabany to FT. EY China’s decision was based on regulatory hurdles that could not be overcome, not that anyone over there thought cashing out millions of dollars would not be beneficial to those doing the cashing out.
EY Israel has about 90 partners and 2,000 staff and is in the top 30 for revenue, “although it accounts for less than 1 percent of global turnover” said an insider to FT.
EY operates in 150 countries but global leaders already decided it would be best to leave the smaller entities as they are for practicality reasons, only the top 70 or 75 countries would separate audit and consulting business which obviously would have included Israel had they gone along with the plan. EY will go forward with the split as long as the majority of these top 75 or so countries are down for it.
In any country where partners reject the deal, consultants and tax advisers would remain under the same roof as the auditors but could soon face competition from their former colleagues, said FT. This includes China.
The new global advisory company “would have the right to operate . . . and to build up a practice” in any country that rejected the deal, EY’s global chair and chief executive Carmine Di Sibio told the FT in July.
The advisory arm could also poach consultants from the holdout partnerships immediately. “[It] certainly can go and recruit people . . . if it wanted to,” said Di Sibio.
That kinda sounds like a threat.
EY Israel rejects break-up plan pushed by global bosses [Financial Times]