Although EY has already decided who will lead the divided factions of audit and consulting, the necessary vote through which roughly 13,000 partners will decide whether or not to split has a few more hurdles standing in the way before it can happen.
When the news of the split first broke in May of last year, it was rumored the vote would go down that summer. Then the winter. And, most recently, the vote was expected to take place by the end of this quarter. As we approach March, Global Managing Partner Andy Baldwin says the firm wants to hold the vote in April or May, though the split may not happen until the end of the year or possibly into 2024.
The break up of the Big Four accounting firm is “inevitable” due to regulatory and capital return pressure, Andy Baldwin, a global managing partner at EY, said in an interview with Bloomberg Radio on Monday. The firm stands by its plan — codenamed Project Everest — for the split and wants to ballot in April or May.
“This is probably the most complex corporate transaction in history,” he said. “The plan is we will be putting this to the vote probably in April or May,” and target “some form of capital transaction” by the end of the year, although that timetable may slip.
You can hear Andy Baldwin’s Bloomberg Radio interview here. In it, he’s asked if the split is something EY wants to do or if it is a necessity due to regulatory pressure (read: independence rules), to which he says regulatory and capital pressures are mostly driving the decision. Standing in the way currently are some details yet to be worked out, the main ones being a hammering out of the legal liabilities that are currently shared among partners and sorting out pensions, which he says “at different points of time run deficits” like many corporate entities. The split “involves effectively 77 simultaneous deals so inevitably we’re sort of working through a lot of complex issues with the teams and obviously for the partners,” he said.
The liberated consulting business is expected to raise $30 billion when it goes public.
So that’s where we’re at with the EY split in current day, consider yourself sufficiently caught up.
Previous Project Everest updates