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EY executives decide to continue the audit and consulting division

EY executives decide to continue the audit and consulting division
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EY’s global leaders are set to roll out a plan to break up its audit and consulting businesses, with partners at the Big Four group close to multibillion-dollar payouts as part of its most radical overhaul in two decades.

The of the company The global executive committee met on Monday to discuss the deal, with the decision to proceed with the expected split this week, according to people familiar with the arrangements.

EY said on Monday that discussions were ongoing and “no decision has been made to move to the next phase”.

However, planning has begun to announce the decision this week, as well as to inform clients about the next steps in the process once the decision is approved, people at the firm said.

The decision to proceed with the split will pave the way for the firm to seek further approvals at the regional and national level, including a nationwide vote by the approximately 13,000 partners who own and manage the business.

EY’s global chairman Carmine Di Sibio told the Financial Times in mid-July that he hoped to win his approval, saying he hoped the firm’s global management would agree to proceed with the break-up several weeks ago. within “several weeks”..

But the timeline has slipped repeatedly as the partners disagreed over how to divide the billions of dollars in liabilities and the firm’s advisers struggled to resolve the issue. a number of regulatory issues in various jurisdictionsincluding China.

If approved, the plan would see EY spin off its advisory business, which offers advice, deal advice and managed services to companies, and likely go public.

The move is intended to free the consulting business from conflicts of interest that limit EY’s work with audit clients.

The split will result in seven-figure cash payouts to audit partners and multimillion-dollar stock awards for thousands of partners who will move into the new consulting business.

Job offers to prospective advisory partners, which depend on being offered £7m-£10m worth of shares in the start-up, are virtually pending a decision, he said. process. But foreign candidates have been given a hint in recent days that the demerger will go ahead, meaning they will receive share awards if they join, the person said.

Ratification of the agreement by the global executive committee this week will not guarantee that the disengagement will continue. The proposed break-up would still need the approval of partners in each country, and countries that refuse to secede will be excluded from the break-up.

If partners in key jurisdictions such as the US or the UK reject it, the entire disengagement plan will collapse. Partner votes are expected to take place between November and January, later than originally planned.

“We have a long way to go,” said one person briefed on the planning. “It’s very, very complicated.”

EY’s rivals Deloitte, KPMG and PwC have together dominated the global accounting industry for 20 years. rejected the idea of ​​following his rival by disbanding their businesses.

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