Two senior EY partners said the firm remains committed to the split and that the issues would be “resolved within weeks not months” to ensure “momentum across the deal”.
The pause on EY’s plans to split into separate auditing and consulting businesses will last “weeks, not months”, senior partners say, after the powerful US branch raised issues about the tax skills that will be retained in the planned independent audit operation.
It has also emerged that the tax experts split across the newly independent audit and consulting arms will be in competition with each other from the first day of the split, and that the as-yet unfinalised non-compete agreement to keep the audit business out of providing consulting services will be “not less than three years”.
Partners on the consulting side will likely have their pay cut but receive potentially lucrative shares from a newly floated consulting business that they would be unable to sell for a period of time. Higher interest rates have increased the cost of debt and hit the forecast valuations of the consulting business since the plan was conceived.
The US firm is all-powerful within the global EY network, accounting for about 40 per cent of its $US45 billion in revenue, and partners from around the world believe it is US partners, along with UK partners, who will effectively dictate if the split goes ahead.The split will require the country-by-country approval from each partnership and will involve 75 of the firm’s roughly 150-plus partnerships around the world.
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