Status: 04/12/2023 10:07 a.m
The auditing group EY has stopped the planned spin-off of the consulting business. Apparently, internal resistance to the project was too great – especially in the United States.
The auditing and consulting company EY is not splitting up after all. The group announced yesterday that the so-called “Project Everest”, into which more than 100 million dollars have already flowed according to information from the “Financial Times”, has been called off.
It was actually planned that the 13,000 partners of the group formerly known as Ernst & Young should vote in April on the separation of the lucrative consulting business. It should then be taken to the stock exchange. In mid-February, a member of the company’s management told the Reuters news agency that “huge approval” was expected for “Project Everest”. The partners involved in EY could have expected millions in proceeds as a result.
The auditor EY and the “Big Four”
EY is a globally operating network of legally autonomous and independent companies that are active in the areas of auditing, tax advice, transaction advice, risk advisory, financial advisory as well as corporate and management consulting and classic legal advice.
With more than 365,000 employees and a turnover of 45.4 billion dollars in 2022, EY is one of the so-called “Big Four” of auditors – alongside KPMG, Deloitte and PwC. The companies audit large, international corporations and advise companies as well as many governments and state institutions.
US unit opposed split
But apparently the internal resistance to the split was too great. A note from EY’s 18-strong global leadership team, seen by the Financial Times, said: “We have been informed that the US Executive Committee has decided not to proceed with the design of the Everest project, given its strategic importance of the US member company for Project Everest, we are suspending work on the project.”
The business unit in the United States is the largest national company of EY. Apparently, there was concern that the spin-off of the lucrative tax consultancy business would do more harm than good. The US unit therefore feared for its competitiveness
Conflict of Interest Warning
With the spin-off announced in September, EY, based in London, wanted to meet the demands of many supervisory authorities. Possible conflicts of interest are considered problematic when auditors also advise the companies they audit. The most explosive example of this in recent years may have been the Wirecard case in Germany.
The fact that the split has now failed in its already planned form also raises questions about the future of EY boss Carmine Di Sibio: He had pushed ahead with the restructuring of the group and was apparently supposed to lead the consulting business after the split.