Ernst & Young is looking to conduct partner votes on its proposal to spin off its consulting business in April and kickstart a related capital transaction by around the end of this year, according to its global partner.
The breakup 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.
The firm, which made $45 billion in revenue in the year ending June 2022 and audits more public companies in the U.S. than any other firm, is breaking up to avoid conflicts of interest between its audit and consulting arms, in the hope of unlocking growth in both.
Before that, the company has to get the green light from affiliate firms and partners around the globe early next year, rearrange its client list and get the nod from regulators.
In China, authorities have urged state-owned firms to phase out their use of the Big Four, signaling continued concerns about data security even after Beijing reached a landmark deal to allow U.S. audit inspections on hundreds of Chinese firms listed in New York, Bloomberg reported earlier.
Baldwin reiterated that EY's commitment to China is unchanged. While the firm's Chinese business saw growth slow to low single digits in the past 12 months, EY is optimistic the business will revert to previous growth trajectories.
EY's Chinese firm has decided not to participate in Project Everest for now, Baldwin said.
