UK arm of EY pitches to Rothschild as $80bn breakup looms | Economic news

The UK arm of EY, the accountancy firm, has tapped one of the city’s leading investment banks to advise on a looming $80 billion break that will shake up the global accountancy profession.

Sky News has learned that EY’s UK board has asked Rothschild to advise on the implications of separating its audit and consultancy business – a move that would trigger windfall gains of millions of dollars. books for hundreds of partners.

City sources said on Friday that the Rothschild mandate could also extend to parts of EY’s European network.

His UK company is one of EY’s financially largest in the world, second only to the US, and the views of his partners will be key in determining whether the historic break can continue.

The UK-based partners were told of the breakup plans several weeks ago, although the final details of the deal voting and approval process have yet to be finalized.

An official announcement from EY regarding the plan is expected in a few weeks.

EY’s UK firm has nearly 800 partners, whose votes will be crucial.

The accounting giant has been working for months on plans to separate its consultancy business from its audit firm, believing that by removing conflicts of interest between the two parties, each would be more valued on a stand-alone basis.

The audit firm would continue to be owned by its partners, while the advisory business – which advises companies on areas including financial restructuring, negotiation, tax and technology transformation – would seek to be listed on the a large international scholarship.

This week, Carmine Di Sibio, global chairman of EY, told the Financial Times that he could land a windfall of $10 billion in consulting fees from multinational tech companies by clearing such disputes.

In the UK, the collapses of companies such as BHS and Carillion have stoked anger over auditor performance, prompting the creation of a new statutory regulator.

EY looks certain to become an outlier among the Big Four audit firms if it implements a breakup.

Deloitte and PricewaterhouseCoopers have both pledged to keep the existing integrated model, while Sky News revealed last week that the KPMG boss had brushed off EY’s plan by hinting to colleagues it was akin to a act of corporate vandalism.

Bill Thomas, KPMG’s global chairman, told partners that the longevity of KPMG’s existing structure was one of its key attributes.

“Our responsibility is to leave the company better than we found it for those who come after us – we are the stewards of the company for our mentees and the next generation,” he wrote in a note. recent.

“To monetize the goodwill of our company created over a hundred years ago, to the detriment of the next generation, would be completely contrary to our culture.”

A spokesperson for EY UK declined to comment.

Leave a Comment