Rumors have been circulating for months – EY now confirms that it will split its audit and advisory division into two new companies.
– Nordic CEO Jesper Almström says at EY to E24: It was just too tiring to be able to say anything.
The staff asked a lot and were curious about the rumors about “Project Everest,” he said. Several media outlets reported this summer that the global consulting and auditing firm is considering dividing the business into two parts.
Now Almstrom can confirm that this is true – and that management has made up its mind. It is possible that one company will retain the EY name and continue as a multidisciplinary company in the areas of auditing, consulting, tax and sustainability
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The other firm will run advisory activities and expand its investments in advisory, among others within strategy, transactions, innovation and sustainability. This company is not named yet.
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Almstrom cites greater opportunities for growth as the reason for the split. Regulations on auditor activities prevent a company from conducting advisory activities in companies that it also audits.
We cannot form alliances with companies whose accounts we review, such as Google and Amazon. We believe we will provide more value to customers and better job opportunities for employees by splitting into two companies, says Almstrom.
The two companies will be the same size. At today’s scale, business would be $20 to $25 billion annually in both, says Norden’s director.
The auditor’s firm must remain owned by partners. What ownership model will be for the new consultancy is yet to be clarified. Almstrom states that it will be owned primarily by a partner in any event, but it does not rule out an IPO in the long term.
– We must be majority owned by the partners. If there is an IPO, only a small percentage of the shares will be available initially.
– Rumors say that 75% will remain owned by the partners?
– smallest. maybe more. But you never know what will happen in the future.
13,000 partners will vote
Norden’s director is satisfied that they were the first to test a new model. He believes it will make EY more attractive to the best minds.
It would be more fun for everyone when we had fewer restrictions, says Almstrom.
What company do you think would be the most attractive to work for?
For quite a few people, it will be natural for the company to which you belong. I don’t think one is “better” than the other.
Wouldn’t it be difficult to stop him?
– no I do not think so. It’s like asking if it’s better to be a doctor or a lawyer. People like different things. Both companies will become the best place to start their careers for both finance professionals and individuals in transaction and strategy consulting.
The split will not occur in 2023. Before the process begins, EY’s 13,000 partners must vote on the management’s proposal.
– Will it be digital?
– Haha! Yes, we probably shouldn’t have 13,000 partners in one room. If nothing else to ensure we achieve our own goals of being carbon neutral.
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