A global split could let EY bring in an extra $10bn in advisory fees from the world’s major tech companies, by freeing it from rules that block the Big Four firm from both auditing and selling advice to Silicon Valley’s largest firms, EY’s global chief executive has said.
EY’s plans to separate out its audit business could allow it to begin selling consulting services to tech giants including Amazon, Google, Oracle, and Salesforce, by freeing it from any conflicts-of-interest that could arise in its current form, EY chairman and chief executive Carmine Di Sibio told the Financial Times.
The firm, which dominates the auditing of the world’s major tech firms, could win business worth $5bn to $10bn a year in consulting fees, that it is currently blocked from winning due to regulations blocking accounting firms from selling their audit clients advice.
The comments come as EY is considering plans to break up its global business, with a view to listing a 15 per cent stake its consulting business on the stock market, in a bid to raise $10bn. EY’s leadership are set to meet in New York this week to discuss plans for a split, in the face of mounting pressure on the firm to take a clear stance.
The Big Four firm is now set to come to a decision over the next couple of weeks, Di Sibio told the FT, as he said the plans, if approved, will then be put to a partner vote in October or November this year. Any potential initial public offering (IPO) would be unlikely to happen before autumn 2023, the EY chief added.
Di Sabio also brushed aside claims EY’s plans are being motivated by a push to free its consulting business from any political liabilities arising from the Big Four firm’s audit division, following a series of high-profile accounting scandals involving Wirecard and NMC Health.
This week global head of PwC said its current business model gives it a competitive advantage, as he argued the links between PwC’s audit and advisory businesses are crucial to attracting staff.
The EY chief’s comments come after it emerged that 55,000 EY workers have been impacted by a rare error by the accounting firm’s payroll provider, ADP. The error saw money taken back out 55,000 EY worker’s bank accounts, after their salary payments were reversed.