Ernst & Young (EY) is this week expected to get the green light for a split of its auditing and consulting businesses, paving the way for the biggest shake-up in the accounting profession in more than 20 years, according to a Wall Street Journal report.
The accounting giant’s global executive committee, which oversees the firm’s 312,000-person worldwide network, met on Monday to put the finishing touches to the plan for the global breakup, the US newspaper said, citing people familiar with the matter.
The committee is expected to approve the plan later this week, which will trigger votes on the deal by EY’s roughly 13,000 partners, who stand to make windfalls averaging more than a million dollars each.
The split, penciled in for late next year, would separate EY’s accountants who check the books of companies such as Amazon Inc. from its faster-growing consulting business that advises on technology, deals and other issues.
The newspaper reported that an EY spokeswoman said the discussions were continuing and that “at this time, no decision has been made on moving to the next phase.”
EY is one of the 'Big Four' firms that dominate auditing in major financial markets and whose multi-billion-dollar consulting arms compete with the likes of Accenture (NYSE:ACN) PLC.
EY’s planned split would divide its US$45bn-revenue global network roughly 60:40 between the consulting business and the audit-focused partnership, which would retain the EY brand, according to a May version of the proposal reviewed by the Wall Street Journal.
The new consulting company was forecast to raise some US$10bn by selling a 15% stake to the public at the time of the split, in addition to borrowing US$17bn to help fund partner payouts, the newspaper added.