E&Y barred from consulting activity for five years in Cap Gemini deal

Ernst & Young will be legally barred from competing with the consulting giant created by the sale of its consultancy arm to Cap Gemini for five years, it emerged today.

Written by Chris Quick, online editor

Accountancy Age, 29 Feb 2000

Paris-based consulting and IT giant Cap Gemini will also be able to use the E&Y brand name for up to four years under the terms of the £7bn deal announced this morning.

A five year non-compete provision has been signed by Ernst & Young.

A spokeswoman for the firm said: 'We are not going to separately re-enter the consulting business.'

Under the deal, some 36% of the equity of the combined management consulting giant will be owned by current E&Y audit and consulting partners.

The details emerged from an analysts presentation on the deal, which also said the deal would be assumed to be effective from the second quarter of 2000 onwards, and that it would be accounted for under the French GAAP 'pooling of interest' method.

For more details of the deal click on this morning's story:

Ernst & Young agrees sale of consultancy arm to Cap Gemini .