EY split timeline: The abandoned break-up plan

EY split timeline: The abandoned break-up plan

After years of deliberations and millions of dollars spent, EY has officially pulled the plug on its greatly anticipated break-up plan

EY split timeline: The abandoned break-up plan

Just weeks ago, accounting giant Ernst & Young (EY) looked to be on course to proceed with ‘Project Everest’ – the long-anticipated restructuring of its global operations.

Hailed as the biggest accounting industry shake-up since 2002’s collapse of Arthur Andersen, the move was set to see the separation of the firm’s audit and advisory businesses, with the latter being floated on the stock exchange.

But following several months of delays, votes, internal conflicts and hundreds of millions of dollars spent, EY announced earlier this week that the plans have been formally abandoned.

With this latest move representing the climax of a long-running saga, we’ve compiled a brief timeline of all the key events.


September 2018

Calls are made for the Big Four accounting firms to be broken up due to a lack of competition in the audit market, as EY reports record global revenues of nearly $35bn. Then-CEO Mark Weinberger hits back at the calls, defending the importance of a “multi-disciplinary practice”.

2021

In a move representing a major change of position from Weinberger’s leadership, break-up plans are first raised internally amid a boom for the consultancy services industry. This was largely driven by increased demand for IT transformation projects as more companies urged employees to work remotely during the pandemic.

May 2022

Internal discussions regarding a restructuring of EY’s global operations are first reported by the Financial Times. The motivations for the project are described as an attempt to defy the conflicts of interest often associated with audit and advisory firms.

The firm also confirms that is exploring a public listing or partial sale of its advisory arm as part of the restructuring plan.

June 2022

Reports emerge that EY partners could be in line to receive windfalls worth £6.5m each (seven to nine times their annual salaries) if the firm follows through on plans to split its audit and advisory operations and float the latter on the stock exchange.

July 2022

EY’s 312,000 staff are told on a call hosted by chief executive Carmine Di Sibio that the firm expects to report record revenues of $45.4bn. Contrary to expectations, little new information is shared regarding the break-up plans, prompting concerns from some partners.

September 8, 2022

Following months of delays and disagreements, EY bosses officially approve the plan to split the firm. The proposal proceeds to a vote of the firm’s 13,000 partners.

Big Four rival Deloitte posts record profits of $59.3bn. Chief executive Punit Renjen rejects the possibility of the firm pursuing a similar break-up plan.

September 9, 2022

Chinese regulators declare that EY has failed to devise a satisfactory deal structure. The firm’s China practice subsequently confirms that it will not be part of the break-up plan.

October 2022

EY Israel follows in the footsteps of China, with the territory’s 90 partners deciding that they will not participate in the firm’s planned break-up.

November 14, 2022

Voting by EY’s UK and US partners on the break-up plan is delayed to 2023, owing primarily to difficulties in finalising the global framework agreement. The ballot process was due to commence in November and conclude in early 2023.

November 27, 2022

EY bosses establish a new decision-making “transaction committee” to settle disputes over which assets, liabilities and people retained by the audit business.

March 8, 2023

Project Everest encounters its biggest stumbling block yet as US head Julie Boland announces that Project Everest is to be reworked following internal disputes regarding how much of its tax business should stay with the firm’s audit arm. The plans are effectively paused.

Shortly after, EY bosses commit to a negotiation “sprint” to resolve the issues caused by Boland’s intervention.

March 23, 2023

Following up on her remarks two weeks later, Boland expresses uncertainty as to whether EY’s break-up plans can be salvaged.

April 2023

Following months of disagreements and the fallout from the US opposition, EY officially confirms that it has scrapped Project Everest.

In a note sent to partners, the firm confirmed it would now pursue a different deal, and that it would retain the vision to create two distinct organisations.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

Professional Services Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine

Accounting Firms Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021

Making Tax Digital Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource