E&Y partners out of pocket
Partners at Big Four firm, Ernst & Young, have lost money on the all-share sale of its consulting division to Cap Gemini.
According to The Daily Telegraph, capital gains tax paid by the partners soon after the May 2000 deal cost more than their stakes are now worth, because shares in Cap Gemini have since plunged.
One partner told the newspaper that the ‘majority of partners are at this stage out of pocket because they had to pay very large amounts of tax’.
The tax payment was a result of E&Y selling a 30% stake to fund the firms pension and indemnity insurance costs when the shares were worth £104.55. They currently stand at about £14.
E&Y chairman, Nick Land, played down the reports saying that only a ‘very significant minority’ of the 466 partners involved in the transaction would be out of pocket.