As EY considers separating audit from the rest of the firm, partners may also be considering the possibility of receiving payouts of millions of dollars.
Most of the Big 4 firm’s 13,000 partners would be eligible for the payout, according to the Wall Street Journal, which also reported Monday that a possible IPO of the consulting group would be scheduled for late 2023 if partners, who annually make roughly $850,000 to $900,000, approve the plan.
“Under a May version of the internal proposal, the consulting business would go public, hoping to sell a stake of around 15% of the company for more than $10 billion, while borrowing $17 billion,” the Journal reported, citing people familiar with the matter. “The current partners would own around 70% of the company with around 15% reserved for stock awards mostly for staff.” The IPO money, which would be borrowed by the consulting side, would pay off the audit partners to the tune of two to four times their annual pay.
The plan has a code name – Project Everest – and it calls the audit arm AssureCo, with the tagline “trust and transparency.” The consulting practice is called NewCo, with a mission to “advise, transform, operate.” AssureCo will likely keep the EY name and would likely earn about two-thirds of its revenue from auditing, the Journal reported.
Deloitte is also considering a split, according to multiple reports. The SEC is investigating firms for possible conflicts of interest and a division of the two parts of the business would send a signal that they are independent of one another. EY has faced a string of investigations from failed audits, mostly in Europe.