EY Ireland’s managing partner Frank O’Keeffe believes the Big Four firm’s proposal to split its audit and consulting businesses is a chance to “positively disrupt professional services” globally.
The firm’s roughly 128 Irish equity partners will vote over the coming months on a plan to separate the practice into two, distinct organisations. Designed, in part, to address regulatory concerns around potential conflicts of interest between the audit and advisory side of the business, the move would see its lucrative consulting business hived off and prepared for flotation on the stock market.
The firm’s global executive committee voted earlier this month to progress the plans and put the demerger proposal to EY’s 13,000 equity partners globally.
Speaking to The Irish Times in New York last Friday, where he was attending the annual EY Entrepreneur of the Year chief executive retreat, Mr O’Keeffe said the Irish vote would likely take place “probably just before or just after the Christmas period”.
Planning regulator Niall Cussen: We can overcome the housing crisis, ‘if we put our minds to it’
On his return to Web Summit, the often outspoken chief executive Paddy Cosgrave is now an epitome of caution
Surviving a shake-up: is restructuring ever good for staff?
The Irish Times Business Person of the Month: Dalton Philips, Greencore
Not a ‘break-up’
Responding to recent industry commentary, Mr O’Keeffe said: “We don’t see this as a break-up of the business. We see it as an opportunity. The only reason we would do it is if we felt that it was absolutely right for our market, for our clients and for our people.”
Sandy Peters, senior head of global advocacy at the CFA Institute in the UK, the professional body for the investment industry, told the Financial Times last week that the audit and consulting “skills are complementary”.
Ms Peters, a former KPMG partner who opposed splitting up the Big Four in 2019 when the UK competition authority was weighing a proposal to do so, said: “There’s $5 trillion (€5 trillion) of goodwill on the books of US public companies that needs to be impairment tested. Are those skills all staying on the audit side?”
But the Financial Times also reported a recent independent survey of executives of large companies revealed an appetite for the split.
“Over 60 per cent of [executives] said they would buy more from EY if we were to go ahead and do this”, Mr O’Keeffe said, which he described as an “endorsement” from the firm’s current and potential customers.
“We’ll continue to work our way through this. It’s pretty complex. There’s a lot of things to be doing, to get right. And we will probably be able to do that, I’d say, within shorter than a 12-month period,” he said.
