EY must ‘work through’ strategic questions after split plan shelved, says firm’s Irish head

Strategic questions that EY attempted to answer by splitting its audit and consulting businesses globally remain unanswered and future options are “under review” after being shelved last spring, the big four accounting firm’s UK and Ireland managing partner has said.

Dubbed Project Everest, the plan to hive off and explore a stock market listing for EY’s lucrative global advisory business received the green light from EY leaders in September 2022.

However, the carve out was scuppered by disagreements between EY partners in the US about how much of its tax practice would be retained within the newly separated accounting arm and issues of compensation.

Frank O’Keeffe, managing partner of EY UK and Ireland, said while the plan was “stopped” last spring, the “strategic question” that prompted the proposed separation of its audit and advisory businesses “will remain and we will have to work our way through as to what is the right answer.”

He praised incoming EY global chief executive Janet Truncale, who is set to replace Carmine Di Sibio upon his retirement in July, for her clarity in telling EY partners globally that “if we decide to do this, we will do it together at the right time.”

“So what that really means for us is we will keep things under review,” Mr O’Keeffe said. “And we will consider that over the next few years.”

When it comes to middle market transactions, the movement of money, it’s been slower. The pickup has been slower. I wouldn’t say it’s recessionary

Mr O’Keeffe, who was speaking to The Irish Times in Cape Town last week where was attending the annual EY Entrepreneur of the Year (EoY) executive retreat, said EY Ireland continued to grow its headcount and revenues last year despite market challenges.

Bloomberg reported earlier this year that EY’s global business had tapped a $700 million (€644 million) credit line to prepare for the split, contributing to cost pressures which forced its UK and US affiliates to trim their headcounts and cut spending. EY told Bloomberg in February: “The costs incurred during Project Everest will be almost entirely paid down by July 1st, 2024.”

Yet, Mr O’Keeffe said EY Ireland did not reduce its headcount over the past year despite a slowdown in deal-making and business levels generally due to macroeconomic pressures. He said the business grew in a “more difficult market” over the past 11 months.

“When it comes to middle market transactions, the movement of money, it’s been slower. The pickup has been slower. I wouldn’t say it’s recessionary,” he said.

[ Shortlist for 2024 EY Entrepreneur of the Year awards revealed ]

“We would all know that the capital markets have been quieter, interest rates have bitten. Staff salaries – you have to make sure they’re going in the right direction. Cost of living has been more expensive and that impacts our clients too.”

Mr O’Keeffe said EY’s Irish clients are also doing business in a more geopolitically fraught and “polarised” world than they were even a few years ago. “What we have to do is to really spend a lot of time with our clients around their strategy, from supply chain right into new markets.”

More than 100 Irish entrepreneurs travelled to Cape Town last week for the retreat, a centrepiece of the year-long EoY programme. It was the first time in the competition’s 27-year history that the retreat took place in Africa.