EY global chair says partners have ‘right to vote’ on spin-off plan

EY’s global chair told its 13,000 partners around the world they have a “right” to vote on the plan to split the firm, in a memo sent just hours after the firm’s US boss declared it “premature” to say if the deal could be salvaged.

The competing messages highlighted tensions between the accounting giant’s global network and the leadership in the US, its largest member firm, which wants to shrink the proportion of the firm that would be spun off into a new standalone consulting business.

In a memo sent late on Thursday and seen by the Financial Times, global chair Carmine Di Sibio said that “changes proposed recently have arrived at an advanced stage in the transaction planning. That said, we are working collaboratively and positively on a global basis to make any needed adjustments”.

The plan to split, known as Project Everest, was agreed in principle by global leaders last September, but it was thrown into confusion this month when Julie Boland, EY’s US chair, announced a “pause” in the planning work.

Any deal would have to be agreed by the US firm’s executive committee before it can be put to a vote by partners in the country, which accounts for 40 per cent of EY’s global revenue.

In what amounted to a direct appeal to partners, Di Sibio said he believed the plan should be put to a vote.

“On a global basis, our sentiment tracking shows partners to be overwhelmingly in favour of this transaction ,” he wrote. “As partners in participating EY member firms around the world, I believe you have the right to vote on whether to proceed with a transaction.”

Leaders from the UK, Europe and Asia-Pacific held talks with the US in the past two weeks. Di Sibio has promised an update next week.

Earlier on Thursday, in her first public interview about Project Everest, Boland told the Financial Times that it was “premature” to say if a deal could be reached. “I think it was probably a misnomer to say just because we came out of feasibility [planning, in September] everything was done and dusted,” she said.

Objections to Project Everest in the US have centred on whether the audit-focused side of the business would be financially and operationally strong enough to continue to provide quality service to audit clients. The US has pushed for more tax and transaction advisory partners to remain on the audit side after the split, and for it to have the ability to compete against the spun-off advisory business in areas such as international tax.

“Even though it’s the asset that everyone’s fighting over, the tax voice has been pretty muted internally,” one US tax partner said. “We’re the kids in the divorce and the judge isn’t asking us who we want to live with.”