Why Ey (Ernst & Young) says no to the spin-off plan of Tpg

17 August 20239 months ago babelfish

EY rejected TPG's plan to separate its accounting and consulting businesses. That's why (the CEO Carmine Di Sibio has something to do with it)

British firm EY, formerly known as Ernst & Young, has rejected an offer from US private equity group TPG, which offered to spin off its auditing and consulting businesses and acquire a stake in the latter.

In July, TPG had presented to EY its plan for the separation of the Big Four businesses (these are the names of the four largest accounting firms in the world: Deloitte, PwC , KPMG and precisely EY), after EY itself had sought, unsuccessfully, to spin off the consultancy unit and list it at a value of 100 billion dollars.

THE STATEMENTS OF CEO CARMINE DI SIBIO

According to information obtained by the Financial Times , TPG had re-proposed the EY spin-off plan (called the Everest project), but with some modifications. In a statement, EY Chief Executive Officer Carmine Di Sibio said “TPG's approach was a preliminary expression of interest and there has been no further commitment. We are not actively participating in any transactions." Just Di Sibio was the main promoter of Everest; EY is looking for his replacement, given that the CEO has said he will leave the post in June next year, after the project collapsed last April.

FOR AND AGAINST THE SPIN

The Financial Times wrote, based on the information received, that it would be difficult for EY to commit to a spin-off agreement before selecting a replacement for Di Sibio. Also because the separation of activities should be approved by the various national divisions of the company: the US division is against the Everest project. Those in favor of the spin-off say it will allow the two units to grow faster, freeing them from conflict-of-interest rules that prohibit firms from selling consulting services to accounting clients.

TPG'S PROPOSAL

TPG's proposal met some criticisms from the American partners in the Everest project: they did not want, for example, that most of the tax activities were spun off from the auditing business and merged into the consultancy business. The CFI therefore proposed that a larger share of the tax files remain within the audit unit.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ey-scorporo-tpg/ on Thu, 17 Aug 2023 07:57:15 +0000.