Big Four accountancy firm EY considers floating advisory business on the stock exchange
EY is considering listing its global advisory business on the stock market, as part of ambitious plans to separate out its audit operations to create two separate firms.
The plan could see EY float its tax, consulting, and deals advice business on the stock exchange, as the firm considers breaking itself up to escape the conflicts-of-interest dilemmas that have faced the accountancy sector for years, according to the Financial Times.
In launching an initial public offering (IPO), EY raises the possibility of generating a huge windfall, that could then be distributed amongst the firm’s existing partners and reinvested in the newly launched advisory firm.
In 2021, EY’s advisory businesses, which employ 166,000 staff, generated $26bn (£20.5bn) in revenues, compared to the firm’s audit business which generated $14bn over the same period of time.
An EY listing could mirror consultancy giant Accenture’s 2001 IPO, which saw the firm raise $1.7bn on the New York Stock Exchange, after selling shares at an initial price of $14.50 each. Shares in Accenture are currently trading at more than $300 per share.
The plans come as the Big Four face mounting public and political pressure over the potential conflicts of interest that exist between their audit operations and advisory businesses.
Any separation would come as a landmark shift amongst the Big Four in placing huge pressure on the other major accountancy firms to follow suit
EY’s plan comes after the UK government set out plans to shakeup the country’s audit sector, by replacing the country’s current watchdog with a new, more powerful regulator, and forcing the four most powerful auditors – EY, PwC, Deloitte, and KPMG – to share audit work with smaller firms.
The scrutiny comes as the Big Four have found themselves at the centre of a series of major accounting scandals over the previous decade, involving some of the UK’s biggest companies including Carillion, Rolls Royce, and Patisserie Valerie.
In March, the US Securities and Exchanges Commission (SEC) also launched an investigation into potential conflicts of interest within the Big Four, between the firms’ audit and advisory operations.
Any plans to split the business in two would require backing from regulators and the support of EY partners.