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Saw that article, I have a Monday shirt from my time at PWC, see if they actually do it as consulting partners would take a pretty big financial hit I would think as 78% of the revenue globally is from audit and tax.
My understanding is that a large chunk of the “Tax” LoS revenue has been classified as Consulting Solutions at PwC, in their most recent reorg….
What does this mean for a 4-5yr Consulting Partner if IPO or if sale?
Is there a likely payout or a cost? Is there a purge of partners and higher probability of layoff before? Is this 2+ years down the road anyway?
Trying to determine if I should look for higher TC and better WLB elsewhere now or stay here to see what happens with the potential split…or try to hang on haha.
EY has a private jet??
What would EY do for specialists assisting the audit? Why would IT, or tax or actuarial, etc. stick around without a potential partnership future? Would they need to contract those services from third parties and if they do, don’t the same independence issues arise?
Trying to estimate what this could mean for EY Partners - conservatively, the whole business is probably worth 2-3x revenue (ACN goes for 4x revenue, and faster growing, higher margin firms such as INFY go for 6x revenue).
For a business with $40Bn in global annual revenue, that would be ~$80-120Bn in value. Perhaps, 1/4 of this would stay with the audit business which will continue to be a partnership, and there will be taxes, one-time costs (e.g. bankers’ fees) to deal with…. But overall value release per Partner will be substantial….. For US Partners, I wouldnt be surprised if it is of the order of $5-7M per Partner (before the impact of taxes and one-time costs).
Would be curious to hear if any EY folks here could share back-of-envelope math….
Here is my back-of-envelope math - happy to have others propose corrections/ modifications to the assumptions below….
Perhaps, we try to keep it simple and look only at the EY US business - very rough numbers, that is a business with $17Bn in revenue and 3,800 Partners (Source: Statista). If we say, that business goes for a valuation of 2x revenue, it should be worth $34Bn or $9M per Partner before one-time costs, taxes and liabilities like the pension plan….
EY probably has ~120 retiring Partners per year, and a total cohort of ~2,000 retired partners drawing DB pensions, given avg life expectancy at age 60 today for US males of 81 yrs, and the fact that previous classes of retiring partners were likely significantly smaller. Realistically, I doubt if the total liability from DB pensions would be more than $5M per retired Partner, i.e. $3M per serving Partner…. for a total of $10B.
Deloitte and PwC are too strong in some of the audit relationships that EY has and their advisory practice isn’t mature to overthrow Deloitte or PwC. I think this would cause more chaos and disruption in an operating model that is not scaled up to handle this chaos. And it’s not the clients that are with the other big 4’s are dying to switch so while advisory may win a bit but the disruption it would cause is probably not worth it because it takes focus away from other important things.
Some people are thinking that their market would increase if there aren't audit restrictions. This is not technically true. Once all big4 walk same path - you just have more competition in the same account.
Exactly blew my mind. Fly commercial.
Time of my team is more valuable. If it was upto me - I'd rather have the team fly private.
I get paid for my decisions and not for my time. (We can tell clients otherwise - but real work is still done by analysts). I can accomplish most of what I do on phone calls. I fly only to have lunch or dinner with clients or to make the pitches.
OHH wow. Thank you for sharing this! I have been wondering about it.