Ernst & Young Global Limited (EY) has rejected a proposal from US private equity group TPG to break up the Big Four firm and take a stake in its consulting business.
According to a statement sent to partners on Wednesday, TPG wrote to EY in late July outlining its plan for a debt-and-equity deal to separate its consulting arm from the audit business.
Nairametrics gathered from the Financial Times that the pitch came just months after EY’s attempt to spin off the consulting business and seek a $100bn enterprise value for it in a stock market listing collapsed.
- The Financial Times on Tuesday revealed the details of the approach, which offered to revive the break-up plan, codenamed Project Everest, in a revised form.
- “We frequently receive inquiries from private equity firms and other investors expressing interest in parts of EY businesses. This was the case before Everest and will continue,” partners were told.
- “The TPG approach was a preliminary expression of interest and there has not been further engagement. We are not actively engaging in any transactions. We remain focused on driving our current FY24 priorities, completing the CEO succession process, and developing the strategic path forward for the organization.”
TPG’s approach comes as EY attempts to select a new global chair and chief executive to replace Carmine Di Sibio, the driving force behind Everest, which unravelled in April after months of infighting.
Di Sibio is due to remain in place until June 2024, but it would be difficult for the firm to commit to pursuing a deal before his successor is chosen. Any break-up would also need the backing of EY’s biggest national firms, which are separately owned by the partners in each country.
TPG’s offer, which the FT says did not include a valuation, highlights the enduring appeal for the Big Four firms of separating their auditing and consulting units. Partners in the latter arm hope they will be able to service more clients since they no longer have to worry about conflicts with groups they audit. But a split now looks just as tricky.