With the accounting industry undergoing significant changes, Ernst & Young (EY) has made a bold move to split its business in two. The decision is not without controversy and has raised questions about whether it will work for EY in the long run. In this blog post, we’ll explore why EY decided to make this move, what challenges they may encounter along the way, and ultimately whether or not it’s a strategy that can succeed in today’s rapidly evolving market. So buckle up and join us as we dive into one of the most talked-about topics in accounting right now!
EY’s decision to split its business
EY, formerly known as Ernst & Young, is one of the Big Four accounting firms. The company has been in business for over 150 years and has over 700 offices in more than 150 countries. In recent years, EY has faced criticism for its role in various corporate scandals. In response to this criticism, EY announced that it would be splitting its business into four parts: assurance, consulting, tax, and transaction advisory services.
This decision has been met with mixed reactions. Some people believe that this will help EY become a more focused and efficient company. Others worry that this could lead to even more scandals, as each part of the company will now be less accountable. Only time will tell if EY’s bold move will pay off.
The reaction to the news
When news broke that accounting giant EY would be spinning off its consulting arm, the reaction was swift and largely negative. Many in the industry saw the move as a desperate attempt to save the struggling consulting business, which has been hit hard by the coronavirus pandemic.
Critics argue that the split will only create more confusion for clients and make it harder for EY to compete against the likes of Deloitte and PwC. Some have even gone so far as to call it a “disaster in the making.”
EY has remained tight-lipped about the decision, but it’s clear that it believes this is the best course of action for the company. Only time will tell if the bold move will pay off.
The pros and cons of the move
Though the move has been praised by some as a way to increase transparency and accountability, others have criticized it as a ploy to avoid taxes. Here, we take a look at the pros and cons of EY’s decision to split its business:
On the plus side, the move could lead to greater transparency and accountability within the company. EY has come under fire in recent years for alleged links to tax avoidance schemes, and this move could help distance the company from those controversies.
On the downside, the move could be seen as an effort to avoid paying taxes. EY is headquartered in London, where it would likely face a higher tax bill if it were to operate as two separate entities. This could damage the company’s reputation among potential clients and employees.
How other companies have fared after similar decisions
In recent years, there have been a number of high-profile companies that have made the decision to split their business operations in two. While the motivations behind these decisions vary, the results have been mixed.
One notable example is Yahoo!, which announced in December of 2015 that it would be spinning off its core business operations into a new company called Altaba. The move was widely seen as an attempt to save Yahoo! from being acquired by another company. However, the spinoff has not been without its challenges, and Altaba has yet to find the same level of success as Yahoo! did in its heyday.
Another example is eBay, which announced in January of 2015 that it would be spinning off its PayPal business into a separate publicly-traded company. This move was seen as an effort to unlock value for shareholders and allow each company to focus on its respective strengths. While PayPal has thrived since becoming independent, eBay has struggled to keep pace with other ecommerce players and has faced a number of challenges.
Finally, there is Hewlett-Packard, which announced in October of 2014 that it would be splitting itself into two publicly-traded companies: HP Inc. and HP Enterprise. This move was undertaken in an effort to revive growth at the struggling tech giant. However, both HP Inc. and HP Enterprise have faced challenges since the split and neither company has returned to its former glory.
While there are no guarantees in business,
What the future holds for EY
The professional services firm EY has made the bold move to split its business into two separate entities, one focused on auditing and the other on consulting. This move comes amidst much controversy, with many wondering if it will be successful.
There is no doubt that EY is a powerful force in the industry. With over $35 billion in revenue and more than 200,000 employees worldwide, the company is one of the Big Four accounting firms. But EY has been facing challenges in recent years, including allegations of fraud and misconduct.
The decision to split the business was made in an effort to improve transparency and accountability. It remains to be seen if this move will be successful, but there is no doubt that EY is a company to watch in the coming years.
