TPG offers to buy stake in EY’s consulting business

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It would mark the biggest overhaul in the accounting profession since the collapse of Enron auditor Arthur Andersen more than two decades ago.

| Private equity group TPG Capital has approached EY about buying a stake in its consulting arm in a deal that would herald a second attempt atTPG outlined its plan for a debt-and-equity deal to separate the consulting arm from EY’s audit business in a letter sent to the firm’s global and US bosses.

The previous transaction, known as Project Everest, was abandoned after months of infighting and dissent from some US executives.TPG’s approach raises the prospect of a revival of the plan and comes at a delicate time for EY, which has not yet chosen a replacement for global chief executiveIt also threatens to reopen internal divisions that surfaced during talks over Everest, which leaders are now trying to heal.

The structure mirrors Everest, which would have handed the average US audit partner a multimillion-dollar windfall for parting with their stake in the consulting arm. Consulting partners would have taken a cut in their cash compensation in return for shares in the standalone arm.The private equity group said its proposal would offer “transaction certainty” and came with “lower capital markets execution risk” than Everest.

 

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