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EY’s plan that could radically shake up the Big Four

One interview to start: The head of Qualcomm Told our colleagues That the American chipmaker wants to buy a stake in British chipmaker Arm alongside its competitors and create a consortium that will maintain Arm’s neutrality in the semiconductor market.

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In today’s newsletter:

  • EY thinks historical split

  • Broadcom’s stormy takeover of VMware

  • The crowd in Davos is arguing over ESG

EY goes from advisor to mergers and acquisitions to advisor

EYThe company’s revenue peaked at $ 40 billion last year after customers flocked to professional services companies for advice on epidemic-preventable deals and corporate upheavals.

Now the big accounting firm is plotting a Transformative transaction His own. EY’s senior partners are holding talks on a historic split of the firm’s 312,000-person audit and consulting business, in a move that could change the Big Four.

Goldman Sachs and J.P. Morgan Chase Advise on the plans, which include possible Public registration or partial sale From its global consulting business, Michael O’Dwyer of FT and DD’s Arash Massoudi revealed, though EY insisted “no decisions were made”.

Carmine Di Sibio, EY Global Chairman and CEO © Bloomberg

EY, whose previous reviews in Germany Wireless cardOn the London list NMC Health and Lakin Coffee China has gone less smoothly, arguing in the past that dismantling the Big Four is not the solution to concerns about poor audit quality and a lack of competition.

But continued investment in improving audits failed to suppress the audit, and the reduction in the performance of audit work for audit clients led to EY’s consulting, transaction and tax consulting practices.

There are many obstacles to jump before any split can pass. The interests of the partners vary depending on their age, region and line of business. Deciding what value to assign to each business will be key, according to EY’s competitors.

Meanwhile, rivals are chasing unsuspecting employees who may fear that partners are selling the family money in exchange for a lucrative one-time payment.

But if the split continues, it will force the other Big Four – Dloit, KPMG and PwC – Decide whether to follow in their footsteps or stick with their current model and endanger their peers by stealing a parade.

Private interest In the sector it means that they may find it difficult to resist redemption.

“I imagine it will lead to masses of activity,” says a UK partner at a rival company, recalling the plethora of spin-offs of accountants two decades ago that included the EY sale of its consulting business to Capgemini In 2000 before rebuilding the practice.

The partner recalls executives catching transatlantic flights on the supersonic Concorde plane – which stopped flying in 2003 – to erase the latest round of accounting breakdowns.

EY Global Director Carmine di Sibiu He can not cross the Atlantic within two hours if he has to. But he can still call EY One, the company’s private Bombardier, if crash calls are needed to land the breakup.

The billionaire power duo behind Broadcom’s takeover of VMware

Broadcom$ 69.1 billion takeover of the software group VMware It attracted an army of advisers from eight banks and four law firms.

However, in the end, it all came down to two billionaires who wanted to get into one of the biggest technology deals in the world: Broadcom’s Hawk Tan and Michael Del Of the so-called PC maker, whose mergers and acquisitions have surpassed the number of many Wall Street veterans.

Hawk Tan, CEO of Broadcom, and Michael Del © Bloomberg / Lucas Jackson / Reuters

Michael Del

The duo pushed the deal – codenamed “Project Atlas” – across the line Exceptionally fast. “Tan came to Michael Dell two weeks ago,” a man with direct knowledge told DD’s Antoine Gara and DD’s James Fontanella-Khan. “A lot of things were done from manager to manager. Banks were not necessarily included.”

Bankers from Barclays, Bank of America, Citigroup, Morgan Stanley, Credit Suisse and Wells Fargo Brought in a few days later to help Tan raise $ 32 billion to fund the deal, with Goldman and JPMorgan advising VMware.

The consultants referred to VMware as Verona, after the Italian city that was the backdrop for Romeo & Juliet, And Broadcom as Barcelona, ​​the capital of Catalonia. Still, rumors leaked of a potential acquisition, forcing Tan and Dell to close the deal faster than they had hoped.

Acquisition of VMware, the crown jewel property acquired by Dell and its business partner Egon Durban of Silver LakeIs Tan’s biggest bet.

Broadcom’s head, who has made a name for himself as one of the constant chip makers, recently moved his buying campaign into the software business after absorbing heat from regulators and rivals, and graphing. CA Technologies In 2018 and Symantec In 2019.

Dell and Silver Lake, which could receive up to $ 15 billion in cash together from Broadcom, are not completely out of business. The 50% potential share component of the merger, designed to protect Broadcom’s investment rating, puts them on track to benefit from the potential side of Tan’s plan to integrate VMware into its broad portfolio.

Tan is confident in its ability to nearly double the profitability of VMware, which has been proven valuable by reviving Dell’s computer business.

One of his most pressing challenges will be to maintain antitrust regulators. They are likely to be interested in whether Broadcom leverages its expanded market share to demand exclusivity from customers for its software offering and hardware.

The ESG pendulum is moving in the other direction

Last week, DD joined the masses of financiers and Hollywood stars who descended on the Swiss town of Davos. The consensus among the business leaders was Gloomy unilaterally.

However, there was one thing the audience could not agree on: where ESG falls on the agenda.

Even as a summit host Klaus Schwab Distributed books declaring “stakeholder capitalism” charity and participants mingled between panels on reducing carbon emissions and cocktail parties to promote sustainable UN development goals, many Davos representatives remained unconvinced that progress had been made.

The sustainable investment trend is increasingly under attack by populist politicians and industry skeptics, reports Andrew Edgcliffe-Johnson of FT. This great call.

Founder of the World Economic Forum Klaus Schwab on stage

The founder of the World Economic Forum, Klaus Schwab, whose vision of ‘stakeholder capitalism’ is being attacked by populist politicians and opponents of the financial industry © AFP via Getty Images

The alpine resort town has come to host a bizarre mix of corporate elites and social activists – a place where billionaires who arrived by private jet can rub shoulders with activists such as Greta Thonberg.

This dichotomy has been growing recently, even when the ESG movement has provoked what McKinsey Advisors call it “the largest reallocation of capital in human history.” A counter-reaction provoked from groups like Free enterprise projectWhich says it is trying to save corporate America from the “socialist foundations of awakening.”

“I’m really worried that too much of it is a lip service… ESG has become too much of a check-the-box asset type,” says Lady Lynn Forrester de RothschildWho manages an influential group of stakeholder-focused CEOs.

if the Increasing resistance By the way, some companies will have fewer boxes to check.

Job moves

  • UK Real Estate Agent Foxstones her name Guy GittinsThe former boss of the rival agency ChestertonAs its new CEO, as it seeks to address shareholders’ concerns about high pay and poor performance.

  • AGL EnergyThe chair of Peter Peanut And CEO Gram hand Resigned After a technology billionaire and climate activist Mike Cannon-Brooks Acquired shares in the Australian group in an effort to block a pending split plan.

  • Squire Patton Boggs Appointed a private equity lawyer Maxim Dexna As a partner in Paris. She joins a French private equity boutique To Martin Council.

Smart reading

Banking on victory Hungarian Prime Minister Victor Urban has long sought a tripartite merger between the country’s major banks to increase his political power. Having won his fourth consecutive term, the dangerous plan is Finally getting in shapeFT reports.

The new captain of SeaWorld Orlando Amusement Park is swept up in a sea of ​​bad publicity. Up to New York investment firm Hill Path Capital and its nonsensical founder, the graduate of Goldman and Apollo Scott Ross IntervenedWriter of the Wall Street Journal.

Inflated expectations Private equity executives have expressed confidence that the current reckoning in public markets will send more customers on their way. The forecast may “prove too much impudence,” economist Muhammad al-Arian said Claims Via FT Opinion.

News summary

Klarna’s boss put a brave face on buying now, paying for later problems (FT)

SoftBank cuts senior executives’ salaries after Vision Fund recorded record losses (FT)

Skaden and the industry are mourning the death of Scott Simpson’s mergers and acquisitions icon (Legal business)

A US investor is bidding £ 1.5 billion for Countryside (FT)

Twitter refuses to remove Silver Lake’s Egon Durban from the board (FT)

Singapore’s sovereign wealth fund raises £ 3.3 billion in UK student housing deal (FT)

Robert Smith’s Vista Equity raises $ 9 billion early for a new fund (Bloomberg)

Telecom Italy agrees to merge fixed network assets with Open Fiber (FT)

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