EY: partners’ payday sets a high watermark for successors
Corporate push to go digital is likely to keep consultancy tills ringing but there are pressure points elsewhere
EY is the latest Big Four accountancy firm to reward its UK partners with a bumper payday. An 11 per cent increase in distributable profits resulted in 781 partners each pocketing an average £749,000, up from £667,000 the previous year.
The firm’s newbies, including 900 graduates, might well wonder if the bounty will be quite so generous when the smart and lucky ones have risen up the ranks.
Special factors were at play in the pandemic year. Lockdowns curtailed travel and entertainment, cutting costs. The rush of dealmaking triggered by the upheaval — and mountains of private equity dry powder — drove revenues from the strategy and transactions unit. Sales rose 12 per cent and accounted for a fifth of the total.
Consulting also had a good year. The unit’s sales increased 9.5 per cent and were around a quarter of the group. This is a profitable métier, as politicians discovered when they learnt that NHS Track & Trace paid consultants an average £1,100 a day and, as at April, employed 2,239 of them.
While Deloitte was the main beneficiary of that programme, EY counts on government and infrastructure for some of its fastest growing business.
Even if state spending is curtailed, the corporate push to go digital is likely to keep consultancy tills ringing. There are pressure points elsewhere. Not least of these is auditing, the biggest slice of business, where regulatory scrutiny and fines threaten to depress margins.
The bigger issue for EY is a growing number of mouths to feed. As of now there are already more than 800 partners, up from an average of 700 in 2019. The ranks are swollen by promotions and acquisitions. EY bought five companies in the past six months, including Frank Hirth, a personal tax services business.
These newcomers are meant to bring in enough new business to earn their keep. Other Big Four firms have waved off their restructuring arms to private equity: Deloitte’s to Teneo, KPMG’s to HIG Capital. If the smartest guys in the room really are the financial sponsors, EY may be making the right bet.