PwC sees opportunity to poach staff during EY split

PwC is seeking to poach staff from its Big Four rival EY and capitalise on “disruption” and “uncertainty” caused by the latter’s decision to split its accounting and consultancy arms.

Bob Moritz, PwC’s global chair, told the Financial Times he was expecting to lure senior managers and even some partners as the firm pursues a big expansion in headcount.

Hiring opportunities had picked up, he said, since EY provided partners with more details of its split. “Now you’ve got some basics outlined you’re starting to see a little pick-up in that area. People now see one side or the other and [ask] ‘is that the organisation I want to be part of?’ and ‘is that the culture I want to be part of?’”

Mr Moritz reiterated PwC’s commitment to keeping its consulting and audit arms together, saying it was “watching and assessing” EY’s move but had not changed its conclusion that a “multi-competency” model strengthened both sides of the firm.

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“We want to be extremely certain and definitive...to give our people certainty, that there’s a long-term sustainable future for them, and it’s full of career opportunities,” he said. “My hope is that with a little disruption in the industry, that creates opportunity [and] we can pick up on the uncertainty, not necessarily just [at] EY.”

EY said last month that its global leadership had decided in favour of splitting the business. The decision will now go to each of its local partnerships for approval. Votes will begin around the end of the year, with the aim of floating the consulting business on the stock market in late 2023.

Windfalls

EY partners are in line for big windfalls if they stay through the split. Consulting partners will be handed a 75 per cent share of the advisory business, potentially worth as much as seven to nine times their annual salary. Audit partners could get cash payouts of two to four times their annual earnings. Moritz said it would be easier to lure away senior managers, one or two layers below partner.

EY has said the split will create two faster-growing companies with more opportunities for its staff, including a more rapid path to partner. “They should be worried about us poaching from them,” the firm’s spokesperson said.

PwC is barely a year into a five-year plan to add 100,000 jobs. It employed 328,000 people at the end of June, 32,000 more than the year before.

The firm made 17 acquisitions last year to fill gaps in its consulting services and will continue pursuing deals opportunistically, Mr Moritz said, but was also turning its focus to investing in new lines of business.

Mr Moritz spoke to the FT shortly ahead of the publication of PwC’s annual revenues for the year to June 30th. These showed a 23.5 per cent jump in its consulting business, to $20.7 billion, a 7.6 per cent increase in the assurance business which includes audit, to $18 billion, and a 6.8 per cent rise in tax and legal services, to $11.6 billion.

Overall, the firm posted 13.4 per cent revenue growth for a total of $50.3 billion. Growth rates are calculated at constant currency rates.

EY said last month that its revenues for the year to end of June were up 16.4 per cent in local currency, to $45.4 billion.

PwC’s growth was fastest in the Americas, where revenues were up 16.3 per cent.

Work on mergers and acquisitions, a major driver of the consulting business, has declined since the fiscal year-end, Mr Moritz said, signalling a tougher period ahead, although its pipeline of new business remained strong overall.

“Smaller to medium-sized organisations have already started to course correct for a slowing economy and you’re starting to see a pivot towards defensive moves such as cost reduction,” he said. “But the medium to larger-sized organisations are actually going even faster after transformation.” - Copyright The Financial Times Limited 2022