Ernst & Young
From Wikicpa
Ernst & Young is one of the largest professional services firms in the world, and a Big 4 accountancy firm, along with PricewaterhouseCoopers, Deloitte Touche Tohmatsu and KPMG.
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History
The firm as we know it today is the result of a series of mergers of ancestor organizations. The oldest originating company was founded in 1849 in England as Harding & Pullein. In that year the company was joined by the American Frederick Whinney. He was made a partner in 1859 and with his sons in the business it was renamed Whinney, Smith & Whinney in 1894. In 1903, the firm of Ernst & Ernst was established in Cleveland by Alwin and Theodore Ernst and in 1906 Arthur Young & Company was set up in Chicago.
In 1965, Whinney, Smith & Whinney merged with Brown, Fleming & Murray to form an accounting and consultancy firm named Whinney Murray. Whinney, Smith & Whinney had been closely allied with Ernst & Ernst since the 1940s, and in 1979 Whinney Murray, Ernst & Ernst, and Turquands Barton Mayhew joined together as Ernst & Whinney, creating the fourth largest accountancy firm in the world. In 1989, the number four merged with the then number five, Arthur Young, to create Ernst & Young.
The firm has its global headquarters in London, UK, and New York. Ernst & Young is led by James S. Turley.
Ernst & Young currently has about 5,000 staff in China, and hopes to have 15,000-20,000 people in the next decade.
Service lines
EY has three main service lines:
- Assurance and Advisory Business Services, comprising largely Financial Audit and Risk Advisory Services. Globally, Ernst & Young has the highest revenues of the Big Four in this area and this service line accounts for 70% of its revenues
- Tax Services
- Transaction Advisory Services
Acquisitions and divestitures
In October 1997, Ernst & Young announced plans to merge their global practices with KPMG to create the largest professional services organization in the world, coming on the heels of another mega-merger plan announced in September 1997 by Price Waterhouse and Coopers & Lybrand. The merger plans were abandoned in February 1998 due to client opposition, antitrust issues, cost problems and perceived difficulty of merging the two diverse companies and cultures.
The partnership built up its consultancy arm heavily during the 1980s and 90s. The U.S. Securities and Exchange Commission and members of the investment community began to raise increasing concerns about potential conflicts of interest between the consulting and auditing work. In May 2000, Ernst & Young was the first of the Big Four firms to formally and fully separate its consulting practices via a sale to the French IT services company Cap Gemini for $11 billion, largely in stock, creating the new consulting firm of Cap Gemini Ernst & Young, which was later renamed Capgemini.
In 2002, Ernst & Young merged with most of the ex-Arthur Andersen practices around the world, although notably not those in the USA or UK. This allowed Ernst & Young to grow its global revenues by over 30% in that year, closing the gap with PwC.
