Debts on EY’s failed Project Everest took longer than expected to clear

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EY took longer than originally planned to pay off debts incurred by the failed spin-off of its consulting unit, according to annual accounts filed by the Big Four.

A $700 million loan facility opened to cover the costs of Project Everest, which would split the company in two and radically overhaul the global professional services sector, still had $270 million outstanding in EY’s fiscal year in June.

Interest paid by EY’s global operating business for the year, including other borrowings, was $74m, more than double the amount from the previous 12 months.

The three-year loan was eventually repaid after the end of the financial year, a person familiar with the matter said, in a note to accounts filed at Companies House in the UK.

“Through our financial planning and regular assessments that guide our capital decisions, we made the decision to pay off this loan 16 months early rather than 20 months,” the person said.

A year ago EY said that “the costs incurred during the Everest project will be almost fully paid by July 1, 2024.”

Along with the rest of the Big Four, the firm had more slow year Globally, it increased revenue by 3.9 percent to $51.2 billion, and the audit and tax work in its consulting business accounted for a year.

Project Everest was designed to turbocharge both the consulting and audit industries by freeing them from conflict-of-interest rules that prevent cross-selling of consulting services to audit clients.

The ambitious plan collapsed in April 2023 after not being signed off by EY management in the US.

Unlike a typical multinational, EY is a network of nationally owned partnerships linked through a global organization that sets strategy and manages shared services such as IT , which is funded by levies on national member companies.

About $600 million was spent on the design of Everest before it was canceled. The 2024 accounts show a big drop in spending on professional fees, such as for lawyers, which fell to $972 million on June 1, 2023. from $4 billion.

New global CEO Janet Truncail has promised otherwise strategic approach grow revenue, including new investments in divisions that advise clients on transformation and sustainability, and expanding EY’s managed services business.