EY UK restructures leadership: 30 partners to exit
The professional services industry is experiencing a shift, with EY announcing one of its most significant partner redundancy rounds in decades. The firm is set to remove 30 partners, predominantly from its consulting division, in response to declining demand for corporate advisory services post-pandemic. This move highlights a broader trend within the Big Four accounting firms as they seek to maintain profitability during challenging economic conditions.
A Response to Market Conditions
EY, which employs 20,000 people across the UK, is facing a slowdown in demand for its consulting services. During the COVID-19 pandemic, companies invested heavily in professional advice, ranging from remote work strategies to supply chain management. However, as inflation and interest rates have increased, businesses have scaled back their spending on consulting, reducing revenue streams for firms like EY.
This downturn has had a direct impact on EY’s financial performance. Consulting revenues declined by 4% in the past year, contributing to a 5% drop in average partner profits, which now stand at £723,000. Similar trends have been observed across the Big Four, with PwC and Deloitte also reporting lower partner earnings.
EY’s Partner Structure and Redundancy Process
EY, like its competitors, operates under a partnership model where equity partners co-own the firm and share in its profits. Non-equity partners, on the other hand, do not receive profit shares. While partners typically invest capital into the firm, compulsory redundancies usually involve returning this money to them.
The firm has also been reducing its overall partnership numbers over the years. Last year, 50 partners departed from EY, while PwC saw 123 partner exits in 2024, partly due to early retirements. While some insiders expect a few equity partners at EY to transition into non-equity roles, this is not reportedly the primary focus of the current restructuring.
A Broader Shift in the Big Four’s Strategy
To sustain profitability, Big Four firms are adjusting their leadership structures. Rather than expanding their top ranks, they are limiting new partner promotions and, in some cases, cutting existing partners. High-performing partners have voiced frustration over carrying underperforming colleagues who contribute little to firm revenue while still benefiting from profit-sharing.
The consulting division at EY, which employs 4,700 people, has been hit hardest by the downturn. In December, reports emerged that EY planned to cut 150 senior consultants below partner level, reflecting broader cost-cutting efforts across the firm.
The Impact on EY and the Industry
The decision to reduce partner numbers signals a shift in how EY and its Big Four counterparts navigate changing market dynamics. In previous years, partners were rarely removed due to their potential to generate new business. However, as demand for consulting services wanes, firms are prioritising efficiency and profit protection over maintaining larger leadership teams.
Conclusion
For business students, EY’s partner redundancies serve as a case study in corporate restructuring and adaptation to economic pressures. The decision reflects broader shifts in professional services, where firms must balance profitability, workforce dynamics, and evolving client needs.
