Ernst & Young calls off splitting its audit and consulting units

Leaders told partners Tuesday that they planned to continue laying the ground for a possible split, and but that more time and investments are needed to make that a reality.

The firm intended to spin offits consulting business and much of its tax practice into a stand-alone public company. But the plan, known as Project Everest, suffered repeated setbacks as partners disagreed over compensation and the resources needed to staff the remaining audit practice—a key sticking point for leaders of EY’s US affiliate.

“Given the strategic importance of the US member firm to Project Everest, we are stopping work on the project,” the firm said in a statement.

EY’s breakup plans had long been on shaky ground but its demise came quickly.

Just two weeks ago US and global leaders said they were still working to resolve differences over key aspects of the deal including how to staff the audit practice and how to divide the tax practice. The impasse pitted Julie Boland, chair of EY US and who was picked to run the legacy audit practice, against Carmine Di Sibio, who chair’s EY global arm and was set to run the stand-alone consulting business.

Thorny logistics of divvying assets and legal liabilities plus shoring up pension payments also added to the challenge of separating the $45 billion operation scattered across 75 different jurisdictions.

Roughly 13,000 partners were originally expected to vote on the deal last fall, but that timeline was pushed back several times. Millions of dollars in one-term payouts and the chance for an equity stake in any IPO those partners had been promised is now off the table.

Firm leaders have long argued that the consulting and audit practices would be more profitable and successful once untethered from one another.