CVC eyes EY’s Italian consulting arm

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CVC Capital Partners, one of Europe’s biggest private equity firms, has approached Big Four accountancy group EY about buying its Italian consulting arm, according to people familiar with the matter.

The buyout group sent EY a letter in recent weeks expressing its interest in acquiring the unit, the people said, with one adding that there had been no talks between the two parties.

EY said the approach was a “preliminary expression of interest”, adding: “As part of our global strategy we continue to evaluate our strategic opportunities and will only entertain transactions at the right time and after careful consideration. There are no plans to sell any part of our business at this time.”

EY’s Italian arm posted revenues of €366mn last year, according to the firm’s latest transparency report, making it less than a tenth the size of the firm’s UK business.

The approach underlines private equity interest in the sector and comes after several firms made investments in professional services businesses in the US and Europe. In recent months, Grant Thornton agreed to sell a majority stake to New Mountain Capital and Baker Tilly received a $1bn investment led by Hellman & Friedman.

CVC — which manages about €186bn in assets and this week confirmed plans to raise €1.25bn in an initial public offering on the Amsterdam stock exchange — has previously been active in the professional services space, including buying advisory firm Teneo. Under CVC’s ownership, Teneo has expanded into other areas through acquiring units carved out from larger corporations, including the purchase of the UK restructuring arm of Deloitte.

CVC declined to comment.

The letter of interest, which was first reported by Sky News, comes a year after the collapse of EY’s plan to split its accounting and advisory arms. So-called Project Everest was abandoned after more than a year of work that cost $600mn.

Janet Truncale, EY’s incoming global boss, will be tasked with developing a new strategy for the firm, which made $49bn in revenues last year.

Some senior figures in the firm still believe that a significant international restructuring is necessary in order to solve the constraints on growth the spin-off was intended to fix.

EY also last year rejected a proposal from US private equity group TPG to break up the firm globally and take a stake in its consulting business.

Separately, some partners at EY’s UK business were told that profit-per-partner could fall as much as 15 per cent during its current financial year amid a challenging economic environment, according to a person familiar with the matter.

The firm’s top brass took home an average of £761,000 last year, down from £803,000 in the previous 12 months. The person said that EY was “still forecasting a solid performance” for its financial year to June, adding that it had a strong pipeline of business for the final quarter.