“It felt quite interesting at first for the consulting companions. It would be a courageous new entire world, we would make heaps of dollars, every thing was fantastic,” reported Andrew Keene, a spouse at EY who moved to Cap Gemini as aspect of the offer.
“It soured quite promptly. Cap Gemini was a French-operate company in which conclusions have been designed much absent, moreover you had the dotcom downturn.”
An post, “Cap Gemini cuts workers immediately after merger flop” from the January 3, 2002, edition of The Australian Financial Critique stated that “the honeymoon was brief” for the blended co-operation.
“Profits at Cap Gemini Ernst & Youthful are set to slide by far more than fifty percent this calendar year, to $US154 million on gross sales of $US8.1 billion, as the firm’s clientele slash tech shelling out in the face of a global financial slowdown,” the posting mentioned.
The organisation had currently “slashed 9 per cent of its 60,000-sturdy workforce” and was about to embark on a “new round of 2500 lay-offs and other cost-preserving measures”.
Mr Keene claimed the French enterprise had a “focus on quarterly effects and they realised the quickest way to help you save money was to fire the overpaid EY partners”.
Connection-primarily based professionals
“The challenge was they were the people today who ended up making the organization. The EY associates ended up the men bringing the business in and when they bought rid of us they got rid of their small business growth [sales] men and women.”
One more former EY and Capgemini husband or wife claimed the deal experienced been “value destroying” for the shareholders in the French organization.
The former companion reported the French corporation was really transaction-based mostly, while the EY consultants were being connection-primarily based professionals with contacts across the corporate landscape. He did not want to be named for worry of upsetting his preceding colleagues.
Former EY companions also spoke about how the payday from the sale was hurt simply because they have been paid in Capgemini shares.
At the time, EY partners gained a established number of shares decided by their rank inside of the business, with senior associates acquiring parcels really worth tens of millions of dollars.
However, the conditions of the offer dictated that only a portion could be sold when the deal was struck, with the remaining not able to be offered for extra than 4 several years.
By the time that lock-up interval ended, the remaining shares experienced missing about 80 for each cent of their value, the previous associates mentioned.
The then audit-only EY immediately rebuilt its consulting arm after the non-contend clause ended.
In a Monetary Evaluation posting from 2018, an EY senior partner explained how the local arm of the business had previously developed up a consulting small business of 150 associates and employees.
“Re-entry to this market seriously occurred in 2006, when we founded a smaller staff of partners … our strategy is to present a bigger stage of tips from seasoned pros, instead than improvising bodies for assignments.”