Ernst & Young Stock Doesn’t Exist. Here's Why

With revenue in excess of $28.7 billion in 2015, Ernst & Young is a business that would certainly attract many investors if its stock were publicly available. Unfortunately, it is not and likely will not be in the foreseeable future.

The firm traces its roots all the way back to 1848, to separate small accounting firms founded by Arthur Young and Alwin C. Ernst. The two founders never met, and their firms merged in 1989, long after they had passed away.

Today, Ernst & Young is one of the members of the Big Four accounting firms along with Deloitte, PricewaterhouseCoopers and KPMG. Together, they are involved in auditing, tax planning and business advisory for almost every large transaction in the world.

Headquartered in London, Ernst & Young has more than 700 offices located in more than 150 countries. Its corporate structure is extremely complex, mostly because regulations governing the accounting profession vary greatly from country to country. However, the firm's highest governing body is its global executive, headed by its global chairman and chief executive officer, Mark Weinberger.

Ernst & Young provides services to its clients in all of the fields traditionally associated with a large accounting practice. Internally, it is divided into four service lines: assurance, advisory, tax and transaction advisory services.

Assurance is the group responsible for the audit of financial statements, but it also provides transaction support for initial public offerings (IPOs) and for public filings, most notably with the U.S. Securities and Exchange Commission (SEC). The advisory group is dedicated to solving complex issues in the industries in which its clients operate. The tax group assists clients with fiscal strategy, compliance and planning. The transaction advisory services group works with clients during large and complex transactions, such as mergers and acquisitions (M&As).

To provide all of the services, the firm employs more than 220,000 people worldwide. Ernst & Young is generally recognized as a quality employer and has been named a great place to work in Canada, Costa Rica, Dominican Republic, Guatemala, Mexico, Panama and the United States. Universum also named it as the world's most attractive employer for three years in a row, from 2013 to 2015.

Ernst & Young is not publicly listed. The complex regulatory environment for accounting and consulting firms makes it nearly impossible to predict whether it will someday be possible to make a public offering of Ernst & Young stock. Instead, the firm is owned by approximately 6,000 partners worldwide. According to Forbes magazine, it ranks as America's 11th-largest private company.

Even though the owners are called partners, the ownership structure is not necessarily an actual partnership but varies from country to country. Not all partners are equal. How much equity a given partner owns, or a partner's remuneration, is information that the firm keeps very private. Indeed, virtually all accounting, legal and professional firms keep partner income secret. Who qualifies to be a partner will vary greatly by jurisdiction. In some cases, only members of the accounting profession are allowed to own an accounting firm, so the partnership may be divided into several sub-partnerships to allow attorneys, financial analysts or consultants to be promoted to partner level. In most cases, the promotion to partner comes with a catch. As owners, partners are expected to invest a certain amount of capital in the firm. Here again, actual amounts are shrouded in secrecy.

The firm seems to be growing, having publicly stated that 753 new partners were added in 2015, its largest increase since 2008 and a 12% increase over 2014.