ERNST & Young is axing more than a third of its mergers and acquisitions partners across the UK as a response to the global downturn in corporate activity.
The Herald can reveal that six out of Ernst & Young's 17 mergers and acquisitions partners are losing their jobs nationwide. In Scotland, Keith Gibson, one of the firm's two Scottish corporate finance partners, is leaving.
Critics claimed the cull was necessary because of Ernst & Young's inability to compete for mid-market deals. However, this was denied by Ernst & Young, which said the job cuts were a natural response to the global downturn.
In a statement last night, Ernst & Young said: ''As the general mergers and acquisitions market remains depressed, it has been necessary to actively manage the business in the context of the current and expected M&A environment.
''To this end, six partners in the M&A division of Ernst & Young's corporate finance practice will be withdrawing from the firm. Ernst & Young remains committed to its corporate finance offering.
''By focusing on our core M&A team, we will maintain our presence and coverage in all our regional markets and industry groups and aim to increase our share of this market as conditions stabilise.''
The cuts will reduce the partner/staff ratio in mergers & acquisitons from one in six to one in 10, potentially allowing Ernst & Young to become more competitive when pitching for deals.
Gibson has only broken the news to his clients in the last two days. He is due to leave at the end of next month, leaving just one corporate finance partner, Alec Carstairs, north of the border.
Gibson was unavailable for comment. Douglas Nisbet, Ernst & Young's managing partner in Scotland, paid tribute to Gibson's work and said that he had been a victim of the downturn.
He said: ''This is not a reflection on Keith, he was working very hard in the marketplace. It is a reflection on the scale of the market downturn. In terms of the M&A market, the Scottish market is similarly depressed. The market is still in a trough. The upturn has been slight, but I don't see it lifting off.''
Nisbet said that Carstairs, who has been focusing on oil and gas deals in Aberdeen, will assume Gibson's duties covering private equity deals in the Central Belt. Neil Campbell, appointed director of M&A for oil and gas in July, will take over some of Carstairs' duties in Aberdeen.
Rival corporate financiers said that Ernst & Young's problem was that it was not competitive. One said: ''We don't see them in the marketplace.'' Another said: ''They are not seen very much at all.''
However, Nisbet insisted that he was content with Ernst & Young's deal-flow north of the border. He said: ''We are happy with the deal count given the UK market. But we would like to see more coming through beyond that.''
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