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August 30, 2009

Relishing the challenge

The transactions business is finding it tough
as the global financial crisis batters the confidence of investors.
Nicholas
Moody
discusses tackling the challenges of the
crisis with Ernst & Young transactional advisory services
global vice-chair Pip McCrostie

We may be in the midst of a global financial crisis but this
doesn’t deter Pip McCrostie.

The New Zealander, who has been global
vice-chair of Ernst &Young’s transactional advisory services
(E&Y TAS) and a member of E&Y’s global board since 1
December 2008, is relishing overseeing 7,500 staff in more than 80
countries at this crucial time.

Far from being cowed by the enormity of
downturn in business, McCrostie says she took on the role precisely
because of the challenges posed by the crisis.

“The economy is part of the reason I took the
role. It is a downturn, there will be a lot less transactions and I
actually felt that it would be great to lead the business during
this unprecedented economic climate when we can make real change
and drive the business forward,” she says.

A woman’s touch

McCrostie’s aim is to bring to the
position what she describes as a typically female trait –
pragmatism. This includes growing E&Y’s TAS practice into a
globally consistent counter-cyclical business, among other
things.

“I’ve got us narrowed down in our focus. I
want us to get to be famous for doing five to six things incredibly
well before we move on to something else,” she says.

McCrostie has been at E&Y since 1987 and
was formerly a senior partner of its UK practice. She has
experience advising private equity houses on the tax aspects of
transactions and is eager to retain a hands-on role as client
service partner on key private equity accounts while carrying out
her global duties.

Professional services firms have been hit by
the financial crisis as a liquidity freeze led to a sharp decline
in the volume of transaction, including IPOs. Ernst & Young’s
2009 Global IPO Trends Report recently found worldwide IPO markets
have been plummeting by more than 60 percent in both deal numbers
and funds raised since 2007.

McCrostie says both developed and emerging
markets have been affected but she remains upbeat about the
emerging markets, especially Brazil, Russia, India, China and the
Middle East.

She believes there will be a new wave of
transactional activity, perhaps as soon as the next six to nine
months, as cash rich institutions like private equity houses,
sovereign wealth funds and other corporations wait for prices to
reach a point that is low enough to start investing. A
self-confessed optimist, McCrostie is well aware her estimation of
recovery is ahead of others.

Unsurprisingly, the drop in demand has
required staff moves and cuts. McCrostie will not disclose how many
TAS staff E&Y has trimmed but concedes they have lost some
people on a performance-related basis. She is adamant E&Y has
moved quickly to re-allocate staff into areas such as restructuring
and financial services. Importantly, she feels firms have learnt
the lessons of downturns past.

“When I first came [to the UK] 20 years ago we
went through our first downturn; it felt like the professional
services got hit very badly and it felt like there were quite major
cuts to headcount both at partner and non-partner level,” she
says.

“I’ve seen a lot more creativity and
flexibility around the alternatives to the redundancy programmes
that the professional firms adopted in the 1990s.”

Continuing to admit partners and take on
graduates is another example McCrostie cites on the lessons learnt
from previous recessions. On 1 July, E&Y Europe, Middle East,
India and Africa (EMEIA) made 169 new partner admissions of which
26 were TAS partners, and this month the UK TAS practice took on 65
graduates, an increase of 10 from 2008.

“In the first downturn I went through, we
didn’t promote people up to partner and that created some
consternation, some resentment and it impacted our retention,” she
says.

“Twenty years ago we would’ve turned the
[recruitment] tap off. We are not doing that now but we are being
more specific, so you have to be really targeted on the individual
that you would want to bring through.”

Leading by example

McCrostie doesn’t just talk the talk
when it comes to nurturing talent. She is currently taking part in
a FTSE 100 cross-company mentoring programme run by executive
trainer Praesta, which links up career-minded women in senior
positions with corporate chairmen and chief executives.

Currently, women make up only 4.8 percent of
FTSE 100 directorships and the programme aims to tackle this
imbalance by having mentors provide advice and guidance to aspiring
women to help them progress into board positions.

McCrostie was nominated by E&Y EMEIA area
managing partner Mark Otty to the programme. She has been paired
with the chair of UK supermarket Tesco, David Reid. The programme
led to a senior female from another accounting firm taking on a
nonexecutive director role for a not-for-profit organisation.
McCrostie says that one day she would be eager to take on a board
position of her own.

“For me that would be a goal in due course but
while I’m in the middle of running of E&Y TAS globally, it gets
100 percent focus, so I’m not going to take my eye off this
business to go into that,” she says.

Pip McCrostie

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