KPMG to dispose of restructuring business
10 Nov 2020
KPMG is to explore options for selling its restructuring business, over concerns about potential conflicts of interest and the regulatory push to achieve operational separation between audit and non-audit work
10 Nov 2020
A KPMG UK spokesperson said: ‘Our industry-leading restructuring business has an established track record of advising on some of the highest profile and most complex projects across the UK.
‘However, in recent years we have seen the dynamics of the UK insolvency and restructuring market change.
‘As a result, we have concluded that now is the right time to explore a potential sale of our UK restructuring practice.’
Bill Michael, chairman and senior partner of KPMG UK has informed the UK partners that after assessing options, KPMG UK’s board has decided to looks for a buyer for the restructuring division, which is ranked in second place in the market with revenues of £130m and a team of 450 professionals.
Despite the expectation that the Covid-19 pandemic will drive a steep rise in insolvency cases, KPMG’s decision has been driven in part by an increasing number and increasing complexity of multiple stakeholders in distressed and stressed situations in recent years, which has made the navigation of potential conflicts of interest with other areas of the business more complex.
In particular, the role of the insolvency practitioner and the need to be free from potential and perceived conflicts has presented challenges for KPMG, given the firm’s audit or non-audit relationships with almost every large and medium sized business across the UK.
KPMG believes a potential sale would allow the restructuring business to serve a broader client base, explore new market opportunities and fully realise its potential.
In the event of a sale, KPMG will only exit the UK insolvency market, and would retain its other advisory services.
The potential sale will not affect the firm’s international insolvency and restructuring businesses, which will continue to operate in their local markets including KPMG’s Ireland (including Northern Ireland) business.
KPMG noted that the sales process may take several months, and said the firm does not plan to comment further while this is underway.
Earlier this year, KPMG completed the sale of its former pensions advisory practice, marking one of the first major steps by a Big Four firm to separate out non-audit work, as required by the Financial Reporting Council (FRC).
The venture is backed by private equity firm Exponent, which is believed to have paid some £200m, and KPMG UK’s current pensions partners.
The move was first announced at the end of 2019, when the firm said all 20 partners and circa 500 staff currently employed in KPMG’s UK pensions practice would transfer to a new company to be headed up by Andrew Coles, UK head of pensions at KPMG.
The new company, Isio, launched as an independent UK pensions advisory firm in March, combining actuarial expertise, third party administration, investment consulting and defined contribution specialisms.