KPMG mulls sale of restructuring division
KPMG is mulling a possible sale of its restructuring arm as the Big Four accounting firms step up efforts to reshape their businesses in the face of regulatory and economic pressure.
The firm is exploring options for its restructuring practice, which wins work from companies in financial distress or have entered formal insolvency processes.
Industry insiders expect a wave of possible deals as the Big Four seek to address perceived conflicts of interest between their audit arms and other parts of the firms.
KPMG confirmed this week it will close Makinson Cowell, its investor advisory business, at the end of November. Heads of the division and some of its staff will join Lazard, the asset manager.
It also sold its pensions division for more than £200m in March to Exponent, a private equity group, in a deal that freed the business of awkward potential conflicts of interest with clients of its audit division.
Deloitte was reported to be weighing up a sale of its restructuring business last month before its global bosses blocked the idea.
The Big Four must submit plans to the accounting regulator by Friday for how they intend to ringfence their audit practices to ensure greater independence following a string of accounting scandals where accountants failed to raise red flags.
Some of KPMG’s restructuring team previously left to join insolvency specialist Alvarez & Marsal (A&M) after the Big Four firm rejected an offer for the division in 2016.
Partners at specialist insolvency practices such as AlixPartners and A&M can earn significantly more than their peers in the Big Four where profits are shared between different practices, insiders say.
Insolvency and restructuring practitioners generally enjoy a boom when the economy slumps and companies fall into distress, potentially offsetting lower revenues in other parts of large consulting firms.
A KPMG spokesman confirmed the firm was exploring options for its restructuring business, as first reported by Sky News, but said no final decision had been made.
The firm has been sounding out potential private equity buyers in recent weeks, the Financial Times reported.
The Big Four are also facing economic pressure with the pandemic making it more difficult to win new business. KPMG partners face a pay cut after the firm joined PwC in delaying the publication of its financial results.
UK sales at Deloitte rose 11pc in the 10 months to March but fell to just 2pc in April and May.
