More KPMG partners follow Richard Fleming to Alvarez & Marsal in a bid to break the Big Four's stranglehold


Richard Fleming (left) officially joins Tony Alvarez III at Alvarez & Marsal this month

One year has passed since KPMG big-hitter Richard Fleming shocked the City by walking out on the consultancy giant.

Fleming officially joins rival Alvarez & Marsal this month. The firm moved for him and two other partners in early 2016 after KPMG rejected a bid from Alvarez & Marsal for the Big Four giant’s restructuring business.

Today, the company reveals that three more KPMG partners will join Fleming’s ambitious new team.

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Tony Alvarez III, the European head of financial advisory firm Alvarez & Marsal, thinks he may have pulled off quite a coup.

Speaking to City A.M., Fleming sits next to Alvarez and hands over a freshly minted business card with his new title: Alvarez & Marsal, European head of restructuring.


Fleming’s rationale for leaving was simple: he was missing out on more and more lucrative advisory roles because of regulation restricting what audit firms can do.

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“I was tired of not being able to do work because of being conflicted,” he says. “For the first time in my career, the market is open to me.”

A 30-year restructuring veteran, he has been joined by KPMG’s former head of restructuring, head of turnaround and head of credit advisory.

Alvarez smiles, he knows that when it comes to financial advisory, and specifically restructuring services, Fleming is a signing of Paul Pogba proportions.

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“He has a reputation of seeing things before they happen,” he says.

While Fleming blushes at the comment, he is the man behind many of the largest turnarounds over the last decade, a reputation that has earned him the nickname “Mr CVA”.

The catalyst for Alvarez’s KPMG coup, the pair explain, is that “a really big piece of the market is being closed” in the non-audit space as a result of the introduction of mandatory rotation of audit services.

There are parallels with the tightening of regulation in 2004 that followed the collapse of Enron, which in turn took down the then Big Five firm Arthur Andersen. It resulted in many accountants jumping ship as regulators cracked down on the roles audit firms could perform.

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Audit rotation

“In 2004, we grew tenfold [in the US],” says Alvarez. But although the UK market was shaken up, people did not leave in their droves like they did across the Atlantic.

“We think this [audit rotation] is one of those moments in Europe.” Alvarez says, claiming he gets an increasing number of calls from people eager to quit the Big Four. “We are seeing a substantial uptick. We’re in advanced discussions with a number of people.”

Meanwhile, Fleming explains his decision wasn’t simply a matter of being unshackled from his audit colleagues.

“I wanted a nimbler, more entrepreneurial organisation where decision-making is truncated. Where investment decisions don’t go through 15 layers of debate and discussion.”

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In the early noughties Alvarez was given licence by his father, co-founder Tony Alvarez II, to replicate the US firm’s success in Europe. And he thinks that with Fleming, he can replicate the partnership Tony II had with Bryan Marsal when they launched the firm in 1983. “We are going to office together, we’re going to share the same assistant,” he says.

Terminal decline

Fleming insists the advisory arms of top beancounters are in a terminal decline. “I’m not talking about a quick death, I think just slowly over time,” he says. “Anything we say on this topic, the Big Four would rebut, because they have to. But over time chunks of their positions are going erode. I reckon we’ve got the opportunity to be just about the biggest restructuring house in Europe.”

Alvarez is convinced his European business, and in particular the UK operations, are ready to take the financial advisory sector by storm.

“We’re on the build,” he says. “Richard and I are kind of the same age. We’re old enough not to be young but young enough not to be old.”