KPMG is reportedly creating a new division to advise on corporate restructurings, less than a year after it sold its UK insolvency advisory business for over £350m.
The big four auditor made the move as a result of new competition laws which made achieving profits from its non-auditing services harder, according to the report in consultancy.uk.
A deal was agreed in early 2021 for a £400m carve-out of KPMG’s restructuring wing after months of speculation.
Backed by H.I.G. Europe, the European affiliate of investment firm H.I.G. Capital, the insolvency business rebranded as Interpath Advisory, and is currently led by KPMG UK’s top restructuring partners Blair Nimmo, Will Wright and Mark Raddan.
But the auditor signed a 3-year non-compete agreement with Interpath and has no current plans to rebuild their insolvency business, it is understood.
KPMG appointed UK restructuring market veteran David Fletcher as an associate partner in its special situations team alongside M&A and debt advisory advisory and consulting practices, it is understood.
The insolvency and restructuring market in the UK has experienced a number of changes in recent years.
The Financial Reporting Council (FRC) effectively banned the big four auditing giants – KPMG, Deloitte, EY and PwC – from providing advisory work for audit clients after a series of accounting scandals.
Fearing that this would inhibit the future growth of restructuring operations as long as they were owned by them – many considered cashing out instead.
But the demand for insolvency work in the UK has since seen a spike. With the UK’s pandemic support measures winding down, the demand for restructuring services in the coming months is expected to grow.
KPMG declined to comment.