Monday 9 November 2020 3:17 pm

KPMG to sell restructuring arm to win more work

Audit giant KPMG is to sell its restructuring arm because conflicts of interest and regulatory scrutiny are preventing it from winning work.  

In an email to colleagues KPMG UK chairman and senior partner Bill Michael said that concerns relating to conflicts of interest arising from its existing work was likely to “limit the restructuring clients we can serve and constrain our ability to maximise the growth of this business,” the Telegraph reported.  

As a result KPMG has decided to sell its restructuring arm. Last month the Big Four firm confirmed it was “exploring options” for its restructuring business.  

Some 22 of KPMG’s roughly 600 partners work in its restructuring business, alongside 475 staff members. 

A KPMG 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.”

KPMG has been haemorrhaging contracts in the last 12 months, according to consultancy website Consultancy UK. The giant has lost 52 clients in the last year – more than the 17 EY lost, or the 27 Deloitte dropped, combined.

The news comes as the Big Four auditors plan “operational separation” of their audit and consulting businesses.

The Financial Reporting Council (FRC) ordered the firms to break up their audit divisions from the rest of their business earlier this year amid concerns about companies mixing audit and lucrative consulting work for the same clients. 

The push to reform the audit sector follows a series of high-profile accounting scandals including the collapses of BHS, Patisserie Valerie, and Carillion – the latter an audit client of KPMG.