Wednesday 6 January 2021 5:19 pm

Private equity bidders eye KPMG’s restructuring arm

Private equity firms are eyeing up KPMG’s restructuring arm, as the Big Four firm prepares to offload its restructuring operations in the UK. 

Intermediate Capital Group and Towerbrook Capital Partners are preparing to submit initial bids for the business ahead of a deadline later this month, Sky News reported.

The division is rumoured to be valued at more than £400m. 

In November, an email to colleagues from KPMG’s 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.” As a result the Big Four firm had decided to sell its restructuring business. 

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

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

Operational separation 

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

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

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. 

KPMG and Towerbrook Capital Partners declined to comment. Intermediate Capital Group has been contacted for comment.