Senior partners in KPMG’s restructuring division have received a 25 per cent pay rise as the accountancy giant tries to prevent a potential break-up, it was reported this weekend.
The Big Four accountancy firm, which has been involved in high-profile business failures, including the collapse of outsourcer Carillion in January 2018, had been holding talks about separating its turnaround business from its core audit and consultancy divisions according to the Sunday Times.
Unlike rival PwC, which has announced a £30m a year overhaul of its audit division, KPMG has opted to set up a new executive committee responsible for the audit business’ performance and risk management.
The restructuring division, which has managed the overhaul of retailers such as Debenhams, Mothercare, and Paperchase, has about 20 partners, and was responsible for about five per cent of KPMG’s £2.3bn UK revenue in 2018.
In 2018, Sky News reported that KPMG had received a number of bids for the restructuring unit from buyout firms, including an overture from Permira, the European private equity fund that bought professional services firm Duff & Phelps for $1.7bn (£1.4bn) in 2017.
The move comes after the collapse of Carillion and department store BHS and the discovery of a hole in the accounts of cafe chain Patisserie Valerie left the auditing sector under intense levels of scrutiny.
Alongside Deloitte, EY, and PwC, KPMG dominates the auditing market, and have been criticised for using these relationships to sell additional consultancy services.
In April, the Competition and Markets Authority called for the Big Four to put greater distance between their core audit work and more lucrative consultancy businesses following concerns over conflicts of interest.
The Big Four have resisted calls from politicians such as Work and Pensions Committee chair Frank Field MP for their break up, arguing that their size and depth of expertise allows them to audit the biggest businesses more effectively than they would as stand alone audit firms.
Last year, KPMG UK’s 603 partners were paid an average of £601,200. Last month, Deloitte UK announced that its 699 equity partners would receive their biggest payout in a decade, with an average sum of £882,000.
KPMG declined to comment.