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Deloitte’s sale of its UK restructuring arm is back on

Deloitte restructuring and insolvency staff in the UK  were informed on Friday 6 November that the Big Four’s global partnership has given the green light for a sale, reversing an earlier apparent veto of a sales process.

Separately, it has emerged that KPMG’s UK-based restructuring and insolvency practice, which is also up for sale, is now more likely to be sold to another firm such as FRP or Duff & Phelps rather than to a Private Equity (PE) firm, as originally anticipated. Deloitte, KPMG, FRP and Duff & Phelps declined to comment.

In September there was confusion when news emerged that Deloitte’s UK unit, employing 30 partners and 350 staff and led by Dan Butters, was up for sale, only for the global partnership to announce that it was not.

It appears early sales discussions leaked to the media, catching the firm prematurely. Now the search for a deal is definitely back on.

As for KPMG, news of the proposed sale of the UK restructuring unit led by Blair Nimmo burst into the media on 22 October. A PE-funded deal was the favourite theory, but now it appears a trade sale of its UK-based mid-market practice is more likely.

KPMG’s UK practice has 22 partners and 475 staff, making revenue of around UK£100 million a year.

The Big Four accountancy firms are under huge pressure from UK regulators and legislators to separate their audit from non-audit operations over the next four years.

This follows widespread perceptions of conflict of interest and a series of high profile corporate scandals, such as the collapse of one of the UK’s biggest outsourcing companies, Carillion.

A big obstacle, however, to any sale, is the question of who would be in a position to buy a large mid- market UK-based restructuring and insolvency practice.

In October, the big four auditors had had to submit plans to the UK’s Financial Reporting Council (FRC) demonstrating how they intended to ‘operationally separate’ their audit and consulting arms by 2025.

Meanwhile the flow of senior restructuring professionals from the Big Four in the UK to independent firms continues.

The head of Deloitte’s alternative capital team in London, Floris Hovingh, has resigned to join Alvarez & Marsal (A&M). He follows a number of other Deloitte restructuring professionals based in the UK
heading to A&M recently, including Michael Magnay, Dario Bortot, Christian Ebner and James Dervin.

Hovingh is head of the Big Four firm’s alternative capital unit and sits within the debt advisory team, which works closely with the firm’s restructuring business.

This article was a news alert from Global Turnaround on 9 November 2020.

Global Turnaround is the leading source of intelligence for the  restructuring and insolvency industry.  As well has being a monthly magazine it has an unrivalled database of news and analysis of all the big cases over the last 20 years.

It is a unique forum for people who want to know how to operate in different insolvency regimes and covers the whole spectrum of subjects related to troubled companies, including turnaround, insolvency, bankruptcy, liquidation, workout, receivership, Chapter 11 and distressed investing. 

Global Turnaround has over 10,000 readers in 74 countries worldwide.

To find out more go to  www.globalturnaround.com or call + 44 (0) 1225 421273


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