What's Happening?
HIG Europe has announced the sale of Interpath Advisory, a restructuring consultancy, with an expected valuation of £900 million. The formal auction process is set to begin, with investment bank Moelis
appointed to manage the sale. Interpath Advisory has gained prominence through its work on major restructuring mandates, including advising Sir Jim Ratcliffe on cost reductions at Manchester United. The consultancy was formed in 2021 following KPMG UK's decision to separate its restructuring division due to regulatory pressures. Under HIG's ownership, Interpath has seen significant financial growth, with earnings doubling since its acquisition and a projected 20% revenue increase for the current financial year.
Why It's Important?
The sale of Interpath Advisory highlights the ongoing demand for professional services firms specializing in corporate restructuring and turnaround work. This sector has become increasingly attractive to private equity firms, with notable interest from companies like Blackstone and Bridgepoint. The divestment reflects broader trends in the auditing industry, where firms are restructuring to address compliance and potential conflicts between auditing and advisory roles. The successful sale of Interpath could set a precedent for similar transactions, impacting the strategic decisions of major accountancy firms and the restructuring consultancy market.
What's Next?
As the auction process begins, potential buyers are expected to evaluate the opportunity presented by Interpath Advisory. The consultancy's established credentials and financial performance make it a lucrative target for private equity firms. The outcome of the sale could influence future divestments and acquisitions within the professional services sector, particularly in the context of regulatory scrutiny and market demand for restructuring expertise. Stakeholders will be closely monitoring the process, anticipating potential shifts in the industry landscape.
Beyond the Headlines
The divestment of Interpath Advisory underscores the ethical and regulatory challenges faced by major accountancy firms. The separation of auditing and advisory functions is a response to concerns about independence and compliance, which have been intensified by high-profile corporate collapses. This move may lead to long-term shifts in how these firms operate, potentially influencing industry standards and practices. The sale also reflects the growing importance of restructuring consultancies in navigating complex financial landscapes, offering insights into the evolving dynamics of corporate governance.
