Private fairness agency HIG targets £800mn on the market of ex-KPMG restructuring unit | USAEMALL.com

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The private equity owner of the former KPMG restructuring and advisory business Interpath is poised to appoint bankers to manage a sale of the company at a target valuation of about £800mn.

Banks have this week begun pitching to HIG Capital to advise on the sale of Interpath Advisory, according to people familiar with the matter, kicking off a formal sale process for the former KPMG restructuring business.

HIG will appoint banks to help it sell Interpath for about £800mn, four years after the private equity firm bought it from KPMG for about £400mn. 

Interpath struggled to make a profit following the acquisition, with pre-tax losses of £10.6mn in the year to March 2023 and a £10.2mn loss in 2022, which it attributed to set-up costs. But last year the company reported pre-tax profits of £3mn.

Its performance turned around after Mark Raddan, a former KPMG partner who had headed Interpath’s advisory business, took over from previous chief executive and KPMG veteran Blair Nimmo last year.

KPMG sold Interpath as part of a trend among the Big Four accountancy firms to cut back on conflicts of interest that restricted the work that different teams at the firms could take on. Deloitte offloaded its restructuring unit to Teneo, which is backed by Dutch private equity group CVC. 

Interpath has since branched out from restructuring advice to providing other services, including corporate finance consultancy work, and has grown from 450 to over 1000 employees.

Private equity firms have aggressively courted the professional services sector in recent years.

In November, Cinven bought a majority stake in Grant Thornton, the sixth-biggest UK audit firm, while Apax Partners bought Smith & Williamson, the professional services arm of wealth manager Evelyn Partners, for £700mn in the same month.

But buyout groups have found it increasingly difficult to leave their investments, with higher interest rates and macroeconomic uncertainty leading to a downturn in dealmaking and initial public offerings that has now lasted for more than two years.

Private equity executives are instead prioritising other options for leaving their investments, including breaking up businesses to sell them off in smaller parts or selling companies to themselves via “continuation funds”.

HIG Capital and Interpath declined to comment.