The demand for restructuring and turnround specialists is increasing strongly, on a global scale. According to latest research from Kenney Information, the niche market segment is one of the fastest growing areas within the consulting landscape. The high demand is a result of the rising corporate distress across the world, particularly in Europe.
Statistics from Moody's indicates that the default rate of larger companies will continue to rise steadily in 2012. The rating agency's models indicate that the default rate will rise to 3.1% by the end of the year, but many analysts argue that this is too conservative - particularly if Europe's sovereign debt crisis continues to worsen.
Alvarez & Marsal
Specialist firm Alvarez & Marsal (A&M) serves as the best example of how strong the market has been growing over the past years. The firm has grown from less than 75 people in 2002 to over 1,800 people today. Its exponential growth is built on the large role it played in the Lehman Brothers' bankruptcy, cashing in more than €500 million, yet even without Lehman it has realized impressive growth. Earlier this year it opened offices in Athens, Mexico City and Canada. The Dutch office of A&M is headed by Rob Schuyt, who recently was appointed.
War for talent
While the rest of the advisory branche is facing a declining market and as a result is laying-off consultants, firms active in restructuring and turnround are caught in a war for talent. "The restructuring market is growing as companies get more used to using outside advisers and interim managers. We've been hiring and growing consistently, as have our rivals," said Peter Briggs, partner at Alvarez & Marsal in the UK. Also the Big4 firms- KPMG, Deloitte, Ernst & Young and PwC - have been hiring particularly aggressively at their restructuring, insolvency and business turnround divisions.
The increased demand for restructuring and turnround services has also been noted by the large investment banks. Martin Gudgeon, head of European restructuring at Blackstone, expects activity to grow steadily this year. "You cannot deleverage in a flat economy, so there's going to be plenty to do". The firm recently a Frankfurt office this year to serve clients based in Germany and the Benelux. Houlihan Lokey, one of the larger investment banks that specialize in restructuring advice, has also admitted that it is "cautiously increasing staff levels, in particular senior advisers across Europe" said managing director Joseph Swanson.