Teneo swoops for KPMG offshore arm

12 January 2022 Consultancy.uk 3 min. read
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The restructuring arm of KPMG in the Cayman and British Virgin Islands has joined Teneo. The purchasing firm was itself spun off from a Big Four firm, in a deal which took place early last year.

The number of corporate insolvencies is rising rapidly. In 2022, this looks set to get worse – as global corporate insolvency numbers are expected to increase by 33%, returning to levels not seen since before the pandemic began. In this market, demand for restructuring professionals is set to go sky-high over the coming 12 months.

In preparation for such a trend, firms specialising in insolvency services are looking to build their capacity for 2022. The most recent case of this comes from the former restructuring wing of Deloitte – Teneo – which is reportedly lining up a surprise swoop for the overseas restructuring unit of another Big Four firm.

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Teneo has announced the acquisition of KPMG's Cayman and British Virgin Islands restructuring division, something which presents it with a key a foothold in global markets for offshore insolvency activity. The transaction also boosts Teneo’s capacity with roughly 25 restructuring practitioners, who would join the firm’s financial advisory arm. Kris Beighton – the former leader of the unit being acquired – has meanwhile returned to become the Chair of Teneo's offshore restructuring business.

Beighton commented, “Teneo is the perfect fit for our people and business. Teneo’s commitment to client service, wide range of service offerings around the world, and vision to build a global financial advisory business aligns with our ambition for the growth of our Cayman and BVI practices. Our focus will remain on delivering world-class services to our clients and investing in and developing our people. We look forward to starting our journey as Teneo.”

When Sky News reported the story, sources close to the deal also speculated that this may be the first of several deals involving Teneo, as it looks to accelerate its global expansion. In this case, it is believed that establishing a presence in the Caribbean was prioritised for winning future insolvency work, as there is a concentration in the region – which is a hot-bed of tax havens – of holding companies for businesses operating in major economies such as China and Hong Kong.

Paul Keary, CEO of Teneo, said, “We are delighted to welcome our new colleagues from KPMG’s Cayman and BVI restructuring team to Teneo as we continue to grow in key markets around the world and build our financial advisory capabilities. Kris, Jeffrey, Russell and the team bring unparalleled experience in this key market, and we are very excited to bring their expertise to our platform.”

Teneo’s acquisition drive is backed by the private equity firm CVC Capital Partners, which enabled its managerial carve-out from Deloitte in early 2021. Deloitte’s decision to offload its lucrative restructuring unit in the deal is thought to have been motivated by a regulatory change from the Financial Reporting Council (FRC), which effectively banned the Big Four from conducting advisory work for audit clients in the wake of a number of accounting scandals. This split left many in the Big Four firms feeling the conflicts issue would inhibit the future growth of restructuring operations for as long as they are owned by them – leading them to consider cashing out.

Indeed, beside Deloitte, KPMG itself also took action following the FRC’s ruling. The UK restructuring wing of KPMG signed an agreement with H.I.G. Europe last year, in a move which saw it repackaged as an independent business, under the name Interpath Advisory.