When Dan Schwarzmann was offered the top job at PricewaterhouseCoopers
recovery unit he says it came like a bolt out of the blue.
He was walking past former business recovery services chair Kevin Ellis’s
office in June 2008 and was called in for a chat.
‘Ian Powell had just been promoted [to senior partner] and Ellis started
talking about the changes to the top brass. I was expecting him to tell me who
was going to be appointed as leader of BRS!’ he recalls.
‘BRS has never let me down. Whenever I’m ready for another experience it’s
given me another experience, but I just wasn’t expecting it so I was in shock.
It took me two days to recover from it.’
But in a year that saw the capital markets shaken to their foundations, his
surprise would pale into insignificance within a matter of weeks as the firm was
called in to handle what is now confirmed as the world’s biggest insolvency,
‘It’s a great opportunity and I’m loving it. But I didn’t realise then that it
was going to be like this,’ says Schwarzmann.
His plans for the 900+ staffed unit at the start of his tenure in July were
He spent July touching base with the almost 50 partners in BRS July and after
the August holiday break was intending to focus on BRS business strategy.
‘Then September the 15th: “Bang.” In the office, people had been tracking lots
of jobs including Lehmans, but I don’t know if anybody in the whole office
thought it would be an insolvency.’
On the Saturday before the collapse, there had been press speculation the
investment bank was in trouble and his wife had asked him if Lehmans could ever
fail. I said: “Never. It’s just impossible.” You can’t get your mind around
something like Lehmans collapsing.’
The unashamed opulence of Lehman Brothers Europe’s former building in the
heart of Canary Wharf, where Accountancy Age meets Schwarzmann, is a
telling indication of the money that once coarsed through the investment bank.
From the 31st floor, the views across London’s financial district stretch are
impressives but there’s a certain irony that the banking powerhouses in the
area who view the rest of the world from their lofty perches were so
short-sighted. They saw no risk in the sub-prime housing market that has brought
the world’s economy to its knees and crippled Lehmans.
The marble-encrusted floor used to be the scene of Lehmans’ top brass wining
and dining their biggest clients. Last September, it became the setting for
Schwarzmann and PwC to try and patch-up the bank before winding it down.
But it could have been so different for Schwarzmann. He is an expressive
character, enthusiastic and PwC to the core, but he almost left the profession
in his early days because he felt there was a ‘commercial edge to me that wasn’t
When he worked at a small firm, he started his career as a ‘shoebox auditor’.
‘Companies almost used to come in with their accounts in a shoebox and say
“Here’s everything sort out my accounts, sort out my tax, sort out
He moved on to company audits which was a great experience, he says, because
he saw many different businesses.
If his advisers at the small firm of chartered accountants he started with
had their way he would have ended up in the IT trade, he says.
Schwarzmann worked on liquidations at PwC in 1989, making this the third
recession he can remember ‘which must make me old, but I don’t feel it,’ he
‘I have not had a dull day. I’ve never in my career sat back and tried to
plot where my career is going I’ve just let it go where it goes.’
The genuine enthusiasm with which Schwarzmann talks about his work is no
transparent PR exercise. Yes, he is a fiercely loyal PwC man through and through
and wants to talk up the firm, but he does not shy away from revealing there
were doubts that even PwC could handle the feared avalanche of insolvencies
after Lehman Brothers failed.
‘Yes, I did wonder whether we had the capacity if things got even worse.
‘On day one you’re sitting in Lehman Brothers and there are 50 people around the
table. You’re having your catch-up meeting and somebody comes up and says
there’s rumours AIG’s about to fail. There were rumours about another bank as
well, and you begin to think maybe we’ll run out of resource.
‘But I knew if we had run out of resource there would have been no resource
anywhere else [in other firms].
But we haven’t run out. There will always be a restructuring team leveraging
the rest of the firm, not the other way around. I won’t deny [the resource has]
been strained, but we’re working well.’
There’s a ‘lot of talk’ among industry professionals about leveraging skills
from around their firm to undertake big corporate insolvencies, but ‘there’s
leveraging the team and there’s leveraging the team’, says Schwarzmann, as the
whole of the firm chipped in.
‘If only BRS people did BRS jobs, it would never work and you would be
delivering the wrong solution to the client. Every single job has got the right
BRS resource but it has tax, forensics, and corporate finance backing them
up,’ he adds.
Because of the ‘instantaneous’ nature of Lehmans collapse PwC did not have
the luxury of time to shape a plan of action and had to work on the fly.
‘Most of my other insolvencies, the directors are talking to you beforehand
but this was extraordinary circumstances. So for the biggest insolvency ever
there was no planning. I can’t believe anybody back in July could have predicted
what we were about to go through.’
Schwarzmann says the BRS strategy has always rested on maintaining the
biggest restructuring practice that is agile and flexible enough to respond to
changing conditions, because they had not been a downturn in over a decade.
‘We continued to use transferable skills in BRS on certain areas like
pensions work and insurance. We were using BRS skills, but we weren’t doing huge
restructuring work, yet we were ready. You’ve got this team 900 strong. This is
what they do and this is what they are ready for. When Lehman’s fell there were
so many other ripples in the markets but the team were prepared.’
Conflicts of interest are the only thing that can really stop the BRS
juggernaut. For Schwarzmann the Woolworths administration was the one that got
away because PwC audited the former high street heavyweight. When you’re
conflicted on a job from a technical, commercial and innovative perspective you
still want to do it.
‘In my career, there are probably four or five that I would have liked to do
and most of those we’ve been the auditors for.’
Although there is still plenty keeping PwC busy. In the last few months the
firm has overseen high-profile wins including the administrations of Keydata
Services and Dairy Farmers of Great Britain, and also the pre-packaged
administration of Cobra Beers.
Fees are holding steady, says Schwarzmann, as companies appear willing to pay
premium prices. ‘If you look at the assets and liabilities we’re dealing with,
that is real value for money compared with the corporate finance world for
example. We’re not seeing any pushback in fees,’ says Schwarzmann.
‘There are some extremely rare times not necessarily through any fault of
our own something has not gone as well as we would have liked. But we’re happy
to say we’ll share the pain. We want to be known as a firm that provides that
option and I think that will pay dividends in the long run. We have no problem
putting our money where our mouth is and saying this is the value I’m going to
achieve when you’re confident in your ability.’
He is carrying on Powell and Ellis’ policy of insolvency staff specialising
in certain fields such as pensions, health and insurance. ‘Demonstrating value
is not a problem.’
As the markets stay tricky and confidence remains at a low ebb, Schwarzmann
intends to stay on in the role working where he most enjoys it at the c
‘I don’t want to be a prophet of doom but it’s still tricky out there. But
confidence in the markets is key. I enjoy the management role and definitely
enjoy contributing to the strategy of BRS but I’m a work person. If you really
want to know what the team should be doing you should be doing the work
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