Firms including BDO Stoy Hayward, Begbies Traynor and Chantrey Vellacott DFK have all launched recruitment drives, in spite of one of the lowest rates ever for corporate insolvency. This apparent contradiction is being explained as a consequence of heightened pressures to avoid conflicts of interest in the wake of the Sarbanes-Oxley Act.
Some ‘group A’ firms believe the situation has presented them with a golden opportunity to pick up work from the Big Four.
Simon Michaels, national head of business recovery at BDO Stoy Hayward, said: ‘With consolidation at the top end of the accountancy profession, and the impact of Sarbanes-Oxley, we are finding more opportunities to secure assignments where the Big Four have a conflict of interest.’
The firm now plans to double its business recovery and restructuring practice from 20 to 40 partners over the next five years.
Outside the UK, the effect of tougher regulation has had a dramatic effect on the insolvency market.
In Australia earlier this year, KPMG was forced to hive off its business recovery section because its audit clients in the banking sector became reluctant to also provide insolvency work.
But nothing quite as dramatic has yet occurred in the UK. Mick McLoughlin, UK head of KPMG corporate recovery, said recently that it was ‘unlikely’ Big Four firms would lose out, as too few firms can handle work at the top end of the market.
But not everybody agrees.
‘Most people in the business now believe that the good old days, when the Big Four could sit there and get work pouring in because of who they were, are over,’ said Nick Hood, senior partner at Begbies Traynor.
‘We have been gearing up for some time to take advantage of the fact that some of this better quality work will have to find its way into the tier beneath the Big Four.
Group A firms now appear to be vying with each other to demonstrate they can handle the jobs previously the preserve of the Big Four.
Hood said: ‘Our strategy is to become credible in terms of experience for bigger and better quality work.’
The second largest improvement in ‘significant’ levels of financial distress since the EU Referendum was in professional services, found research from Begbies Traynor
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies