Recovery experts: you shouldn't be surprised

Is it a coincidence that the incoming UK heads of PricewaterhouseCoopers and
BDO are from a restructuring background in the current economic climate?

Ian Powell takes the helm at PwC on 1 July having come through the ranks of
the firm’s corporate restructuring practice over the 20 years to 2006, to become
head of advisory. Simon Michaels will lead BDO from October, similarly after 20
years in the firm’s business restructuring stream, which he has headed since
2004.

Prime qualities for the roles are leadership and people management skills.
Knowing both men fairly well, I can see how they fit.

It’s no surprise to me that insolvency practitioners should take leadership
positions, especially those bent towards restructuring rather than straight
liquidation.

Good restructuring professionals will inevitably develop good people
management skills and the best will have been comfortable exercising such talent
over many years.
Michaels’ views are less public, but one has to assume that he won the ballot on
the strength of his partners’ judgement of his leadership qualities rather than
on pure politics.

I believe it is unremarkable that having come through the recessions of the
1980s and 1990s, when good people were attracted to corporate restructuring,
those who moved on to divisional management roles and developed their leadership
skills are now positioned for the top jobs.

Commerciality and numeracy is expected of IPs, but communication abilities
and people skills have become ever more important. These recent promotions
underline the skillsets of the restructuring profession and the opportunities in
store for those whose careers begin by attending creditors’ meetings or dealing
with retention of title claims.

But is there really no coincidence here? I think that’s the case. PwC’s and
BDO’s partners may know something about their firms that I don’t, but I very
much doubt that their new leaders’ insolvency technical skills will be put to
much use.

Even if the credit crunch turns out to have more severe and long-lasting
effects than most IPs hope, both firms have strong counter-cyclical
restructuring departments.

Fortunately for the rest of us, they have an increasing number of conflicts
of interest and, therefore, insolvency matters they are unable to deal with.

Chris Laughton is a business recovery partner of Mercer
& Hole