BusinessBusiness RecoveryOn the money with Gavin Hinks

On the money with Gavin Hinks

Rescuing companies, or liquidating them, is booming, so you’d think the business recovery and insolvency partners out there would be happy. But not so

gavin hinks, editor accountancy age

Ironically, the word is that, among the mid-tier at least, there is a fair
amount of discontent because the ‘busrec’ guys aren’t seeing their fair share
from all the extra work they’re bringing in.

The current climate is made for them. Statistics out last week show
liquidations for Q1 are up 56% on the same period last year, while
receiverships, administrations and company voluntary arrangement have leapt
43.6% (both seasonally adjusted figures). All told that’s around 6,700 companies
that have hit the skids in the first three months of this year.

No wonder business recovery partners are coining it in. Trouble is, most of
them are locked in profit sharing structures that fail to take account of recent
increases in business ­ the benefits of the downturn are being shared with the
partners in services faring less well.

That’s irritating a lot of business recovery people who may be seeing this as
a once-in-a-career opportunity to make their pot of gold. They’re even hobbled
by most firms’ profit share structure which will only enable reviews every two
or three years.

Managing partners often retain funds to be allocated on a discretionary
basis, but these are hardly likely to compensate for the large sums recovery
people feel they are forfeiting.

Senior people suspect a couple of things might happen. Good business recovery
partners will begin to tout themselves around to find a better deal. The other
option is to get really aggressive with the managing partner in the hope he or
she can find a way to improve their rewards.

Either way there’s an problem to be resolved.

Gavin Hinks is editor of Accountancy Age

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