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The private equity firm that owns Interpath, the former restructuring and advisory branch of KPMG, is getting ready to hire bankers to oversee the sale of the company, aiming for a valuation around £800 million.
This week, banks have started to propose their services to HIG Capital for advising on the sale of Interpath Advisory, marking the commencement of a formal sales process for the ex-KPMG business.
HIG plans to engage banks to assist in selling Interpath at an estimated value of £800 million, four years after acquiring it from KPMG for approximately £400 million.
Interpath encountered challenges in achieving profitability after the acquisition, posting pre-tax losses of £10.6 million for the year ending March 2023 and a loss of £10.2 million in 2022, primarily due to initial setup expenses. However, last year, the company recorded a pre-tax profit of £3 million.
The company’s fortunes improved under the leadership of Mark Raddan, a former KPMG partner who took over as chief executive from Blair Nimmo last year.
KPMG divested Interpath amid a broader trend among the Big Four accounting firms seeking to mitigate conflicts of interest that limited the activities of various teams within the firms. Deloitte similarly sold its restructuring division to Teneo, backed by Dutch private equity group CVC.
Since then, Interpath has expanded its services beyond restructuring advisory to include corporate finance consulting and has grown its workforce from 450 to over 1,000 employees.
In recent years, private equity firms have aggressively pursued opportunities in the professional services sector.
In November, Cinven acquired a majority interest in Grant Thornton, the sixth-largest audit firm in the UK, while Apax Partners purchased Smith & Williamson, part of wealth manager Evelyn Partners, for £700 million in the same month.
However, buyout firms are facing mounting challenges in exiting their investments. Higher interest rates and economic uncertainty have resulted in a decline in deal-making and initial public offerings, continuing for over two years now.
Private equity executives are now focusing on alternative exit strategies, such as dismantling businesses for sale in smaller segments or using “continuation funds” to sell companies back to themselves.
Neither HIG Capital nor Interpath provided comments.
