KPMG's Restructuring Services group just got a lot stronger. On July 16, KPMG acquired Grant Thornton's supply chain advisory practice, effectively doubling the size of its core restructuring team and broadened its service offerings. To better understand the implications of this deal, Consulting's One on One sat down with Drew Koecher, head of KPMG's restructuring practice, and Kimberly Rodriguez, the partner-in-charge of KPMG's supply chain advisory unit who recently came over from Grant Thornton.
Consulting: How significant is this addition to your practice?
Koecher: The acquisition added 23 professionals and three partners, which effectively doubles our restructuring core team — which now has about 50 professionals. The practice is part of our much larger M&A transaction capability, which represents about 600 professionals and pulls from a full spectrum of areas across the firm such as tax restructuring and debt advisory. The former Grant Thornton group brings deep operational expertise, which allows us to work on a restructuring starting at the plant floor and follow it all the way through the balance sheet. The financial implications are key, but now we're better able to address the underlying operational issues.
Consulting: What does have a stronger operational capability mean for the newly combined practice?
Rodriguez: Our core has been focused on the challenges at the plant level, which is not a core expertise of many of our competitors. We've found that we can be most effective when we can affect cash flow where cash flow is generated. This enables us to help clients at the heart of their issues. Many of our clients aren't in bankruptcy; they are feeling distress and want to stop the bleeding before it gets to that point. Many of our competitors focus on block and tackle issues for firms in bankruptcy. We work to help the client make operational changes to try to avoid bankruptcy altogether.
Consulting: What other specific strengths is the former-Grant Thornton practice bringing to KPMG?
Rodriguez: Our group had considerable strength in the automotive and manufacturing verticals, especially around supply chain and performance improvement. The automotive industry has the most complex supply chain of any industry. And because of that, we're seeing leaders in other industries, such as healthcare, want to learn more about the quality and efficiencies the automotive industry has been able to achieve. Among our clients, we're seeing automotive leaders migrating into other industries. And so KPMG's broader, global reach will enable us to expand our focus into additional verticals. We're already taking that knowledge and applying it to hospital clients. It's amazing how applicable it is across other industries.
Consulting: Was this acquisition by KPMG an opportunistic pickup or part of a larger acquisition strategy?
Koecher: This is a core investment for us in our effort to rebuild our restructuring business. Our US restructuring group was sold to Mesirow Financial in September 2004. We reentered the market 18 months ago and are committed to building out a broad service offering again. The Grant Thornton addition provides a great deal of synergy: we're very middle-market focused and GT's team was very well positioned among the larger companies. This lined up exceedingly well. But I would not classify this as a one-off 'opportunistic' buy; this is part of a larger strategy. As we seek to scale our capability in the US, we will continue to seek opportunities. The firm is always looking for opportunities to grow, to scale client resources. So this is not a one-off shot; it's not an outlier by any means.
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