Professional services failures to come – Firmin

THE future of professional services firms will be “the big news story of 2013”, according to a leading restructuring expert.

Mark Firmin, the head of KPMG’s UK regional restructuring practice, predicted that consolidation – particularly within the legal sector – would continue as firms continue to be impacted by the downturn.

“Some professional services firms, many in the legal sector, have been hanging on expecting things to pick up again but they haven’t,” he said.

“There are more out there that have over-expanded. And they’re mainly regional. Some are trimming but many are cutting to the bone.

“I think we’ll see some failures in 2013 in the accountancy, legal and (property) agent sectors. If businesses are burying their heads in the sand then it’s looking at death by a thousand cuts.”

Mr Firmin, based in the ‘Big Four’ accountancy firm’s Leeds office, said the retail and construction sectors were two areas that would continue to be affected.

But he added that retailers with a “niche” could differentiate themselves from the competition and predicted that there wouldn’t be “masses” of retail casualties in the new year, despite forecasts of dire Christmas trading.

However, he added: “The ones carrying too much stock are going to have to heavily discount. And the ones where you see everything in store carrying 25% discounts before Christmas are the ones that have made mistakes.”

Commenting on the general outlook, Mr Firmin said businesses across most sectors that would normally budget for annual growth were now accepting that margins would remain flat.

“Businesses are thinking how do we grow?,” he said. “Many don’t have the confidence to invest at the moment.

“A lot of people are saying are we going to be a Japan and have a lost decade. It’s not inconceivable.”

He added: “My advice would be to allow professionals like us to get in as early as we can. A lot of insolvencies can be avoided by management teams taking advice early.”