McGrathNicol celebrates twenty years in business recovery
Home-grown turnaround & restructuring consultancy McGrathNicol is celebrating its 20th anniversary, having over that time grown to a headcount of 55 partners and 350-plus staff.
The firm was established by former KPMG insolvency partners Colin Nicol and Tony McGrath together with a number of other senior colleagues, when they were forced to split from the Big Four firm ahead of new US legislation.
Opening its doors on the 1st of July in 2004, the newly-badged team was already working on one of the most high-profile cases in Australian history – the collapse of HIH Insurance – and has continued that momentum through to this day.
The spin-out started life with more than a dozen partners, including current managing partner Jamie Harris and chairman Jason Preston, leading a formidable headcount of 140 professionals. But while the McGrathNicol name is now just about synonymous with the local insolvency market, the press at the time had simply dubbed the breakaway after its eponymous leaders before it had the chance to choose a brand for itself.
It’s likely the fledgling firm felt it had more pressing matters to attend to. The $5.3 billion HIH collapse remains the biggest in Australian history, dragging on for well over a decade and causing significant ripple effects as one of the country’s largest insurers. The upstart then landed the administrative gig for ION Automotive in its first year, with the parts supplier owing in the order of $470 million to banks and creditors.
These engagements would have an impact beyond the business market by shaping the consulting sector itself, with McGrathNicol convinced of the need to assemble in-house forensic accounting expertise to support its restructuring business. As a sort of mirror to world affairs, the firm has since added practices focused on data analytics, geopolitical risk, and cyber, alongside performance improvement and deals advisory.
Back to the future
But as the landscape continues to evolve, the firm’s recent activity in the M&A space neatly demonstrates that some things always seem to remain the same. The impetus for McGrathNicol’s divorce from KPMG was fresh regulatory legislation in the US governing auditor independence (familiar enough territory already), in part enacted in response to the Enron scandal.
“20 years on, and I am incredibly proud of the journey we have taken and all that we have achieved” – Tony McGrath
Also giving rise to local market competitor KordaMentha, the scandal caused the biggest global shake-up in accounting & consulting history. As the Big Four steadily patched things back together (KPMG for example added Ferrier Hodgson in 2019), fast forward two decades and Australia has recently witnessed arguably its own greatest scandal, PwC’s government tax breach affair.
While the ramifications of that saga are still unfolding, the first impact was in PwC – previously the largest and now the smallest of the local Big Four – being pushed to sell off its public sector consulting business, in what would ultimately reemerge as Scyne. In a highly complex carve-out, owner Allegro received buy-side advisory and financial due diligence support for its $1 purchase from none other than McGrathNicol.
Reflecting on the firm’s origins back in 2011, McGrath, who joined KPMG almost 40 years ago from Arthur Andersen and remains active as a senior consultant and expert witness today, told the AFR; “I think it was the right thing for both groups, certainly for us, but also KPMG. This is the way our sector has gone – to boutiques, away from the big firms, and the clients like that.”
As it celebrates its milestone, the firm today has 55 partners (following three mid-year additions) spread across offices in every mainland capital and an Auckland outpost, including its modern new digs in Sydney’s Martin Place, and was recently named one of Australia’s best consulting firms across multiple service areas and sectors, achieving platinum-level status in five categories.
