HIG Europe is in exclusive talks to buy the Big Four firm’s restructuring operation for about £400 million.

If the deal is agreed, John Connolly, a former global chairman and UK chief executive of Deloitte, has been rumoured to take over as chairman of the business. Mr Connolly left Deloitte in 2011. He is currently chairman of G4S, the security services group and Slater & Gordon, the law firm.

KPMG listed the division for sale last year because of concerns that potential conflicts of interest with other parts of the business were preventing it from winning new work.

The firm has been under increasing pressure amid heightened regulatory scrutiny and the resignation of its chairman, Bill Michael, after the comments he allegedly made to staff on a Zoom call.

KPMG’s restructuring team has worked on high-profile collapses including those of Intu Properties and Antler, the luggage brand.
Some of KPMG’s top restructuring partners, including Blair Nimmo, Will Wright and Mark Raddan, are expected to hold senior management roles once the deal completes, Sky News reported.

The deal comes amid a dispute between KPMG and the Financial Reporting Council (FRC) about restructuring work the firm carried out in 2011 that involved HIG’s American business, HIG Capital.

The watchdog has claimed that KPMG was “hopelessly compromised” when it assisted HIG to acquire Silentnight, a British bed manufacturer that KPMG was advising, without Silentnight’s £100 million pension scheme.

KPMG said the accusations were “extraordinary” and accused the regulator of failing “to take into account how restructuring mandates operate in practice”. A disciplinary tribunal has yet to provide its ruling on the allegations.

HIG Europe did not respond to a request for comment submitted by The Times. KPMG declined to comment.