H.I.G. Capital’s Strategic Exit: The £800 Million Interpath Advisory Sale in Context

H.I.G.’s Carve-Out Thesis

H.I.G. Capital structured the acquisition through its European Middle Market LBO team, recognizing the counter-cyclical nature of restructuring services during economic uncertainty. The £400 million purchase price reflected a 10x EBITDA multiple on £40 million earnings, funded through senior debt facilities arranged by CVC Credit alongside equity commitments. Crucially, the deal included continuity of leadership under Blair Nimmo, Will Wright, and Mark Raddan – key partners who championed the transaction – ensuring client retention during the transition to the newly branded Interpath Advisory. H.I.G.’s due diligence emphasized the unit’s 50-year track record in complex engagements and the structural tailwinds from anticipated pandemic-driven distress[8][13][32].

Value Creation Engine: Interpath’s Transformation Journey

Service Line Diversification

Under H.I.G.’s ownership, Interpath systematically expanded beyond its restructuring roots into a full-spectrum advisory firm. The 2021 launch included immediate investments in forensic accounting, valuations, and transaction services, recruiting senior leaders from Duff & Phelps and PwC to build these capabilities. By 2024, the firm had established dedicated practices in special situations M&A, financial services deal advisory, and operational transformation, reducing cyclical dependence on insolvency work. This strategic broadening enabled participation in 26 deal advisory transactions in H1 2024 alone, including Bunzl’s acquisition of Nisbets UK and Mitchells Group’s purchase of Allied Grain Systems, demonstrating revenue diversification beyond restructuring[6][24][21].

Geographic Expansion Strategy

Interpath’s international footprint grew from its UK foundation to 23 global locations through organic launches and targeted acquisitions. The 2024 establishment of a Paris office preceded the acquisition of KPMG’s French restructuring business, adding 100 professionals including six managing directors. The January 2025 purchase of German procurement specialist Kerkhoff established a DACH region foothold with 60 operations experts. Offshore capabilities expanded through the acquisition of Kalo Caribbean, strengthening restructuring services in Bermuda, British Virgin Islands, and Cayman Islands. This global infrastructure supported cross-border engagements like the administration of Waldorf Production’s North Sea assets, showcasing multinational execution capabilities[22][23][11].

Leadership and Cultural Evolution

The transition from Big Four subsidiary to independent advisory firm necessitated cultural reinvention centered on “conflict-free agility.” Founder partners Nimmo, Wright, and Raddan instituted equity participation for managing directors, aligning incentives with entrepreneurial growth. Leadership renewal saw Mark Raddan succeed Nimmo as CEO in April 2024, coinciding with John Connolly’s appointment as Chairman. Strategic hires like Matthew Jubb from Endless (transformation) and Nick Parkhouse from EY (financial services) infused operational expertise, while the 2023 recruitment of 180 deal advisory professionals signaled commitment to transactions. This cultural shift supported headcount growth from 550 to 900+ professionals despite reported £10.6 million losses in FY2023, reflecting investment in expansion[14][21][25][38].

Market Dynamics: Valuation Drivers and Exit Timing

Restructuring Cycle Positioning

The £800 million exit valuation – representing 17.3x adjusted EBITDA – emerges during a complex phase in the restructuring cycle. UK corporate insolvencies remain elevated at 30-35% above pre-COVID levels, driven by persistent inflation and high interest rates. However, forward curves project 80 basis points of rate reductions by late 2026, potentially softening future distress pipelines. This creates a valuation tension between current cash flows from record insolvency appointments and concerns about sustainability beyond 2026. Interpath’s counter-cyclical positioning is further complicated by Labour’s 2024 election victory and pledged tax increases on North Sea producers, directly impacting energy sector restructuring demand[1][11].

Comparative Transaction Analysis

Interpath’s premium valuation exceeds recent professional services transactions, testing market tolerance for restructuring assets. The 17.3x EBITDA multiple compares to CVC’s 14-15x multiple for Teneo (2019) and AlixPartners’ 12-13x in its 2016 sale to CDPQ/PSP. This pricing sits 200-250 basis points above the 75th percentile for mid-cap professional services deals, reflecting H.I.G.’s bet on Interpath’s transformed business model. The multiple expansion from the original 10x acquisition EBITDA multiple demonstrates how service diversification and internationalization have reduced earnings volatility, though market observers question sustainability should the restructuring cycle peak[1][2].

Private Equity Exit Environment

H.I.G.’s exit timing coincides with constrained IPO markets, making secondary buyouts the most viable liquidity path. The process launches amid competitive pressures in private equity fundraising, with firms like CVC securing €4.61 billion for strategic opportunities funds. Interpath’s sale also follows high-profile PE exits in adjacent sectors, including STG’s acquisition of Movable Ink and Wynnchurch’s sale of Northstar Aerospace to GE. However, the £800 million ask faces valuation scrutiny following Ontario Teachers’ Pension Plan and PSP Investments’ shelved auction of Cubico renewables, signaling investor caution on premium-priced assets[36][37].

Transaction Architecture and Buyer Landscape

Deal Structure Considerations

The exit process will likely involve complex structuring to accommodate Interpath’s partnership model and international operations. Earnout mechanisms may bridge valuation gaps given projected economic shifts, with potential seller financing components. Tax-efficient repatriation of offshore earnings from Bermuda and Cayman operations presents another structuring challenge. Crucially, the transaction must preserve partner autonomy while integrating with a buyer’s existing platform – a tension evident in H.I.G.’s own acquisition where KPMG partners retained significant equity. Debt financing availability remains favorable despite rate hikes, with CVC Credit’s original acquisition facility demonstrating lender appetite for restructuring cash flows[5][16][31].

Potential Acquirer Profiles

Three buyer archetypes emerge as logical suitors for Interpath at the £800 million valuation. Strategic consolidators like Teneo (which acquired Deloitte’s restructuring arm) could leverage synergies in global advisory, though antitrust concerns may arise. Financial sponsors with professional services expertise – notably CVC, Bain Capital, or KKR – possess the sector knowledge to continue H.I.G.’s value creation playbook. Pension funds seeking counter-cyclical cash flows (e.g., CDPQ, CPPIB) represent a third path, drawn to restructuring’s non-correlated returns. Secondary market dynamics suggest Apollo Global Management or Carlyle as potential buyers, given their activity in adjacent sectors like insurance services[1][12][36].

Strategic Implications for Advisory Sector

Big Four Carve-Out Blueprint

Interpath’s journey establishes a replicable model for private equity-backed professional services spin-offs. The success metrics – headcount growth from 550 to 900+, revenue increase to £163.6 million (FY2024), and international expansion – validate the conflict-free advisory thesis. This template now influences EY and PwC as they navigate regulatory pressures, though KPMG’s attempted rebuild of restructuring capabilities post-sale through hires like David Fletcher demonstrates ongoing strategic tension. The Interpath experiment proves that with PE capital and operational freedom, carved-out units can successfully compete against parents in core advisory services[26][38].

Valuation Benchmarking Impact

A successful £800 million exit would reset valuation parameters for professional services platforms, particularly those with restructuring expertise. The 17.3x EBITDA multiple would establish a new ceiling, pressuring rivals like AlixPartners and FTI Consulting to demonstrate similar growth trajectories. This pricing could accelerate PE investments in legal advisory and consulting niches, mirroring H.I.G.’s parallel acquisition of ITH Group. Conversely, failure to achieve the target valuation may signal market skepticism about premium pricing for counter-cyclical businesses amid shifting monetary policy[1][31][36].

Leadership Transition Dynamics

The CEO transition from Blair Nimmo to Mark Raddan in April 2024 created unexpected continuity challenges during the exit process. Nimmo’s extended advisory role through 2024, while ensuring client retention, complicates buyer assessments of post-acquisition leadership. Chairman John Connolly’s scheduled departure over Deloitte audit conflicts further clouds governance stability. These transitions highlight the human capital vulnerabilities in PE-owned professional services firms, where founder expertise remains critical to enterprise value. Buyers will scrutinize the depth of next-generation leadership beyond Raddan, particularly in international markets[25][35][38].

Conclusion: Signaling and Sector Implications

H.I.G. Capital’s £800 million exit pursuit represents a critical inflection point for private equity in professional services. The transaction tests whether operational transformation and geographic expansion can justify premium multiples in a cyclical sector facing economic crosscurrents. Success would validate the carve-out investment thesis, likely triggering further PE investments in accounting, consulting, and legal service spin-offs. Failure may signal market exhaustion with restructuring assets after years of elevated activity. Beyond financial metrics, Interpath’s journey demonstrates how regulatory constraints can be transformed into entrepreneurial opportunity through private ownership – a model now being replicated across continental Europe with Interpath’s French and German acquisitions. The ultimate exit valuation will reverberate through advisory firm boardrooms, influencing how Big Four leaders balance regulatory compliance with shareholder value creation in an era of enforced separation[1][22][23].