In the largest private equity transaction in the profession to date, Chicago-based Grant Thornton (FY22 net revenue of $2.3 billion), the 7th largest accounting firm in the country, has accepted a significant investment from New York-based New Mountain Capital.
The Financial Times, citing “people familiar with the matter,” reported that New Mountain Capital, which has $50 billion in assets under management, is taking a majority stake in the firm. The cash, with additional debt financing, will be used to “return capital to partners, buy out retirement obligations to former partners and build a war chest for investment,” according to the newspaper.
Citrin Cooperman was the first to kick off the wave of private equity infusions into the profession in 2021 led by TowerBrook Capital Partners. Top 25 firms EisnerAmper, Cherry Bekaert and Baker Tilly also closed private equity deals. Closing in the Grant Thornton deal is expected in the second quarter of this year.
As is customary in these types of transactions, Grant Thornton will operate in an alternative practice structure with Grant Thornton, the licensed CPA firm, providing attest services and Grant Thornton Advisors offering business advisory and non-attest services.
“The investment immediately enhances our value in the marketplace and enables us to accelerate our current strategy,” said Seth Siegel, CEO of Grant Thornton, in a statement. “We’ll enjoy greater scale, resources and agility, while better positioning the firm to make targeted investments in talent, technology, infrastructure and enhanced capabilities. Grant Thornton will further solidify our position as the industry’s platform of choice.”
Andre Moura, managing director at New Mountain Capital, said, “We have been deeply impressed by the Grant Thornton team, and in our research, Grant Thornton ranked at the highest levels in the U.S. as measured by the quality of its work product and the satisfaction of its clients, even at a much lower price to clients.”
Siegel cited Grant Thornton’s upcoming 100-year anniversary as a companion milestone to its partnership with New Mountain Capital, noting that the partnership will help it “fully capitalize on the compelling opportunities that will define our next century.” He also predicted the partnership will reshape the industry landscape.
Allan Koltin, CEO of Koltin Consulting Group, who advised New Mountain Capital and Citrin Cooperman on their combination in October 2021 commented, “The Grant Thorton deal with New Mountain Capital is another exclamation point on why the accounting profession and private equity are combining forces.”
Koltin predicted more of the same. “Grant Thornton might be the largest CPA firm deal to date but trust me other Top 25 CPA firms will follow, including some of the largest in the world. New Mountain Capital hit a grand slam home run on its investment in Citrin Cooperman, so no surprise here that they entered into a second deal in the accounting industry.”