Grant Thornton USA sells majority stake to private equity firm

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The U.S. arm of accounting firm Grant Thornton has agreed to sell a majority stake to investment group New Mountain Capital, the largest in a wave of private equity deals reshaping the industry.

The deal, which will be New Mountain's second investment in an American accounting firm, was announced to Grant Thornton's nearly 10,000 employees on Friday, according to people familiar with the matter.

Weeks ago, smaller rival Baker Tilly agreed to a $1 billion cash infusion from private equity group Hellman & Friedman to fund an acquisition spree that could further fuel a company that is rapidly expanding beyond traditional tax and accounting into consulting services. competition in the industry. .

Chicago-based Grant Thornton is the seventh-largest U.S. accounting firm after the Big Four, RSM and BDO, with revenue of $2.4 billion in its last fiscal year ended July 2023.

Financial terms of the investment could not be immediately determined, but it would be the largest of five private equity deals to date among the top 25 U.S. accounting firms, as the traditional partnership model is increasingly being questioned. Private equity advocates say it can be used to boost growth and introduce more attractive incentive structures for partners and employees.

New Mountain's cash plus some debt financing will be used to return capital to current partners, buy out former partners' retirement obligations and build investment funds, according to people familiar with the matter. In addition to spending on technology and new services to clients, Grant Thornton is likely to step up its acquisitions, an area where the company has historically been less active than many rivals, people familiar with the matter said.

The firm has about 600 partners in the United States and is the largest member of Grant Thornton International, a network of accounting firms that share a common brand and coordinate services globally.

“We will enjoy greater scale, resources and agility while better positioning the company to make targeted investments,” Grant Thornton CEO Seth Siegel said.

Three of the top 25 companies that have closed private equity deals – EisnerAmper, Citrin Cooperman and Cherry Bekaert – grew revenue between 38% and 100% last year, compared with the average growth rate of the top 25 companies of 18%. Accounting Today.

New Mountain acquired a controlling stake in Citrin Cooperman in 2022, financing an acquisition spree that gave the accounting firm an estimated $700 million in annual revenue.

New York-based New Mountain, which manages about $50 billion in assets, is known for preferring to buy private companies in industries it believes are insulated from economic fluctuations. The company claims that it has never had an investment go bankrupt or default on interest in more than 80 private equity transactions it has executed since its founding in 2000.