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Grant Thornton joins the rise of private equity

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Grant Thornton is looking to sell a stake in its business to private equity in a bid to boost its growth.

8th Jul 2024
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Private equity’s influence in accounting is rapidly expanding. Grant Thornton has begun considering deals with private equity firms to sell a stake in its business, which is currently owned by over 200 partners.

The firm has made it clear that its audit business would still remain majority-owned by these partners in any deal. This move shows Grant Thornton’s strategy to attract external investment as a way to boost growth while preserving its core partnership.

The rise of private equity

This consideration from Grant Thornton comes after a wave of recent deals in the accounting profession, driven by the increasing rise of private equity. 

In March of this year, its US business made headlines by selling a majority stake to the investment firm New Mountain Capital, which marked the largest of five private equity deals among the top 25 US accounting firms. This move reflects a broader trend where accounting firms are turning to private equity to drive growth and expand their market presence.

Only a month before, the US accounting firm Baker Tilly agreed to sell a majority stake in its business to private equity group Hellman & Friedman for £780m.

Finding ways to grow 

Grant Thornton’s UK firm was recently hit with a £50k audit sanction after an inspection by the Financial Reporting Council (FRC) concluded that the firm failed to comply with the regulatory framework for auditing.

Despite this, the company is determined to boost its growth. The firm shared, “As all businesses do, we continually evaluate the external business and economic landscape and explore various avenues that will drive growth for our firm. This enables us to make informed decisions about what’s best for our people, our clients and our firm. We are not actively engaged in any such transaction.”

The company revealed its plan to further drive growth after “a standout year” in 2023. For the year ending 31 December 2023, Grant Thornton reported a revenue of £690.2m, up from £647.8m in 2022. Operating profits also saw an increase, rising from £124m to £146.2m. The firm noted an 11% increase in average profit per partner at £644,000.

Current developments 

Currently, Grant Thornton UK has yet to confirm a deal, saying that they’re not “actively engaged” in a transaction.

A spokesperson for Grant Thornton Ireland said: “In light of ongoing developments in our profession, we are constantly exploring strategic options to assess what is best for our clients, our people and our firm. 

“However, we can confirm that Grant Thornton Ireland is not for sale.”

Replies (3)

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By FactChecker
08th Jul 2024 23:17

"Grant Thornton’s UK firm was recently hit with a £50k audit sanction after an inspection by the FRC concluded that the firm failed to comply with the regulatory framework for auditing.
Despite this, the company is determined to boost its growth."

... well they would say that wouldn't they. :=)

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By FactChecker
08th Jul 2024 23:20

"Grant Thornton has begun considering deals with private equity firms to sell a stake in its business, which is currently owned by over 200 partners.
This move shows Grant Thornton’s strategy to attract external investment as a way to boost growth while preserving its core partnership."

Does it? Or is it just a way to pay for those partners' lifestyles when there's not enough profit to share out at the levels to which they've become accustomed?

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By Justin Bryant
09th Jul 2024 10:28

Yes; they're just cashing in. Just like with an IPO. I bet the non-equity (non-capital) GT partners are a bit miffed by this.

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