Private equity giants circle Grant Thornton

Private equity giants are circling Grant Thornton with a view to lodging bids for Britain’s sixth-largest accountant, which could kick off a formal sale process as soon as next month.
CVC, the European owner of the La Liga football league, is running the rule over the UK arm of Grant Thornton, which employs about 5,500 people, in the hopes of lodging a bid.
KKR has also taken a look at bidding for the accountancy in recent weeks, although people close to the situation said that it was unclear whether the US buyout behemoth was currently interested.
Private equity sources said that Grant Thornton, which is advised by Rothschild bank, has been approaching firms directly about the prospect of buying a stake in the company. A formal process is expected to start over the next month.
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Last year, the mid-tier accounting firm generated about £654 million, up 7 per cent on the previous year. Historical profit multiples, and private equity sources, said that a deal would likely value Grant Thornton at around £1.5 billion.
Regulations require that audit firms be majority owned by trained accountants, meaning that any swoop may have to ring-fence the auditing wing of Grant Thornton. Despite this, its audit partners would still likely have financial interests in the non-audit practice.
Like many firms of its ilk in the professional services sector, Grant Thornton is currently weighing up whether to sell a stake to private equity firms. Last month The Sunday Times revealed that Grant Thornton’s UK firm had been exploring whether to sell a stake to private equity. The company is also considering merging with its American sister firm, which itself sold a majority stake to PE firm New Mountain Capital in March.
Grant Thornton, KKR and CVC declined to comment.
CVC and KKR both have form for snapping up services businesses. In 2019, CVC became the majority shareholder in Teneo, the public relations firm. It merged the firm with Deloitte’s old restructuring team in 2021.
The restructuring team, led by Dan Butters, came out of the Big Four accountant partly because of conflict of interest restrictions, which prevented the team from serving audit clients. However, if CVC were to take on Grant Thornton, it would raise similar concerns and could limit Teneo’s client list.
KKR built a 30 per cent stake in another PR shop, FGS Global, in 2023. This month it grew its stake to 80 per cent in a deal that valued the PR firm at $1.6 billion (£1.2 billion).
Historically, PE firms have been wary of the professional services sector, which is lighter on the sorts of physical assets such companies like to gear up and borrow against. However, over the past decade private equity has spied an opportunity by buying up smaller professional services firms and rolling them together.
Professional services partnerships have also been keen on bringing in outside capital, as any money they wish to invest in their firms has to come from their payouts at the end of the year.