PE wins the heart of Grant Thornton UK

Grant Thornton UK has agreed to sell a majority stake to private equity firm Cinven in a landmark deal for the UK accounting sector, marking the most significant private equity investment in the industry to date.

The London-based professional services firm, which employs more than 5,500 people across over 20 UK offices and is led by more than 240 partners, opted for Cinven’s offer after considering competing bids from Swedish private equity group EQT and a potential merger opportunity with its US sister firm.

While the exact terms of the deal were not disclosed, The Financial Times cites sources familiar with the process indicated that earlier bidding had reached approximately £1.3 billion, with partners initially hoping for a valuation of around £1.5 billion. The transaction remains subject to partner ratification and regulatory approvals.

The decision comes as Grant Thornton UK reported strong financial performance, with revenues of £654 million in the previous year, representing a 7% increase, alongside an 18% rise in operating profit to £146 million. This growth was achieved despite the firm’s strategic move away from auditing “public interest entities” such as listed companies, banks, and insurers.

Samy Jazaerli, principal in Cinven’s financial services sector, emphasized the attractiveness of the accounting services market, noting Grant Thornton’s “strong brand, broad product offering, blue-chip customer base and successful track record” in the UK market.

The deal represents a significant shift in the professional services landscape, where firms have historically operated as private partnerships. Grant Thornton UK’s existing partners will maintain a significant investment in the business following the transaction.

Cinven, which has offices across Europe and North America, was advised by Goldman Sachs International on M&A aspects, with Freshfields providing legal counsel, Oliver Wyman offering commercial advice, and EY and Deloitte supporting on financial operations and tax matters respectively.

The transaction notably diverges from the path taken by Grant Thornton’s US operations, which had proposed a three-way merger including Grant Thornton Ireland, following its own private equity deal with New Mountain Capital. However, the UK leadership opted to maintain independence rather than integrate with the US operation.

Grant Thornton UK confirmed the agreement in a statement, noting they had “evaluated the external landscape” and agreed to initial terms with an investor they believe is “best placed to support our accelerated growth in the medium term.”