Private equity circle Grant Thorntons UK business

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Several private equity firms are considering a bid to acquire a stake in the UK operations of mid-sized accounting firm Grant Thorntons through a competitive bidding process, with the aim of valuing the mid-sized accounting firm at up to $1.5 billion.

Carlyle, Blackstone, Permira, CVC Capital Partners and Bridgepoint are among the buyers considering potential offers for Grant Thornton UK ahead of a formal expressions of interest deadline in September, according to people familiar with the matter.

London-based Cinven is also seen as a potential bidder among industry executives, while New Mountain Capital, which bought a majority stake in Grant Thorntons' US operations earlier this year, is considering a takeover bid as part of plans to merge its UK, Irish and US operations, the Financial Times reported.

According to the process run by Rothschild, Grant Thornton UK's corporate value is expected to be valued at between 1 billion and 1.5 billion.

“This deal is a significant milestone for us as there are no large corporate clients in the UK in this market yet,” said Richard Holden, head of business services at investment bank Allantra.

People close to the matter said interest was in the early stages and a formal offer was not guaranteed. New York-based KKR is not expected to make a bid, one person close to the company said.

Grant Thornton also dismissed speculation that it would consider a deal outside of its audit business, with one person close to the accountant saying the idea was “completely ridiculous.” A spokesperson added: “We are committed to remaining a multi-disciplinary firm.

Under UK regulations, audit firms must be majority owned by experienced accountants, so a private equity deal is likely to involve ring-fencing of Grant Thorntons' audit work.

The firm has in recent years been moving away from auditing so-called public interest entities, such as listed companies, banks and insurance companies, which require the highest level of regulatory auditing. As a result, Grant Thornton was downgraded from the UK's accounting regulator's top audit director last year.

Private equity involvement in the UK accounting sector is less extensive than in the US, where domestic accounting firms are larger. However, interest is growing in the UK, particularly among smaller firms.

Holden said the accounting group relies on private equity partners to help with technology investments and succession planning.

Some of Grant Thornton's potential bidders have a history of investing in professional services firms, including CVC, which owns Teneo and integrated Deloitte's former restructuring unit into the business in 2021.

Grant Thornton UK reported revenues of $654 million and operating profit of $146 million last year. The firm is led by Malcolm Gomersall, who took over in January after the departure of predecessor David Dunckley.

Carlyle, CVC Capital Partners, Bridgepoint, Blackstone, Permira, Cinven and Rothschild declined to comment.

Grant Thornton said he was always looking for ways to accelerate the company's growth… and would not comment further on the matter.

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