Private equity circles Grant Thornton’s UK business

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Several private equity firms are considering offers for a stake in Grant Thornton’s UK business, in a competitive bidding process aimed at securing a valuation of up to £1.5bn for the mid-tier accountant.

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

London-based Cinven is also seen as a potential bidder by industry executives, while New Mountain Capital, which took a majority stake in Grant Thornton’s US business earlier this year, is exploring an offer as part of a plan to merge the UK, Ireland and US operations, the Financial Times has reported.

The process, which is being run by Rothschild, is expected to value Grant Thornton UK between £1bn and £1.5bn.

A transaction would be “quite an important milestone because in the UK, in that area of the market which is the large, enterprise clients, there hasn’t been a deal yet”, said Richard Holden, head of business services at investment bank Alantra.

People close to the matter said that interest was at an early stage and there was no guarantee of formal offers. New York-based KKR is not expected to make a bid, one person close to the firm said.

Grant Thornton also shut down speculation that it would consider a deal excluding its audit practice, with one person close to the accountant saying the idea was “complete nonsense”. A spokesperson added: “We are committed to remaining as a multidisciplinary firm.”

UK regulations require audit firms to be majority owned by trained accountants, meaning that any private equity deal would be likely to involve ringfencing Grant Thornton’s audit practice.

The firm has in recent years moved away from auditing so-called “public interest entities”, such as listed groups, banks and insurers that involve the highest level of regulatory scrutiny. As a result, Grant Thornton was demoted last year from the UK accounting watchdog’s top tier of audit supervision.

Private equity involvement in the UK accounting sector is less extensive than in the US, where domestic accounting firms are larger. But such interest has been gathering pace in Britain, especially among smaller firms.

Holden said accounting groups had been turning to private equity partners for support in investing in technology and navigating succession planning.

Some of the potential bidders for Grant Thornton have a history of investing in professional services firms, including CVC, which owns Teneo and bolted on Deloitte’s former restructuring unit to the business in 2021.

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

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

Grant Thornton said it always explored “avenues that will drive growth for our firm . . . we will not be commenting further on this matter”.