Grant Thornton’s Retired US Partners Want Bigger Payout From Private Equity Investor
Former partners of Grant Thornton who were unhappy with the terms of a private-equity deal hired lawyers to pursue an increased payout –
the first sign of trouble in accounting firms’ recent trend of seeking deals with private equity investors. Such moves allow private-equity firms to invest in partnerships’ cyclical cash flows while accounting firms gain capital to compete for talent drawn toward industries with faster returns rather than client billings.
Grant Thornton made headlines earlier this month when New Mountain Capital made the largest private-equity investment into an accounting firm to date, marking two top-10 accounting firms that sought outside funding this year and five transactions since 2017, such as Cherry Bekaert LLP, EisnerAmper LLP and Citrin Cooperman LLP among others.
New Mountain Capital-led group purchased a majority stake in Grant Thornton US operations and plans to focus on non-audit business, according to a media release. They plan on operating under an alternative practice structure with Grant Thornton LLP providing attest services while Grant Thornton Advisors LLC offering business advisory and nonattest services – Seth Siegel will lead this newly created entity as its CEO.
After closing this deal, which is expected in the second quarter of 2024, New Mountain Capital plans on returning capital to current Grant Thornton partners and paying retirement obligations of former partners, according to Siegel. They will also build up a war chest to invest in the firm and potentially expand technology offerings and hire more staff; potentially increasing acquisition activity as they have historically been less active than their rivals in that field.
