Grant Thornton is in good shape. The UK’s sixth largest accounting firm’s latest annual results, published earlier this month, reveal it grew its revenues by 11% last year to £724m. Profits reached £147m. Its 250 partners averaged a £682,000 pay-out for 2024, up by a very healthy 6% on the previous year.
All of which begs a question: why has Grant Thornton felt the need to sell itself to private equity (PE) investor Cinven? The deal was announced last November and is thought to value the firm at around £1.5bn. But why move away from an ownership model that appears to be functioning so effectively? Indeed, the only disappointing figure in those results was related to the Cinven transaction; the firm blamed its meagre 0.4% growth in operating profits largely on the impact of deal costs.
Ambition vs resources
The short answer is that Grant Thornton’s ambition outstripped its resources. The firm is well regarded, with strong brand value, and sits at or near the top of the mid-tier of the UK’s accounting industry, vying with rivals such as BDO, Evelyn Partners and RSM. But it remains a county mile behind the Big Four accountants, which retain their stranglehold of the auditing market for blue-chip British businesses, continue to expand into global markets, and enjoy handsome earnings from their consulting arms. Grant Thornton could not have hoped to make significant inroads into the gap from retained profits alone.
Hence the need for a cash injection. Neither Grant Thornton nor Cinven have disclosed what stake the PE firm is taking or how much funding it is handing over. And Grant Thornton stresses that the partnership remains in place. Still, both parties clearly hope this will prove to be a transformative transaction.
“External equity investment allows us to further accelerate our growth by investing more impactfully in talent and technology to provide an outstanding experience for our people and clients, while retaining our multidisciplinary partnership structure and ethos,” said Malcolm Gomersall, CEO of Grant Thornton UK. “Our new structure supports an increased pace of investment and strengthens our decision-making around growth plans.”
Statement of intent
It’s a clear statement of intent. Expect to see Grant Thornton recruit more aggressively and to invest in digital transformation. Above all, look out for mergers and acquisitions (M&A) activity that enables the business to scale much more quickly than purely organic growth would ever have allowed.
For observers wondering what such a strategy looks like in practice, Grant Thornton’s sister firm in North America, Grant Thornton US, provides a read-across. Since selling a majority stake in its business last year to a consortium led by PE firm New Mountain Capital, it has embarked on an acquisition spree. In April alone, it acquired more than half a dozen of its sister firms in Europe and the Middle East, as its plans for international consolidation gathered pace.
Hotbed of activity
Indeed, the once-sleepy accounting sector is currently something of a hotbed of M&A activity. Cinven’s investment in Grant Thornton is one of many recent PE investments in the sector – albeit the largest – in recent years, with multiple firms pursuing growth strategies pegged to acquisitions and roll-ups.
This is not purely a UK phenomenon, as the Grant Thornton US deal with New Mountain underlines. Globally, data from S&P Global Market Intelligence reveals PE and venture capital firms invested $6.3bn in the accountancy sector in 2024 – the largest sum in a decade. More deals have been announced in 2025, including transactions such as Blixt Group’s investment in Beavis Morgan and Inflexion’s swoop on Baker Tilly’s Netherlands business.
Scale at pace
Investors see an opportunity to scale at pace. For example, Azets is now comfortably one of the UK’s top 10 accountancy firms but didn’t even exist a decade ago. The firm was launched in 2017 with funding from PE group Hg and has grown through the acquisition of close to 100 accountancy firms around the country. The business took on further PE investment from PAI Partners in 2023, providing further affirmation for its strategy.
Lee Humble, UK head of corporate finance at Azets, said there are multiple attractions for both parties. “Accountancy firms are highly attractive to PE,” he explained. “The recurring revenues they earn from core services provides excellent visibility of future income and are largely recession proof. There is significant potential to improve efficiency and effectiveness through technology investment, which can enhance revenues and profitability.”
As for accountants, the appeal of PE is more than just financial. “Some partners in small and medium-sized accountancy firms have never dealt with the pressures of rapid growth or running a large organisation,” Humble added. “With PE comes cash, but also the experience of targeting growth and return that partnerships often don’t have.”
Go for growth
It’s a point echoed by Russell Worrall, UK head of advisory at Interpath. His firm was formed in 2021 following a carve-out from KPMG that saw it buy the latter’s restructuring business in France, as well as the German business Kerkhoff. Interpath now has a presence in 10 European markets, having announced an expansion into Spain in April.
“The landscape of the professional services market in the UK, Europe and beyond is evolving, providing real opportunity for further PE investment,” says Worrall. “Ownership structure matters: by being part of a global business with common ownership and no conflicts, you have the ability to provide a seamless service and can guarantee quality.”
Mark Raddan, Interpath’s CEO, argues that the sector’s traditional structures can sometimes impede investment for growth, with individual partners keen to draw down profits and not necessarily willing or able to provide additional capital.
“The opportunity at its best is for PE-backed professional services firms to balance the need to pay senior leaders in the current year while investing in the future, which is a trade-off that partnerships have often struggled with,” Raddan said. “To achieve their potential, these businesses need significant investment, particularly to acquire, develop and retain talent, but also as the role of new technologies evolves.”
Possibility of conflict
The counterargument is that change creates the possibility of conflict. It is not difficult to see how the coming together of PE and a partnership might give rise to a culture clash. Not least, there is the question of time horizons, given the need for PE firms to exit ownership stakes – typically with five to seven years – in order to pay out to the limited partners in their funds.
Indeed, this latter point has prompted concern among regulators. Last year, the Financial Reporting Council fired a warning shot across the bows of PE investors with a public letter expressing concern about the risks that could come with private capital. Chief executive officer Richard Moriarty pointed to anxieties about impacts on leadership and culture, and stressed the need to protect the independence of the audit process.
Still, Grant Thornton is convinced it can make its alliance with Cinven work. “The dynamics of our sector, both here in the UK and internationally, have changed dramatically over recent years and continue to do so,” added Gomersall. “We engaged with our regulators early on and maintained an open and constructive dialogue with them throughout this process.”
The firm also argues its evolution will create opportunities for all staff, including partners, to develop professionally. “Growth is what enables us to invest in our people,” Gomersall said.
Partnership structure
Marc Fecher, a partner in Moore Kingston Smith (MKS), also believes these arrangements can prove effective, pointing to the firm’s own experience since it was acquired by PE firm Waterland in 2023. Like Grant Thornton, MKS has retained its partnership structure – and has already moved forward with M&A, including a merger with Shipleys announced last October.
“We needed funds to pursue our ambition, but we didn’t want to dilute our partner-led culture,” said Fecher of the Waterland investment. “We now have a bigger brand with greater recognition, more depth on our bench, and increased investment across all our capabilities, but new funding has supported both organic and inorganic growth.”
There will likely be more such deals to come, particularly now that larger PE firms such as Cinven are entering the fray. Indeed, within days of the announcement of the Grant Thornton deal last year, Apax, the giant US PE house, revealed it was buying the professional services arm of wealth manager Evelyn Partners.
In recent days, Warburg Pincus has also moved into the sector. It has announced it is backing a new venture, Unity Advisory, which is led by former senior executives from EY and PwC, including Steve Varley, the ex-chair of EY in the UK. The firm is deliberately steering clear of the audit market but is targeting mid-sized businesses with a range of other accounting and consultancy services.
Pause for thought
It’s a move that might give Grant Thornton and Cinven pause for thought. Their strategy is to build for scale; others in the sector believe the size of firms such as EY, PwC, KPMG and Deloitte creates problems – notably scope for regulatory focus on conflicts of interest. Indeed, EY mulled a break-up of its firm before abandoning the plans. Boutiques such as Unity are therefore eyeing an opportunity to offer a different proposition.
Still, either way, PE appears to be here to stay in the accounting sector. Cinven itself is already something of a veteran. “[We have] extensive experience of successfully investing in people-based professional service providers such as Alter Domus, Miller and CPA Global,” said Rory Neeson, head of the firm’s business services sector, when the deal was announced last year. Grant Thornton will hope that experience can now help it to fulfil its ambitions.
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