Grant Thornton’s US business has discussed a possible deal to acquire the accounting group’s UK and Irish affiliates in what would be one of the most ambitious merger transactions in the sector to date.
The transatlantic merger proposal comes after Grant Thornton US sold a majority stake to private equity investors earlier this year and promised to turbocharge the growth of its consulting and tax businesses.
The US firm had set its sights on international expansion and expressed an interest in rolling up firms in Grant Thornton’s global network, according to people familiar with its proposal, who cautioned that discussions remain at an exploratory stage.
All the national firms are legally separate entities, owned by local partners, although they share a common brand and operate under an umbrella that imposes minimum standards and helps co-ordinate international work.
Under the three-way merger plan, the current partners of the UK and Irish firms would become shareholders in an international holding company led by Grant Thornton’s US private equity owners and partners. Relative valuations of the firms had yet to be discussed and the UK and Irish firms could decide to pursue different deals or none, according to people familiar with the matter.
The UK firm has already hired Rothschild to explore options for its business. Bankers have begun seeking expressions of interest from private equity firms that could provide an alternative to a merger with the US firm.
More recently, Grant Thornton Ireland hired Deutsche Bank to begin a similar exploration of its options, said people familiar with the situation.
Grant Thornton UK had revenues of £654 million and operating profit of £146 million (€173.5 million) last year, according to its annual report, while the Irish business had revenues of about €300 million.
Grant Thornton US had revenues of $2.4 billion ($2.2 billion) in its last fiscal year ended July 2023. A consortium of investors led by the private equity group New Mountain Capital purchased a 60 per cent stake in the business for $1.4 billion in May, in what was the largest deal to date in a wave of private equity investment in accounting firms on both sides of the Atlantic.
National rules require control of the firms’ audit divisions to remain in the hands of local partners, meaning they would be ringfenced and kept at arms length. Grant Thornton US believes that it can achieve significant synergies by combining the remaining consulting and tax businesses with those of the UK and Irish firms, according to people familiar with its thinking.
The idea has echoes of a plan at Big Four accounting firm EY which last year tried to combine its consulting and tax advisory businesses around the world into a new company that would be floated on the US stock market. The plan collapsed because of opposition in the US, its largest national firm.
A spokesperson for Grant Thornton UK declined to comment on the merger plan, but said it always explored “avenues that will drive growth for our firm”. Grant Thornton Ireland provided a similar statement. Grant Thornton US declined to comment. – Copyright The Financial Times Limited 2024
