AUS
NZ
UK
CA
USA
IND
Swedish buyout firm EQT has reportedly joined other buyout firms exploring the acquisition of a substantial stake in the UK operations of accountancy firm Grant Thornton.
Sky News reported that EQT, currently in the process of acquiring computer games producer Keywords Studios, submitted an offer to Grant Thornton’s advisers ahead of a deadline earlier this week. The Stockholm-based firm is now part of a competitive group of bidders that includes Carlyle, Cinven, CVC Capital Partners, and Permira. Nordic Capital is also said to have looked into making an offer.
The potential deal could value Grant Thornton’s UK arm between £1 billion and £2 billion, according to industry sources. Of particular interest is CVC's participation in the auction. CVC Capital Partners owns Teneo, a professional services firm specializing in public relations, political advice, and financial restructuring, including company administrations and liquidations. This aspect of Teneo’s business was acquired from Deloitte in 2021, partly in response to growing conflicts of interest within large accounting firms between their audit and consulting functions. CVC has owned Teneo since 2019 and is expected to seek an exit from the business in the coming years.
Audit scandals involving companies like BHS and Carillion have intensified public and political pressure for the separation of audit and consulting operations within accounting firms. In 2022, Grant Thornton was fined £1.3 million by the Financial Reporting Council for "serious failings" in its audit of Sports Direct, now known as Frasers Group (LSE:FRAS). The firm also faced a £2.3 million penalty the previous year for demonstrating a "serious lack of competence" in its work on Patisserie Holdings, the owner of the collapsed Patisserie Valerie.
Since these incidents, Grant Thornton has significantly reduced the number of public interest entity (PIE) audit clients, which include banks, insurers, and other important companies.
A spokesperson for Grant Thornton UK LLP stated that the firm continuously evaluates the external business and economic landscape and explores various avenues for growth. This approach is aimed at making informed decisions that benefit its people, clients, and the firm.
Grant Thornton UK has approximately 200 partners, who will play a crucial role in deciding any transaction. The firm's US entity has already finalized a deal with New Mountain Capital, another private equity group, to sell a majority stake. EQT declined to comment on the report to Sky News.
