Grant Thornton Acquisition: Key Details, Impact, and What Comes Next

New Mountain Capital's acquisition of a significant stake in Grant Thornton marks a pivotal moment in the professional services industry. This strategic investment is set to enhance Grant Thornton's technological capabilities and expand its service offerings, positioning the firm as a more competitive and innovative player in the market. The partnership underscores a commitment to quality and client service, solidifying Grant Thornton's leadership in the field.

What Is Grant Thornton?

Founded in 1924, Grant Thornton offers a comprehensive suite of services including advisory, audit & assurance, and tax. The firm differentiates itself with industry-specific insights, a wide range of service offerings, and the innovative alyx platform for technology-driven solutions. Additionally, Grant Thornton's Purple Paladins program supports emerging nonprofits, highlighting its commitment to community impact. With a global reach and a focus on modernizing business practices, Grant Thornton stands out in the professional services market.

Who Acquired Grant Thornton?

New Mountain Capital is a prominent private equity firm specializing in business building and growth within economically resilient industries. The firm offers key services in private equity, credit, and net lease, focusing on acquiring high-quality leaders and operationally critical real estate assets. With approximately $55 billion in assets under management and over $40 billion in capital raised, New Mountain Capital holds a significant position in the market, emphasizing a "defensive growth" investment philosophy.

When Was Grant Thornton Acquired?

New Mountain Capital completed its acquisition of Grant Thornton on May 31, 2024. This strategic move coincides with Grant Thornton's 100th anniversary, a period marked by strong momentum and record-setting revenues. The timing aligns with industry trends emphasizing technology and automation, talent acquisition, and new service line capabilities. This acquisition positions Grant Thornton to capitalize on future opportunities and maintain a competitive edge in the professional services market.

Why Was Grant Thornton Acquired?

• Market Expansion: The acquisition enables Grant Thornton to expand its service offerings and execute strategic acquisitions, thereby growing its platform. This move is expected to accelerate growth across key markets, including the US, Ireland, Bermuda, Isle of Man, and Gibraltar. The partnership aims to enhance the firm's appeal to a broader international client base, making it the first truly integrated US and Irish professional services firm.
• Technology Integration: New Mountain Capital's investment allows Grant Thornton to further invest in technology and automation. This will enhance service quality and client experience, enabling the firm to quickly expand its current capabilities. The partnership will also provide access to enhanced technology and other resources, driving better holistic support and execution for clients.
• Competitive Advantage: The acquisition strengthens Grant Thornton's position against competitors by providing greater scale, resources, and agility. The partnership with New Mountain Capital, CDPQ, and OA Private Capital is expected to accelerate Grant Thornton's strategy, benefit clients and team members, and solidify its position as the industry's platform of choice. Additionally, the separation of audit and non-audit services ensures compliance with securities laws, potentially enhancing the firm's reputation and trustworthiness in the market.

Acquisition Terms

• Acquisition Price: The financial terms of the deal were not disclosed.
• Payment Method: The payment method was not specified.
• Key Conditions or Agreements:
  • The transaction is subject to regulatory approval and other standard closing conditions.
  • Grant Thornton will operate in an alternative practice structure: Grant Thornton LLP will provide attest services, and Grant Thornton Advisors LLC will provide business advisory and non-attest services.
  • New Mountain Capital acquired a 60% stake in Grant Thornton’s U.S. unit.
  • There will be a management services agreement between the audit and non-audit entities.
  • Compliance with securities laws by separating audit and non-audit services to avoid conflicts of interest.
  • Resolution of disputes with retired partners who sought a bigger payout.

Impact on Grant Thornton

The acquisition by New Mountain Capital has led to significant changes in Grant Thornton's operations and management. The firm now operates under an alternative practice structure, with Grant Thornton LLP focusing on attest services and Grant Thornton Advisors LLC handling business advisory and non-attest services. This restructuring aims to enhance compliance with securities laws and avoid conflicts of interest. Additionally, the investment has enabled Grant Thornton to make targeted investments in talent, technology, and infrastructure, thereby accelerating its business strategy and solidifying its position as a leading professional services firm.

In terms of product offerings and services, the acquisition has allowed Grant Thornton to expand its capabilities and deliver more comprehensive solutions to clients. Enhanced technology and resources are being leveraged to improve service quality and client experience. The firm has also combined with Grant Thornton Ireland to create a cross-continental professional services platform, further broadening its reach and service offerings. Employee reactions have been mixed, with some layoffs occurring, but the overall sentiment is positive, emphasizing career growth opportunities. Clients are expected to benefit from the enhanced capabilities and expanded service offerings.

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