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Grant Thornton Us is in talks to buy more than half a dozen sister firms in Europe and the Middle East in a private capital purchased entertainment that will dramatically reshape the Global Accounting Network.
The rotation plan, some of which is expected to be announced this week, comes between intensifying competition between middle -level accounting firms and has been created to give Grant Thornton an advantage in taking multinational businesses.
Grant Thornton US decided international consolidation as a priority after selling a majority of shares in a consortium led by New Mountain Capital last year in the largest receipt of a accounting firm’s private capital.
In October she sealed a deal to buy Grant Thornton Ireland, but their sister firm in the UK promoted a bid for receipt and sold to the European Purchase Group.
In recent days, the US firm has reached an agreement to buy Grant Thornton operations in the United Arab Emirates, Luxembourg and the Kayman Islands, people said with the deals. She was also in advanced negotiations to buy her sister firm in the Netherlands and had talks at different stages with some other territories, people said.
Unlike multinational companies, global accounting firms are usually structured as a network of local owned businesses that share a common brand and agree to respect a common group of quality standards.
Big Four-Deloitte, PWC, EY and KPMG-Kane or consolidated member firms have imposed powerful central bureaucracy to coordinate cross-border work, but middle-level accounting firms have historically been more freely related. While local businesses work together to win and serve international customers, the lack of a common profit pool can limit the incentives to cooperate and spread the cost of assembling investment in new technology, critics say.
The combination of the US and Ireland business had “changed behavior” within firms and led to a large number of projects for clients with operations in both countries, said Jim Peko, Grant Thornton the US executive chief. “Joining Member Firms together has a real economic extension and a calm customer experience.”
The firm was “not looking to consolidate the entire Grant Thornton network,” he added, but would look for places where the main customers had overlapping business interests. The partners of the won member firms become capital holders along with the new mountain consortium and US partners in a holding company that has been renamed Grant Thornton Global Advisors.
The initial consolidation wave unites operations in the main financial centers, said Andre Moura, Managing Director in New Mountain, “but we are just starting. We plan to bring the best firms, faster.”
The arrival of private capital has rapidly reshaped the US accounting sector, where one in three of the top 30 firms has sold a financial buyer in four years.
While most firms have used the increased financial power to buy US smallest calculations, Grant Thornton was the first to start consolidating its international sister firms.
RSM US, which has prompted interest from private capital to remain a traditional partnership, said at the end of last year that it had reached an agreement in principle to buy its counterpart in the United Kingdom, but the deal has not yet been completed.
