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Private equity’s forays into accountancy and legal markets are well documented, and several years in the making. As such, these ‘investors’ into the UK and US markets are finding it harder to snap up firms that fit their requirements.
But now they are looking beyond those borders to drive expansion. The FT has reported on PE-backed Grant Thornton US’s desire to buy up other Grant Thornton-networked firms in Europe and the Middle East.
The implications of such a move are potentially huge: not just for the accounting network and its members, but also other professional services firms (and the countries they operate in) which have yet to see much PE activity.
PE’s insatiable appetite to bulk up their professional services offerings, which could include corporate services, legal, accounting and IT, will see organisations that may have been cautious about M&A faced with a choice of being acquired, acquiring, or merging to be sustainable.
It can also be argued that an increase in compliance, and clients’ expectations of their services providers, means that even the smallest firms must consider bulking up to continue to exist.
Strong-arm approach
And then there’s the more specific circumstances surrounding Grant Thornton’s network members. If these members are wanted by Grant Thornton US, what if they spurn the approach?
They could be well be left out in the cold if Grant Thornton US can push aggressive expansion. Grant Thornton US might even look to buy firms that are currently outside of the network - and potentially current rivals in the markets where Grant Thornton member firms decline to be acquired.
Then there’s Grant Thornton UK, which is now owned by Cinven. What role will they have to play in the network’s future composition?
Money certainly talks – but it also drives action too. Whether your firm is an investment target or not, there’s no doubt that careful thinking and planning are required to leverage the opportunities, and disruption, ahead.
Tim Underwood is Foulger Underwood Singapore managing director
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