Investment firm CVC Capital Partners, known for its involvement in Six Nations Rugby, is reportedly considering a major move in the professional services sector. Sky News has learned that CVC is one of several buyout firms interested in acquiring a controlling stake in Grant Thornton UK, one of Britain’s largest audit firms.
This potential deal, which is still in the early stages, could value Grant Thornton UK at anywhere between £1bn and £2bn, making it the most significant transaction to date in the UK’s audit industry. CVC’s interest is particularly notable because it already owns Teneo, a professional services firm that offers public relations, political advice, and financial restructuring services, including company administrations and liquidations.
Analysts have raised concerns about potential conflicts of interest, as CVC’s ownership of both Grant Thornton UK and Teneo’s financial restructuring business could create conflicts between the two entities. CVC acquired Teneo in 2019 and is expected to pursue an exit from the business in the next couple of years.
The issue of conflicts of interest within large accountancy firms has been a growing concern, particularly following high-profile audit scandals at companies such as Bhs and Carillion. This has led to public and political pressure for the separation of audit and consulting operations within these firms.
Despite previous attempts at audit reform failing, the recent King’s Speech has included measures for tougher audit regulation, paving the way for potential changes in the industry. Grant Thornton UK itself has faced scrutiny from the Financial Reporting Council (FRC) in recent years. In 2022, the firm was fined £1.3m for “serious failings” in its audit of Sports Direct, and in 2021, it was handed a £2.3m penalty for demonstrating a “serious lack of competence” in its work on Patisserie Holdings.
Since then, Grant Thornton UK has reduced its number of public interest entity (PIE) audit clients, which include banks, insurers, and other significant companies. This has resulted in an improvement in audit quality, according to a Grant Thornton partner, and a decrease in scrutiny from the FRC.
Sources familiar with the sale process for Grant Thornton UK say that the firm will be seeking expressions of interest next month and is open to considering a deal that may or may not include the audit business. CVC is expected to face strong competition from other private equity firms.
A spokesperson for Grant Thornton UK LLP stated that the firm continuously evaluates the external business and economic landscape to make informed decisions for the benefit of its people, clients, and overall growth. The firm also reaffirmed its commitment to remaining a multi-disciplinary firm and will not be commenting further on the matter.
Grant Thornton UK has approximately 200 partners who will have a decisive vote on any potential transaction. The firm’s US entity has already reached a deal with New Mountain Capital, another private equity group, to sell a majority stake. While there were discussions about acquiring both the UK and Irish affiliates, sources suggest that the chances of a deal are slim.
CVC declined to comment on the potential acquisition of Grant Thornton UK.
