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A Blackstone-led investor group is shopping for a majority stake in US accounting agency Citrin Cooperman, in a deal that provides the goal an enterprise worth over $2bn and marks a big step up in valuations throughout the sector.
Blackstone has acquired the stake from smaller rival New Mountain Capital, in response to two folks accustomed to the matter, marking the $1tn non-public capital group’s first deal in an trade present process a wave of takeover exercise.
Up to now three years, a 3rd of the biggest US accounting teams have entered the portfolios of personal fairness funds, with Citrin Cooperman the primary agency to vary palms twice.
The deal might be introduced afterward Tuesday, in response to the folks. The Blackstone-led group may have an possession stake above two-thirds, they stated, and can embrace smaller buyers, to maintain Blackstone’s stake beneath 50 per cent and assuage regulatory considerations concerning the independence of Citrin Cooperman’s audit enterprise.
Audit accounts for round 20 per cent of the group’s income. Greater than half of its price earnings is from tax work, and round 1 / 4 from advisory work.
New Mountain was one of many first main non-public fairness teams to put money into the US accounting sector when it bought a controlling stake in Citrin Cooperman in late 2021, in a deal that gave the accountancy group an enterprise worth of about $500mn. Its sale has been keenly awaited within the sector for a sign on valuations.
Two folks accustomed to the matter stated Blackstone was shopping for Citrin Cooperman at a a number of of round 15 instances earnings earlier than curiosity, taxes, depreciation and amortisation, in contrast with New Mountain’s preliminary acquisition at 11 instances ebitda.
One particular person accustomed to Blackstone’s considering stated the enterprise was a lower-risk proposition than on the time of New Mountain’s acquisition, as administration has efficiently navigated the transition away from the outdated partnership mannequin and made important investments in expertise.
Personal fairness possession has turbocharged merger and acquisition exercise within the accounting sector. Citrin Cooperman had income of $350mn when New Mountain purchased it three years in the past, in response to folks accustomed to the figures. That had since grown to about $850mn in 2024 following a string of bolt-on acquisitions of regional accounting corporations, they stated, making it one of many high 20 largest corporations within the US.
Citrin Cooperman companions will once more roll over nearly all of their possession within the agency however will get windfalls from promoting some shares, in response to folks accustomed to the Blackstone settlement. Companions had been briefed on particulars of the deal on Monday.
Administration are anticipated to extend their stake over time, by the allocation of efficiency bonuses.
After the Citrin Cooperman deal, New Mountain final 12 months acquired a majority stake within the a lot bigger US accounting agency Grant Thornton, whose shoppers are typically larger than the small and mid-size corporations focused by Citrin Cooperman. Final week, Grant Thornton US acquired its Irish sister agency in a deal funded by New Mountain.
Blackstone and New Mountain declined to remark.
