In a significant shift within the professional services sector, two prominent US accounting firms have been acquired by private equity investors, marking a continuation of the industry’s consolidation trend.
Bahrain-headquartered Investcorp, partnering with Canadian pension fund PSP Investments, has secured ownership of PKF O’Connor Davies, which stands as the 25th largest accountancy firm in the US. Simultaneously, Centerbridge Partners, managing $40 billion in assets, has acquired a majority stake in Alabama-based Carr, Riggs & Ingram, the nation’s 23rd largest firm.
These strategic moves reflect a broader transformation in the accounting sector, with private equity now controlling one-third of the top 30 US accounting organisations. The trend gained momentum earlier this year when Baker Tilly transferred control to Hellman & Friedman, while Grant Thornton’s US operations were acquired by New Mountain Capital.
Private equity involvement has catalysed aggressive expansion strategies within these firms. PKF O’Connor Davies, generating annual revenues of $380 million, plans to leverage Investcorp’s capital for acquisitions and technological advancement. Similarly, Carr Riggs, with revenues of $455 million, aims to utilise Centerbridge’s investment to expand its geographical footprint and service offerings.
The surge in private equity interest stems from accounting partnerships seeking to create equity value for employee retention and recruitment. Traditional partnership models, which typically reward through membership adjustments, often require decades of service before significant compensation materialises. The introduction of equity structures enables firms to offer stock awards, enhancing their ability to attract and retain top talent.
Investcorp, which oversees $53 billion in assets, has demonstrated a strategic focus on professional services, with investments including AlixPartners, ICR, and United Talent Agency, solidifying its position in the white-collar partnership sector.
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