Grant Thornton on Wednesday said it will buy CBIZ in a $5 billion deal that’s slated to create the fifth-largest tax, advisory and professional services company in the U.S.
In a Wednesday news release, Grant Thornton officials said the merger would create a “multinational platform” that would generate $7.5 billion in revenue across 20 countries and territories. The combined firm, they said, would employ nearly 35,000 people around the world.
The transaction shows private equity’s continued influence on the accounting sector. In May 2024, Grant Thornton said it took a “significant growth investment” from PE firm New Mountain Capital.
Francine McKenna, adjunct professor at Montclair State University and author of The Dig accounting newsletter, said she “could not have predicted” the merger but was not surprised by it. “Consolidation seems to be the strategy here,” she told CFO.com.
The companies are likely not combining to compete with the Big Four on public company audits, but are instead looking to build a broader geographic footprint and boost their tax and advisory offerings, McKenna said.
Still, CBIZ may bring some baggage with it due to its 2024 acquisition of Marcum, which just three years ago settled federal claims of failures in auditing special purpose acquisition companies.
“I wonder if Grant Thornton knows what they’re getting themselves into by absorbing what CBIZ absorbed when they bought Marcum,” McKenna said.
Jack Castonguay, accounting professor at Hofstra University, told CFO.com that private equity is likely to continue driving changes to the partnership model at firms, though it’s not likely to go away entirely. He pointed to layoffs of partners at some large firms, and changing consensus on the hourly billing model. “The hourly rate model is going by the wayside,” he said.
Given private equity’s big-ticket investments in accounting firms over the years, it’s unlikely consolidation in the sector will slow down, Castonguay said.
