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Private equity firms target Evelyn Partners’ accountancy division despite regulatory concerns

October 5, 2024

Private equity firms are circling Evelyn Partners’ accountancy division, which has been put up for sale and is attracting significant interest despite rising regulatory scrutiny.

Among the interested parties is Apax, which is reportedly considering a bid for the professional services division that offers accounting and tax services. The unit could be valued at over £500 million, with a deadline for first-round bids fast approaching.

Inflexion, another buyout firm, is also understood to have reviewed the business but is unlikely to submit an offer. Last month, it was revealed that investment bankers from Evercore had been hired to manage the sale process for Evelyn’s accounting division. The wealth management group, based in London, oversees £62.2 billion in assets and is owned by private equity firms Permira and Warburg Pincus.

The sale of the accountancy unit is expected to pave the way for an even larger transaction, with Permira and Warburg Pincus considering a potential sale of Evelyn Partners in the future. The private equity interest in Evelyn’s accounting business comes as the sector as a whole has increasingly drawn attention from buyout firms, which see fragmented industries as ripe for roll-up strategies. These strategies involve acquiring smaller businesses and merging them into larger entities to increase value.

However, the growing involvement of private equity in the accounting and audit sectors has caught the attention of the Financial Reporting Council (FRC), the UK’s accounting regulator. Last month, the FRC issued a warning to accounting firms, stating that while it is not opposed to external private capital participation in the UK audit market, it acknowledges the “important risks” that must be managed carefully. The FRC stressed that any change in ownership structure must uphold and enhance the public interest in audit quality.

Private equity’s increasing interest in accounting firms comes at a time when regulators are becoming more concerned about the potential impact of profit-driven ownership structures on the integrity of professional services. As Evelyn’s sale progresses, regulatory oversight is likely to remain a significant factor in any deal-making.

Neither Evelyn, Apax, nor Inflexion have commented.