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Baker Tilly Just Did a Massive Private Equity Deal

Guy at a desk wearing sunglasses because he's so cool making it rain

Announced yesterday in an excessively flowery press release, Baker Tilly announced a “strategic investment” from private equity firms Hellman & Friedman and Valeas Capital Partners. The investment is expected to close in early 2024.

According to the press release, Baker Tilly has doubled its workforce in the past five years and the deal will help them continue to grow in all the ways a large accounting firm can.

The significant investment from H&F and Valeas provides the firm with access to additional capital and capabilities to accelerate growth through investments in talent, technology and further strategic acquisitions directed at providing best-in-class client services.

As part of this transaction, the firm will be restructured as two entities: Baker Tilly Advisory Group, LP will provide the firm’s business advisory, tax and other services with Jeff Ferro continuing in his role as CEO. Baker Tilly US, LLP, a licensed CPA firm, will provide the firm’s attest services, with Jere Shawver, Managing Partner – Risk and Assurance, stepping into the new role of CEO. Baker Tilly US, LLP will operate as a separate legal entity pursuant to regulatory and independence requirements. Following the restructuring, both firms will remain partnerships, with all partners holding equity alongside H&F and Valeas in Baker Tilly Advisory Group, LP.

The rest of the press release is just a bunch of quotes from the people at the heart of this deal, we can skip those.

The transaction numbers were not shared publicly though Financial Times found a drippy sieve to get details from:

A person familiar with its deal said that the two private equity firms would take an equity stake of about $1bn for just over 50 per cent of the firm, with more than $900mn coming from H&F. There will also be an undisclosed amount of debt financing provided by a group of private lenders including Blackstone Credit, HPS Investment Partners and Blue Owl Capital.

The money will predominantly be used to buy out retirement obligations to former partners and return capital to its 600 current partners, as well as to recapitalise the balance sheet and build a war chest for mergers and acquisitions.

Allan D. Koltin, CEO of Koltin Consulting Group, who provided counsel to Baker Tilly and Hellman & Friedman throughout the process said, “This investment is a huge step for Baker Tilly, and it will certainly put the firm in a strong position to lead the consolidation of the public accounting industry.”

Not to brag about being clairvoyant or anything but we sorta saw this coming last year. Get ready for a very flashy merger ahead.

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