Blackstone, the largest private equity firm in the world, said Tuesday it has acquired a majority stake in top 20 accounting firm Citrin Cooperman in a deal that marks the first time in the profession that private equity ownership of a CPA firm has transferred, or flipped, from one investment group to another.
Blackstone acquired the ownership stake in New York City-based Citrin Cooperman from New Mountain Capital, a much smaller private equity firm that announced its investment in Citrin Cooperman in April 2022. Financial terms of the deal weren’t disclosed.
“Today is a monumental day for the accounting profession!” Allan Koltin, CEO of Koltin Consulting Group, who advised on the deal, said in a emailed statement to CPA Practice Advisor. “Citrin Cooperman and New Mountain Capital became the first top 25 CPA firm in the country to successfully transfer private equity ownership from one group to another. They couldn’t have picked a better private equity firm to do it with in Blackstone, the world’s largest and most prestigious private equity firm. For many in the profession, the biggest question was whether something like this could ever happen, and my belief is there will now be many other transactions like this in the future.”
New Mountain Capital entered into a second private equity deal with Grant Thornton last spring, buying a significant stake in the top 10 accounting firm. Koltin told INSIDE Public Accounting last year that while New Mountain Capital could have continued to hold their investment in two top 20 public accounting firms, “it appears the wisdom will be to sell a significant part of their investment in Citrin Cooperman and to take some chips off the table.”
According to Koltin, Citrin Cooperman was a $315 million firm when the buy-in deal was finalized with New Mountain Capital, which paid roughly 11 times earnings before interest, taxes, depreciation, and amortization (EBITDA). By the end of 2024, Citrin Cooperman’s revenues were projected to be $850 million, Koltin said. The Financial Times reported today that Blackstone was buying Citrin Cooperman at a multiple of around 15 times EBITDA.
Citrin Cooperman partners were told about the details of the deal on Jan. 6, according to the Financial Times:
Citrin Cooperman partners will again roll over the majority of their ownership in the firm but will get windfalls from selling some shares, according to people familiar with the Blackstone agreement.
Management are expected to increase their stake over time, through the allocation of performance bonuses.
Citrin Cooperman CEO Alan Badey said he was excited about the agreement for Blackstone to invest in Citrin Cooperman as the firm enters its next chapter of growth.
“Blackstone will help us make additional investments in expanded service offerings and technology as we deliver on our continued commitment to best-in-class firm culture and providing an exceptional client experience,” he said in a statement. “We thank New Mountain for their years of partnership in helping to build and support our business.”
Eli Nagler, a senior managing director at Blackstone, and Kelly Wannop, a managing director at Blackstone, said in a joint statement: “The Citrin Cooperman partners and staff have done an exceptional job making the firm a leader through an unwavering commitment to excellence and client service. We are excited to invest in the business to help it continue to provide the highest-quality offerings moving forward.”
New Mountain Capital said Tuesday that it looks forward to seeing Citrin Cooperman continue to thrive for the benefit of all its clients and stakeholders.
“We are proud of our successful partnership with Citrin Cooperman, and we thank the management team, partners, and staff of Citrin Cooperman for all we have accomplished together over the last three years,” New Mountain Capital managing directors Andre Moura and Nikhil Devulapalli said in a joint statement.
Last week, Grant Thornton US acquired Grant Thornton Ireland in a transaction funded by New Mountain Capital.
More than 35% of the top 30 accounting firms in the U.S. by revenue have sold stakes in their firms—many a controlling stake and some a minority stake—to private equity investors.
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