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

Private equity firms are showing keen interest in Evelyn Partners’ accountancy division, which has recently been put up for sale, despite heightened regulatory scrutiny in the sector.

One of the key contenders is Apax, a private equity firm reportedly weighing a bid for Evelyn’s professional services division, which specializes in accounting and tax services. The division is expected to be valued at over £500 million, with the deadline for first-round bids quickly approaching.

Inflexion, another prominent buyout firm, has also reviewed the business but is unlikely to submit an offer. Just last month, investment bankers from Evercore were brought in to oversee the sale of Evelyn’s accountancy division. Evelyn Partners, a wealth management company headquartered in London, currently manages £62.2 billion in assets and is owned by private equity firms Permira and Warburg Pincus.

This sale of the accountancy unit may set the stage for an even larger transaction, as Permira and Warburg Pincus are reportedly considering the potential sale of Evelyn Partners as a whole in the future. The interest from private equity firms in Evelyn’s accountancy business reflects a broader trend, where buyout firms target fragmented industries like accounting for roll-up strategies. These strategies involve purchasing smaller businesses and consolidating them to create larger, more valuable entities.

However, the growing involvement of private equity in the accounting and audit sectors has raised concerns with the UK’s Financial Reporting Council (FRC), the nation’s accounting regulator. Last month, the FRC issued a cautionary statement to accounting firms, acknowledging that while external private capital is not opposed, there are “important risks” that need to be carefully managed. The FRC emphasized that any ownership changes must prioritize and enhance audit quality in the public interest.

As private equity’s involvement in accounting firms continues to increase, regulators are paying closer attention to the potential impact of profit-driven ownership on the integrity of professional services. With Evelyn Partners’ accountancy sale moving forward, regulatory oversight is expected to play a crucial role in the final deal.

Neither Evelyn, Apax, nor Inflexion have provided any comments on the sale.