Private equity conquers auditing: Baker Tilly follows industry trend

The systematic capital market liberalization of the German audit industry is picking up speed, while established firms are navigating between growth ambitions and regulatory restrictions.

Strategic exploration with investment banking support

Baker Tilly Germany is exploring a potential private equity partnership and, according to FINANCE information, has engaged Rothschild & Co as an advisory mandate. This development follows directly on from Grant Thornton's M&A process, which is being coordinated by Perella Weinberg Partners. Baker Tilly is communicating cautiously: "We always monitor all developments in the market closely and examine strategic options for the further development of our company."

International precedents as a structural template

Both accounting firms have international private equity experience that could serve as a blueprint for German transactions. Grant Thornton USA and UK are already majority-owned by financial investors (New Mountain Capital and Cinven respectively), supplemented by companies in Ireland, the UAE, the Cayman Islands and the Netherlands. In February, Baker Tilly USA structured a billion-dollar transaction with Hellman & Friedman and Valeas Capital Partners by spinning off the consulting unit from the auditing business.

Regulatory structuring challenges

The German ban on third-party ownership requires creative transaction architectures. Baker Tilly's dual structure of "Audit & Advisory" and "Legal and Tax" in separate companies enables differentiated investment models. Private equity investments can also be realized under German regulatory requirements through cross-shareholdings or holding structures.

Financial performance as an investment incentive

Baker Tilly's dynamic growth makes the company attractive to financial investors: 14% increase in turnover in 2024 with similar figures from the previous year. The higher-margin consulting business in particular - around 50 percent of total revenue - grew by over 17 percent. These key performance indicators are crucial for private equity valuation models and growth financing strategies.

Competitive market position in the Next Six segment

Baker Tilly and Grant Thornton are separated by just one million euros in turnover, which highlights the competitive pressure in the Next Six ranking. Fresh outside capital could enable Baker Tilly to widen the gap to its rivals or even improve its ranking. However, this strategic positioning requires significantly disproportionate growth compared to the current development.

Sector-wide capital market liberalization

The private equity probe is part of a systematic industry trend: WTS brought in EQT as a shareholder, PKF WMS is cooperating with Ufenau Capital Partners. Market observers are predicting further transactions in the coming months, as several financial investors are actively scouring the segment for investment opportunities.

Strategic openness as a competitive advantage

Baker Tilly's fundamental open-mindedness towards private equity investments positions the company favorably in the market. The characterization of private equity as one of many options for financing innovation and growth signals strategic flexibility and could strengthen negotiating positions.

This development illustrates the fundamental transformation of the German auditing landscape, where traditional partnership structures are increasingly being supplemented by capital market-oriented growth models - a paradigm shift with far-reaching implications for the entire industry.