Hellman & Friedman (H&F) and Valeas Capital Partners have recently announced a significant investment in Baker Tilly US, a leading accounting and consulting firm ranked among the top 10 in its field. According to a source close to the Financial Times, the private equity firms will acquire an equity stake in Baker Tilly, valued at around $1 billion. This investment will give them just over a 50% share in the firm, with H&F contributing more than $900 million. Additionally, the deal includes a confidential amount of debt financing from various private lenders.
This influx of capital will primarily be used to fulfill retirement obligations and distribute capital to the firm’s 600 existing partners. Moreover, it will bolster Baker Tilly’s financial resources for future acquisitions, positioning the firm to better compete with its mid-market counterparts such as RSM, Grant Thornton, and BDO.
As part of this strategic transaction, expected to finalize in early June, Baker Tilly will undergo a structural reorganization. The firm will be divided into an alternative practice structure. Jeff Ferro, the current CEO of Baker Tilly, will take the helm of Baker Tilly Advisory Group LP, overseeing advisory, tax, and various other services. Jere Shawver, currently the managing partner for risk and assurance, will become the CEO of Baker Tilly US LLP, a licensed CPA firm.
Post-transaction, both entities will continue as partnerships, with equity shared among the partners, H&F, and Valeas in Baker Tilly Advisory Group LP.
Blake Kleinman, a partner at H&F, expressed enthusiasm for the partnership, highlighting H&F’s extensive experience in the professional services sector. H&F, a firm specializing in business services with over $92 billion in managed assets as of September 30, 2023, has a history of notable deals, including investments in Young and Rubicam (1996) and AlixPartners (2006).
Jeff Ferro, welcoming the partnership with H&F and Valeas, pointed out the benefits for Baker Tilly, emphasizing the future growth and investment opportunities the deal presents for the firm’s employees and clients.
Baker Tilly, headquartered in Chicago, boasts a workforce of over 6,400 across more than 50 offices nationwide. The firm is projected to achieve $1.8 billion in revenue in the fiscal year ending in May 2024.
In a related move, BDO recently secured a $1.3 billion debt agreement with Apollo Global Management to establish an employee stock ownership plan.
