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Accounting firm Crowe agreed to sell a stake to KKR, the latest in a wave of private-equity investments across the industry as firms seek capital to speed up their AI adoption and expansion efforts, Mark Maurer reports.
Details and timing: KKR and co-investors will collectively take a majority stake in the Chicago-based firm, with Crowe partners retaining a minority stake, in a deal valued at nearly $3 billion, people familiar with the matter said. Crowe and KKR said they expect the deal to close in the third quarter. They declined to comment on the valuation and stake size.
I talked to Mark about the deal. Here’s an edited, condensed version of our conversation:
Mark, you've been covering private equity's interest in the accounting world for some time. What's unique about this deal?
Mark: Crowe had been among the few largest 20 U.S. accounting firms outside of the Big Four that declined to do a structural overhaul in the past few years. The firm previously said it didn’t need to sell to private equity as many of its peers struck deals. But then it hired an investment bank last fall. CEO Steve Strammello said the competitive landscape dramatically changed.
At a $3 billion valuation, Crowe’s deal with KKR is one of the largest private-equity deals in the accounting space.
Why are Crowe and KKR doing this deal now?
Crowe wants to speed up its adoption of AI to boost its capabilities in serving clients. It also wants to do more M&A. The KKR investment will be instrumental in striking some of those deals. Strammello said the KKR investment would help Crowe acquire more firms, particularly in competing with PE-backed peers because Crowe would have more flexibility in pricing transactions.
What do you see happening next at Crowe?
Strammello said the KKR investment would help Crowe acquire more firms, particularly in competing with PE-backed peers because Crowe would have more flexibility in pricing transactions.
That could mean acquiring other firms in the Crowe Global network. Investing in Crowe’s sister firms “would absolutely be on the table for us,” though not at a rapid clip, Strammello told me.
And what about for the wider accounting world?
Industry observers expect more PE-backed accounting firms to acquire smaller firms, thus giving those firms partial PE ownership as well. Firms such as CliftonLarsonAllen, known as CLA, and Plante Moran continue to hold off on major structural moves.
To read Mark's exclusive report, click here.
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