Balancing the books: 6 PE-backed accounting services deals

Inflexion, Orangewood and PAI Partners are among the firms interested in the financial services sub-sector.

The first half of the year saw fresh interest from private equity firms in accounting and tax services. Some firms are interested in the consolidation opportunities, some see potential in digitalising the industry further, and all are feeling increased compliance and regulation demands.

Here are six accounting services deals that caught the attention of PE Hub and PE Hub Europe (listed in reverse chronological order):

1. Accel-KKR buys Symfonia from MidEuropa

In June, Menlo Park-based Accel-KKR announced it had agreed to buy a majority stake in Symfonia from London-headquartered MidEuropa. The financial terms of the transaction were not disclosed. MidEuropa will retain a “significant” minority stake in the company.

Warsaw-based Symfonia is a provider of financial management, payroll and ERP software to accounting offices and small- and medium-sized enterprises (SMEs) in Poland.

“Symfonia is another example of MidEuropa’s growing and successful involvement in the broadly defined B2B technology and services segment,” said Kerim Turkmen, partner at MidEuropa. “We believe that the abundance of IT talent and ongoing digitalisation in Central European markets makes the region the right place to create a Pan-European tech-enabled champion.”

2. Inflexion invests in TC Group

In another deal in June, Inflexion, via Enterprise Fund V, completed an investment into TC Group, a provider of accountancy and taxation services to UK SMEs. TC is headquartered in West Sussex, England.

London-based Inflexion will support TC as it continues its strategy to consolidate the fragmented market and generate increased wealth for its partners and customers, according to a statement.

3. PAI Partners backs Azets Group

Also in June, PAI Partners announced an investment in Azets Group, a provider of business-critical accounting, tax, payroll, audit and advisory services to SMEs.

Azets, formed by Hg, has 189 offices in the Nordics, the UK and Ireland. The company generates revenues of around £700 million (€820.52 million; $896.89 million).

Paris-based PAI will hold an equal and co-controlling stake in Azets alongside current owners Hg, following completion of the deal.

“With its proven and resilient business model, Azets provides a strong platform for future growth,” said Colm O’Sullivan, a partner at PAI. “Thanks to its leading market positioning, the firm is well placed to benefit from the growing levels of compliance, regulation and outsourcing that underpin its core services market.”

4.  Unity Partners invests in NDH

In May, Unity Partners, a Dallas-based PE firm, announced an investment in NDH, a Chicago-based provider of tax and accounting services.

NDH provides tax advisory, tax consulting, tax preparation, outsourced back-office accounting, fractional CFO and start-up business services.

5. Orangewood backs DLA

In March, New York-based Orangewood Partners announced an investment in Fairfield, New Jersey-based DLA, an internal audit and accounting advisory firm.

“Over the past two decades, DLA has built a reputation as trusted advisers to leading corporations and developing practice areas that are tailor-made for the current environment, which is seeing an increasing focus on regulation, compliance, and internal controls,” said Eric Engler, a managing director of Orangewood in a statement. “To that end, we believe DLA is exceptionally well positioned to capitalize on the significant opportunities as clients recognize the value in outsourcing these essential business services.”

6. Norvestor drives home majority stake in Rantalainen Group

In January, Norvestor signed an agreement to acquire Rantalainen Group, a financial administration services provider, after Helsinki-based Intera Partners announced its exit from the company.

Based in Hyvinkää, Finland, Rantalainen Accounting Services is an authorized group providing financial management, accounting, reporting and auditing services.

Norvestor is a Nordic private equity firm focused on mid-market buyouts. It has offices in Oslo, Stockholm, Helsinki and Luxembourg.

We expect to see more accounting services deals in the coming months.