Ex-KPMG led accounting giant stalls £1bn sale
One of the UK’s largest accounting firms founded by a former KPMG head has put a £1bn auction on hold despite receiving a wealth of interest from investors.
Sumer, a ‘consolidator’ firm that buys majority stakes in smaller independent accounting companies, had hired advisors at boutique advisory Continuum last September to oversee a review on a potential £1bn sale of its own business.
The fast-growing firm has acquired over 34 accounting groups in just a few years since former KPMG chief operating officer Warren Mead founded the company in 2022, following a 26-year tenure at the Big Four giant.
However, the private equity-backed accounting giant has reportedly stalled the expected sale and Sumer’s owner, Penta Capital Partners, is considering alternative options, according to The Times.
Sumer is weighing whether to move the company into a new fund known as a ‘continuation vehicle’ which would allow investors to either cash out or reinvest their ownership stake into the new fund and provide it with resources to keep growing.
Continuation vehicles let private equity firms keep assets for a prolonged period of time to boost value, but are considered controversial and hotly contested by many.
According to professional services giant BDO, continuation funds are “a growing trend” but “can present conflicts of interest, primarily due to asset transfers between funds managed by the same team.”
Alternatively, the firm is understood to be considering a dividend recapitalisation as another option, which would see a loan taken out to award investors without having to sell the business.
Many large private equity groups have reportedly eyed Sumer’s sale, with some raising questions over the sky-high valuation, but despite this there is still a strong amount of market interest.
In just over three years, the company has become the country’s 12th largest accounting practice and provides services to small and medium-sized businesses rather than large corporate clients.
Sumer rakes in around £300 million in annual revenues and employs roughly 3,000 people across the whole company.
The sector is a shiny object for private equity
Private equity firms have become increasingly interested in the professional services sector, especially the accountancy industry, over the past few years.
This is driven by the promise of a predictable revenue stream and opportunities to merge smaller firms into larger companies.
Private equity entity Cinven bought Grant Thornton UK for £1.5bn in December 2024, and as a result, the firm said it would hire 160 new partners over the next two years.
Nearly half of accounting firms said they are open to private equity investment, while a third have already secured PE-backed funding, according to a survey by law firm Kingsley Napley shared exclusively with Morning Wire.