Grant Thornton and Wipfli are both owned by New Mountain Capital, which has invested more than $1 billion assembling a portfolio that now includes two firms that compete directly with each other. Their Chicago offices sit less than half a mile apart in the Loop.
This is not an isolated arrangement. At least five private equity sponsors now control two or more competing accounting platforms at the same time.
The concern, as raised
The firms overlap in clients, services, acquisitions and talent markets. Both reportedly seek to maintain separate operations and arm's-length decision-making. The question observers are raising is whether stated separation is sufficient when a single investor benefits from both sides of a competitive interaction.
Law firm Proskauer Rose has warned private equity sponsors on exactly this point: with greater control comes greater exposure to liability.
Why it is not a simple problem
Common ownership of competitors is well-trodden ground in other industries, with established answers — information barriers, separate boards, restrictions on competitively sensitive data flowing to the sponsor. Accounting adds a complication those frameworks were not written for: independence.
Auditor independence rules are concerned with relationships that could compromise objectivity. Alternative practice structures were designed to keep the attest practice legally separate from the invested entity. Whether a sponsor's economic interest in a competing firm's audit clients raises a distinct question is, at minimum, unsettled.
What it means practically
For firms evaluating a sale to a PE-backed platform, this adds a diligence item that would not have occurred to anyone five years ago: who else does this sponsor own, and do they compete with me or with my clients?
For firms staying independent, it is a genuine differentiator worth saying out loud. "No outside owner with a stake in your competitor" is a credible position, and some clients — particularly in regulated industries — will care.
The quieter point
Every one of these structures exists because firms needed capital to grow capacity and capability faster than partner earnings would allow. That is the underlying need. Ownership change is one way to meet it, and it comes with governance questions like this one.
Buying capacity and automation directly is another way, and it comes with none of them. A firm that solves its capacity problem through technology and an external preparation bench does not acquire a new set of stakeholders alongside the solution.
Independence, in both senses of the word, is worth pricing correctly.
