Grant Thornton CEO defends Cinven ownership
Grant Thornton UK chief executive Malcolm Gomersall has defended the accounting firm's private equity ownership, arguing that Cinven's investment has increased scrutiny of audit quality rather than undermining it, according top a report by the Financial Times.
Grant Thornton UK's chief executive, Malcolm Gomersall, has defended the accounting firm's decision to take a 60% stake in Cinven, a European buyout firm, according to a Financial Times report. The deal, valued at approximately £1.5bn, marked the largest private equity investment in a UK accounting firm and set off a wave of PE-backed transactions in the sector.
Gomersall argued that Cinven's investment has heightened scrutiny over audit quality rather than compromising it. The prospect of a future sale of Cinven's stake, he added, incentivizes Grant Thornton to maintain its reputation and standards. However, the firm has taken a cautious approach in situations where private equity ownership raises questions about auditor independence.
For instance, Grant Thornton consulted the Financial Reporting Council to determine if a potential engagement presented an independence issue, and decided against the client when the regulator deemed it a grey area. As private equity firms increasingly invest in accounting practices, concerns have been raised that the focus on financial returns could pressure firms to prioritize growth over audit quality, particularly when the same private equity group has interests in both the accounting firm's ownership and its client base.
Over 1,000 accountancy practices worldwide have received private equity investment over the past decade, with activity accelerating since 2022.
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