Private equity firms eye Evelyn’s accountancy arm

Private equity firms are circling the accounting business put up for sale by Evelyn Partners despite growing regulatory scrutiny of deal-making in the industry.
Apax is understood to be one of the firms that is running the rule over Evelyn’s professional services division, which offers accounting and tax services and could be valued at more than £500 million, before a deadline for first-round bids. Inflexion, another buyout firm, is also believed to have looked at the business but is unlikely to make an offer.
It emerged last month that investment bankers from Evercore had been hired to find a buyer for the division. The London-based Evelyn wealth management group oversees £62.2 billion of assets and is owned by the private equity firms Permira and Warburg Pincus. It is thought that a disposal of the accounting unit is a precursor to an attempt by the pair to pursue a much bigger sale of Evelyn at a later date.
The accounting and wider professional services sector are increasingly drawing the attention of private equity firms, which make money by buying businesses and selling them on for a profit. Fragmented industries often attract buyout firms wanting to pursue roll up strategies, which involves acquiring smaller companies and putting them together to create a big, valuable player.
However, the Financial Reporting Council, the accounting regulator, is watching private equity interest. Last month it wrote to accounting bosses to say that while it “is not in principle against a greater participation of external private capital in the UK audit market”, there are “important risks that will need to be carefully managed”. It added: “A change in ownership structure via external private capital must be able to maintain and enhance over time the important public interest dimension of audit.”
Evelyn, Apax and Inflexion did not comment.