EisnerAmper restructures after private equity investment

EisnerAmper LLP, a Top 20 Firm based in New York, received an investment Monday from TowerBrook Capital Partners, a private equity firm, and is separating the non-attest side into an entity called Eisner Advisory Group LLC.

The amount of the investment was not disclosed, but EisnerAmper CEO Charly Weinstein called it “significant.” The firm will have an alternative practice structure similar to the kind pioneered by American Express when it acquired the CPA firm Goldstein Golub Kessler in 1998. EisnerAmper LLP, as a licensed CPA firm, will continue to provide attest services, while Eisner Advisory Group LLC will offer business advisory and non-attest services.

The capital infusion will help EisnerAmper with its long-term growth plans, including new service offerings, investing in talent and technology, and strategically expanding via organic growth and targeted mergers and acquisitions. Private equity firms have not traditionally made investments in CPA firms, but many PE firms earned a great deal this year due to the strengthening economy and have been looking for profitable places to invest. Private equity deals rose to a record $513 billion in the first half of this year, according to data from Refinitiv. PE funding may prove to be a future source of financing for other accounting firms beyond EisnerAmper.

“This is a groundbreaking transaction for us at EisnerAmper and I think for the profession as well,” Weinstein told Accounting Today. “This is really an opportunity for us to continue our transformation. I’ve been CEO of the firm for the last 20-plus years, and I’ve agreed to be the CEO for five more years, so I’m really committed to this. But over those last 20 years, you’ve seen how the firm has transformed over the years. There have really been three or four transformations of EisnerAmper. The world is rapidly changing. Technology is changing the way we’re doing our work.”

EisnerAmper’s office building in Metropark/Iselin, N.J.

Courtesy of EisnerAmper

One of those transformations happened in 2010 when Eisner LLP combined with Amper, Politziner & Mattia to form EisnerAmper (see story). The firm has made a number of acquisitions in recent years, including one with ZenTek Data Systems in Fort Lauderdale, Florida, last month. But the private equity firm investment is an unusual deal for a CPA firm, and it developed gradually.

“Over the last three or four years, I’ve been talking to the partners at the firm about the next transformation of EisnerAmper,” said Weinstein. “We started this process of trying to think about what makes EisnerAmper special and why would anyone want to invest with us. We spent a lot of time looking at the firm and the things that we thought made the firm such a great place to work and has made us successful over the last 50 years or so. And as we started to think that through, we thought in the next iteration what are the things that are going to be most important to our clients, and what are the things that are going to be most important to our people, and how can we transform the firm so that we can be an even better place to work, and that we can help our clients even more. We thought that the benefits of changing our ownership model and partnering with TowerBrook would really accelerate our growth and accelerate the opportunities for our people, and accelerate the way we can add more value to our clients.”

The deal started to come together last summer when the two firms were introduced. “I guess you could say in some ways it was love at first sight, so we’ve been getting to know each other over the past year in a very meaningful way,” said Weinstein. “We share similar values and we share a similar culture, and this is really truly a strategic investment, focused on growth.”

“EisnerAmper’s commitment to providing industry-leading services has helped it to build a large, long-term client base that is continuing to grow,” said Jonathan Bilzin, co-president and managing director at TowerBrook, in a statement. “We see a significant opportunity for the business to increase the pace of that growth with the help of TowerBrook’s resources and relevant experience.”

Deutsche Bank Securities acted as financial advisor to EisnerAmper and committed debt financing to support the transaction.

Weinstein plans to use the investment in a number of areas on the non-attest side. “It’s really across the board,” he said. “Over the years we’ve been building out our advisory businesses in a very meaningful way. Our tax practice has been growing significantly over the years. We’ve been able to attract a tremendous amount of talent to the firm. Many lateral partners have joined us from Big Four firms, our competitors and from industry. We think we can accelerate that with the additional resources, and the ownership model that we have in place we think will be even more attractive to talent. Recently we’ve acquired compensation consulting firms, managed technology services firms and cyber consulting firms, and we think that we’ll be able to use these additional resources to accelerate even more of those opportunities for the firm.”

TowerBrook is also interested in more M&A deals for EisnerAmper. “We look forward to working with Charly and the partnership at EisnerAmper to continue to grow their platform through strategic M&A and further investments in technology to support their client base,” said TowerBrook managing director Walter Weil in a statement.

TowerBrook is heavily involved in M&A. Last week, TowerBrook announced a deal to acquire a majority stake in the European office furniture distributor Bruneau, and in June it acquired Uperio, a Belgian company that rents out tower cranes.

All of EisnerAmper’s 207 partners voted unanimously to approve the deal, and Weinstein expects them and the staff to benefit from the new structure. “We’ll continue to have partners in the advisory practices, and there are equity opportunities for partners who join us and for staff who are promoted to the partner level, so we think those aspects of the advisory businesses will be very attractive in terms of bringing even more talent to the firm,” he said. “By creating this alternative practice structure, we have a traditional corporate type structure with our advisory practices, and the partners do continue to have a significant ownership stake in the ongoing business.”

He believes clients will benefit from the new structure as well. “When we were thinking about whether this would be a good thing to do, the most important part of our calculus was how will this benefit our clients, and will this be good for our people,” said Weinstein. “The partners had a vote on this. We have 207 partners, and it was a 100% unanimous vote by the partners to move forward with this because our partners firmly believe that this will benefit our clients and create even more opportunities for our staff. So the partnership is very excited about this, and we’ve been speaking with our people, and our colleagues are very excited about this. It’s a good time to be bold. We think this is going to differentiate us in a very positive and meaningful way. It will be a positive disruptor in the profession.”

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