Blackstone buys accounting group Citrin Cooperman from New Mountain

January 8, 2025 (Preqin News) – US alternatives asset manager Blackstone has acquired professional services firm Citrin Cooperman from New Mountain Capital, as private equity firms continue to acquire companies in the fragmented and cashflow-stable accounting and tax industry.

New Mountain Capital acquired Citrin Cooperman in 2021 at a multiple of 11x EBITDA, sources told the Financial Times.

According to Preqin’s valuations benchmark of 19 US financial services deals in 2021, the median EV/EBITDA multiple was 13.62x, with the top quartile coming in at 16.48x. At the top of the private equity post-COVID deal boom, median EV/EBITDA grew by nearly a quarter (24.7%) to 16.98x, with GPs confident valuations would continue to grow.

Significant revenue and headcount growth contributed to an increased EBITDA multiple, with Blackstone reportedly buying Citrin Cooperman at a value of more than $2bn, and an EBITDA multiple of around 15x. Revenues increased significantly over this period – growing from $351.8mn in 2021 to $900mn in 2024, according to the Wall Street Journal, while headcount increased from 1,217 in October 2021 to 2,800 in November 2024.

Citrin Cooperman has pursued a bolt-on strategy over the past four years, hoovering up 26 smaller professional services companies, including boutique New England firm Andsager, Bartlett & Pieroni in December, as well as Baltimore’s consulting firm Clearview Group and Californian service provider Signature Analytics in November, according to Preqin.

‘Blackstone will help us make additional investments in expanded service offerings and technology as we deliver on our continued commitment to best-in-class firm culture and providing an exceptional client experience,’ Alan Badey, CEO of Citrin Cooperman, said in a press release confirming the acquisition.

Interest in corporate accounting and tax firms has been on the rise recently. The sector is highly fragmented, with many small and medium-sized companies. Private equity managers see potential in rolling up or merging firms across specialisms and geographies.

However, regulators in the US remain wary of private equity’s interest in the financial services sector. ‘While there are opportunities, it brings with it a number of risks, and those have to be thought through very carefully on the front end and be monitored very proactively on an ongoing basis’, the Securities and Exchange Commission’s Chief Accountant, Paul Munter, told the Wall Street Journal in December.

New Mountain Capital’s healthy return on investment on Citrin Cooperman will flow into its sixth flagship private equity fund, New Mountain Partners VI, launched in 2020. This fund has an 18% net IRR as of September 2024, and sits in the top quartile of mega North American buyout funds with this vintage, according to Preqin data.

New Mountain Capital remains committed to the sector, acquiring accounting firm Grant Thornton US in May 2024.

_{The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.}