San Ramon, Calif.-based Armanino (FY23 net revenue of $640.4 million) has accepted a minority investment from Further Global Capital Management, an employee-owned private equity firm.
Armanino, the 20th largest accounting firm in the nation according to IPA’s latest rankings, joins a growing number of large national firms that have been taking investments from PE firms since EisnerAmper’s deal with TowerBrook Capital in 2021.
The difference here is that it is the only top 20 firm to accept a minority investment, which allows the firm to retain operational and ownership control. While terms of the deal were not disclosed, the capital will accelerate Armanino’s technology investments, particularly in AI, fuel growth through M&A, and help attract and retain top talent, the firm’s public relations firm said in an email. “The capital provides Armanino the ability to stay at the forefront of industry transformation while retaining and attracting the best people to support their growth plans.”
New York-based Further Global typically targets equity investments in the financial services industry of $75 million to $200 million, but states on its website, “While we typically seek to take control positions, we are very comfortable operating in minority positions, given appropriate alignment and governance rights.”
Allan D. Koltin, CEO of Koltin Consulting Group, who has advised Armanino on various strategic matters for more than two decades commented, “The important sound bite here is that Armanino is still Armanino! Yes, they received a private capital investment from Further Global but the culture, the entrepreneurialism, how they advise clients, how they grow people, and their mission and vision are all the same.”
The firm stated that leaders had been exploring the PE trend for several years, with discussions with Further Global beginning a few years ago.
“Every major private equity firm in America camped out in Armanino’s ‘virtual lobby’ but all they received was a cup of coffee and a thanks for your interest,” Koltin said. “Usually, Armanino is the trendsetter especially in the talent, technology, tax and advisory areas, but on this strategic initiative they took their time to figure out what was best for their people and then once they answered that question, they chose Further Global as the best cultural and strategic fit for their firm.”
Staff will benefit from the arrangement, the firm says. “From its founding, Armanino has been entrepreneurial-focused, so the capital will allow the firm to say ‘yes’ to more entrepreneurial ideas and offer new mechanisms to align senior employees’ efforts with the firm’s growth and success, extending ownership benefits to them.”
Armanino LLP will change to an alternative practice structure, splitting into two independently owned and governed professional-services entities: Armanino LLP, a licensed CPA firm wholly owned by individual CPAs, will provide attest services to clients, and Armanino Advisory LLC, a consulting and advisory firm, will perform non-attest services.
