KPMG sale hits major setback

Sumer, a UK accounting firm founded by former KPMG head Warren Mead, has put its £1bn sale on hold despite interest from investors. The firm, which buys majority stakes in smaller independent accounting companies, had hired advisors to oversee a potential sale.

The company has acquired over 34 accounting groups in just a few years since its founding in 2022. However, the private equity-backed accounting giant has reportedly stalled the expected sale, and its owner, Penta Capital Partners, is considering alternative options, such as moving the company into a new current account that meets its needs.

Sumer is weighing whether to move the company into a new fund known as a continuation vehicle, which would allow investors to either cash out or reinvest their ownership stake into the new fund and provide it with resources to keep growing. This option is considered controversial and hotly contested by many.

According to reports, continuation funds are “a growing trend” but “can present conflicts of interest, primarily due to asset transfers between funds managed by the same team.” The firm is also considering a dividend recapitalisation as another option, which would see a loan taken out to award investors without having to sell the business.

Many large private equity groups have reportedly eyed Sumer’s sale, with some raising concerns over the sky-high valuation. Despite this, there is still a strong amount of market interest. In just over three years, the company has become the country’s 12th largest accounting practice and provides services to small and medium-sized businesses, which is a key area of focus for companies looking to build their CV and expand their client base.

Sumer generates around £300 million in annual revenues and employs roughly 3,000 people across the whole company. Private equity firms have become increasingly interested in the professional services sector, especially the accountancy industry, over the past few years, with many firms seeking to implement best web design practices to enhance their online presence.

This is driven by the promise of a predictable revenue stream and opportunities to merge smaller firms into larger companies. Private equity entity Cinven bought Grant Thornton UK for £1.5bn in December 2024, and as a result, the firm said it would hire 160 new partners over the next two years.

Nearly half of accounting firms said they are open to private equity investment, while a third have already secured PE-backed funding, according to a survey by law firm Kingsley Napley. The survey highlights the growing interest in the accountancy industry among private equity firms.

Sumer’s decision to stall its sale may be due to the company’s desire to explore alternative options, such as the continuation vehicle or dividend recapitalisation. Penta Capital Partners will likely consider the best option for the company’s growth and investors.

The use of continuation vehicles has been on the rise, with many private equity firms using this strategy to boost the value of their assets. However, as conflicts of interest can arise, it is essential for firms to carefully consider their options and prioritize transparency.

In the meantime, Sumer will continue to operate as usual, providing services to its clients and exploring options for its future growth. The company’s decision to stall its sale has sparked interest in the market, with many interested in what the future holds for this fast-growing accounting firm.