New Mountain Capital, a New York based private equity underwriter (PEU), is close to buying accounting firm Wipfli. New Mountain bought a majority stake in Grant Thornton's U.S. accounting unit last year before creating an international Grant Thornton consulting firm. New Mountain Capital states:
Grant Thornton US operates as the 7th largest US audit, tax, and advisory platform by revenue, with 46 offices located across the country. It is the US member of Grant Thornton International Ltd, which is the international network of Grant Thornton-branded firms.WSJ noted the concern that PEU ownership and its concomitant pressures could erode the practice of accounting. Can anyone say Arthur Anderson & Enron?
PEUs are unrestrained by tax law, antitrust regulations, ethical concerns (as they can be on all sides of a deal), fee disclosure requirements, SEC regulations, GAAP accounting and 401(k) restrictions.
PEU legends blew through GAAP accounting decades ago with measures like economic net income and earnings before .....(a literal kitchen sink of important financial accounts).
The greed and leverage boys (and their new TechGod brethren) are the sinew of the American economy. Congress kept preferred PEU "carried interest" taxation, which is highly unpopular, in place despite both parties campaigning to eliminate the tax dodge. The House just unanimously passed a bill expanding individual access to private markets, which includes private equity.
Politicians Red and Blue love PEU and increasingly, more are one.