After failed $100bn EY offer, TPG buys Crowe’s healthcare consulting unit

In the aftermath of a rejected offer for EY’s consulting business, US private equity firm TPG has signed a definitive agreement to acquire a majority stake in Crowe’s healthcare consulting unit.

Under the transaction, Crowe Healthcare will become an independent entity under the leadership of founder and managing partner Derek Bang and the existing management team. It will rebrand as Kodiak Solutions.

Established in 2005, Kodiak has grown to more than 350 employees nationwide providing healthcare industry software and services in financial reporting, revenue cycles, and risk and compliance. The company supports more than 1,800 hospitals and 200,000 practice-based physicians in the US.

Upon closing of the transaction (expected in the fourth quarter), Kodiak will be majority-owned by TPG Growth – TPG’s middle-market and growth equity arm. Crowe will retain a minority stake.

“Known for its best-in-class products and services, Kodiak has built very strong customer advocacy with a long list of preeminent healthcare clients across the US,” said Zach Ferguson, managing director at TPG Growth. “We are excited to partner with Derek and the entire Kodiak team to build on this strong foundation with investments in both organic and inorganic growth, and look forward to partnering with Crowe as co-investors going forward.”

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TPG, formerly Texas Pacific Group, is co-headquartered in Fort Worth and San Francisco and specializes in leveraged buyouts and growth capital. The firm was founded in 1992 and manages assets and investments totaling $139bn.

“This transaction is a win for our healthcare team and our clients, while also positioning our firm for continued success,” said Mark Baer, CEO of Crowe. “It creates more flexibility and agility for Crowe and is a shift in our healthcare strategy to expand our footprint across the broader healthcare ecosystem – offering new, extended services and capabilities to the vast array of companies that make up the sector.”

The Crowe Healthcare deal follows a failed proposal from TPG to EY for a debt-and-equity deal that would have revived the Big Four firm’s ambitious split project. EY’s split plans, which would have spun off the consulting business as a public company, were scrapped in April amid objections from US audit partners.

Mid-market accountancy BDO USA earlier this month announced a $1.3bn debt deal with Apollo Global Management to create an Employee Stock Ownership Plan (ESOP).

Source: Consulting.us

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