All eyes on MHA as accountancy firm rings London Stock Exchange bell
Accountancy firm MHA’s long-awaited £271m initial public offering (IPO) went live this morning, a minor win for both the company and the London Stock Exchange.
The UK arm of Baker Tilly International launched onto London’s junior stock market, AIM, at 8 am and raised £98m by way of a placing with institutional and retail investors.
The company share price is currently up 2.5 per cent from the opening price of 100p.
It has 271,211,764 Ordinary Shares in issue and a free float of approximately 36.1 per cent.
Speaking to City PM this morning, CEO of MHA PLC Rakesh Shaunak said: “We’re pleased that it’s green rather than red, but we’re in it for the long-term. We have built a sustainable business and we were very pleased that the market has responded favourably.”
Law firm Freeths advised the company on its flotation.
The firm had a successful year in 2024, as the firm reported that its revenue jumped by nearly 30 per cent to £180m. Over the last four years, it doubled its turnover from £90m (2020) to £180m (2024).
MHA stated it has “a medium-term aspiration to become a top 10 UK accounting and professional services business, generating over £500m annualised revenue.”
Shaunak said the firm wants to continue to expand in the UK and “are looking to go across the borders into Europe as well”.
To hit this target, the firm opted for an IPO over a private equity buyout. Funds raised from the IPO will be used for bolt-on acquisitions, investment in tech, and AI, as well as to provide an exit route for current and retired partners.
UK taking a different approach
The IPO comes after a series of major deals at the Baker Tilly.
At the start of this year, private equity firm Inflexion agreed to acquire a minority stake in Baker Tilly Netherlands. At the time, the private equity house said its share would support the firm’s “growth plans in the region.”
In February 2024, Baker Tilly’s US arm announced an investment from private equity firms Hellman & Friedman and Valeas Capital Partners. The vision behind this investment was to fund its certified public accountant business.
So why did the UK arm opt for public investment? Shaunak said it was a “unanimous decision” and “endorsed by the partners.”
The IPO was deemed “the most attractive, sustainable route for the long-term benefit of our people and clients.”
He explained that “for the right firm and the right investor, private equity is a valid option, but for MHA, the higher potential short-term gains from private equity were outweighed by the important distinction that the control of our strategic destiny and planning will very much remain in the hands of our Board and our partners.”
“We will pursue strategic mergers and acquisitions at our own pace,” he added.
Shaunak noted that “going down the IPO route [it] will also give our people a real stake in the future of our business via a significant employee benefit trust.”
“And crucially, it would allow us to offer equity participation to future partners and leaders, ensuring they have a direct stake in the firm’s continued growth,” he added.
Private equity surge in the market
Dan Coatsworth, investment analyst at AJ Bell, told City PM, “The alternative routes to an IPO include selling to a private equity company, yet there needs to be a willing buyer.”
“The accountancy and business advisory sector is certainly on private equity’s radar, but it might be that MHA is not the only potential opportunity around, and there are cheaper or more attractive targets to pursue,” he stated.
This comes as its rival, Grant Thornton UK partners, voted last December to favour investment from private equity firm Cinven.
Private equity interest in the professional services sector has skyrocketed over the last few years, especially for firms with accountancy arms. Last November, British private equity firm Apax won a bidding war for Evelyn Partners’ accounting arm, which it secured for £700m.
Coatsworth noted that MHA floating on the stock market provides an exit route for certain partners to sell some of their holdings in the business while also providing access to capital markets and a broad pool of potential new investors.
“Acquisitions have augmented MHA’s growth, and it plans to do more deals. It could potentially pay for future acquisitions by issuing new shares,” he added.
Betting on its story
The firm fully steamed ahead with its IPO despite the recent turmoil caused by President Trump’s tariff war. The FTSE 100 has been down over 5 per cent since Trump’s tariff announcement at the start of the month, while the FTSE AIM All Share has been down over 4 per cent.
Shaunak told City PM last week that its IPO was “very much on track” despite the current turbulence in global stock markets.
When the firm announced its plans to float, it targeted a £350m valuation while aiming to raise £125m; however, as of this morning (Tuesday), it raised £98m and its valuation stood at £271m.
Shaunak stated: “We’re very fortunate that we have a number of highly committed and highly reputed investors on the book already, and I’m sure they will be very happy to continue the journey with us.”
“But we intend to continue to tell the story, execute our strategy, which we have complete confidence and faith in, and I’m sure all those things combined, the story will tell itself,” he added.
This story has been updated this morning