Big Four audit firm KPMG acquired rival audit and advisory services firm Rothstein Kass. The transaction is expected to close in the coming weeks, and terms of the agreement will not be disclosed, according to a statement from the firm.
As a result of the agreement most of Rothstein Kass’ principals and employees will join KPMG, and the Rothstein Kass brand name will no longer be used, according to a KPMG spokesperson.
The deal is a “powerful demonstration of KPMG’s strength in and commitment to serving the broader alternative investments industry and capital markets, including hedge funds, private equity, real estate, infrastructure and other segments of this important industry,” the statement said.
By buying Rothstein Kass KPMG will become the largest auditor of hedge funds based on client numbers (currently fifth), according to data compiled by research firm AuditAnalytics.com.
According to one market source, KPMG saw the acquisition as a way to enhance its hedge fund practice. Rothstein Kass, the source said, was a prime target because of its reputation in the hedge fund business, which was open to the deal after suffering a recent exodus of talent.
“And the problem for Rothstein Kass was always that they didn’t have as much of the accountancy piece, now they will. Basically they’re just merging existing referral networks.” added the source.
Rothstein Kass was unable to return comment on the deal by press time.
KPMG’s alternative investments practice has more than 6,000 partners and professionals worldwide. Rothstein Kass has more than 1,000 principals and professionals in 10 offices across the United States. It provides audit, tax, and advisory services to hedge fund, private equity, venture capital, and other clients.