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AAB secures ‘significant’ investment from August Equity

Graeme Allan, chief executive at AAB (left) and David Lonsdale, partner at August Equity

Anderson Anderson & Brown (AAB) has sold a majority stake in its business to fast-track its plans to become a UK regional market leader in the accountancy and wider business services market.

AAB said August Equity’s investment would enable the accountancy firm to grow UK wide as well as continue its investment in technology.

Graeme Allan, chief executive of AAB the firm’s selection of investment partner came after meeting a number of potential investors, with August offering the deal they liked most.

He said: “What they are backing is our plan – that was very important to the partners. We didn’t want to take somebody else’s plan on and deliver it – we wanted to build our own plan and we wanted a partner to back that plan and that is what August have done.

“To do the type of transformation we were looking for you need an investment partner alongside you to achieve that.”

Ambition for growth

AAB is currently a significant Scottish regional player, with offices in Aberdeen, Edinburgh and Glasgow.

AAB also has a London office focussed on payroll, global mobility and virtual finance which supports some of the group’s larger UK and international clients.

It plans to build its market share across the Central Belt of Scotland alongside growing the number of regional hubs it operates from in cities across the UK.

The deal builds on recent investments AAB have made in Scotland earlier this year including the acquisitions of Purpose HR in Edinburgh and Glasgow-based accountants Hardie Caldwell as part of its plans to become a £50 million revenue group by 2025.

The deal with August will give it “significant firepower” for further deals and will allow AAB to invest further in tech following the doubling of spend in this area during 2021.

Investor capital

London-based August Equity was founded as Kleinwort Capital and re-branded after Swiss-based Partners Group and investment giant F&C took a stake in the investment business in 2006.

It funds management buyouts and growth plans in the technology, healthcare and animal care sectors and has invested over £700m in 40 companies, having raised over £1bn through five funds to date.

David Lonsdale, an M&A specialist who has been with the private equity firm since 2008 said the firm was “excited to be working with Graeme and the team”.

He added: “We look forward to working together to accelerate the growth of AAB and build a leading tech-enabled, business-critical services group which is highly differentiated in the market.”

Graeme Allan is chief executive at Anderson Anderson & Brown

Mr Allan said the investment establishes a new model for the business that will establish a “wide equity ownership” whilst maintaining the opportunity for staff to progress to partner level for the company.

He said: “Why we think this is different maybe from other consolidation-type models is because that journey for members of the team to come though all the way to partner will still exist within our model.

“We are spreading the equity across quite a large number of the leadership.

“We see this as the next ten to 15 years of the model as we progress and grow the business, being able to facilitate that journey for people.”

Next steps

He envisages AAB will work actively with August to target two to three further acquisitions and then decide next steps with possibly an even bigger partner.

He said: “The journey for August will be the usual one on a five year cycle. We think there is a two to three-deal run in here as we build the business out.

“Somebody larger in the PE world might want this as it gets bigger because we are too small for them just now.”

However, he sees the current AAB leadership committed to staying with the business or years to come.

“This is a long term journey for me as well,” he said. “Part of what August is buying into is a leadership team committed to not just the next five years but the next ten to 15.”

Mr Allan added: “We are enjoying a fantastic period of growth but see so many opportunities to invest more heavily to fast-track this.

“August Equity’s investment will be instrumental in helping us build a high-quality regional business services group across the UK.

“They are also a great cultural fit and are as excited about our partnership and the future as we are.

“As we grow, we will remain committed to investing and developing our people and of course clients will benefit as we expand our portfolio of tech-enabled services for the SME and enterprise markets.”

Over thirty years’ track record

AAB was founded in 1990 by retired senior partner Mike Brown and two former Ernst & Young colleagues, Bobby Anderson and Sheena Anderson.

The firm started out with a workforce of just five people and had turnover of about £600,000 in its first year.

AAB now boasts 21 member partners and a total workforce of more than 350. It provides audit and accounting, tax, payroll and human resources, outsourcing and advisory services to clients operating throughout the world.

The group supports a wide range of SME and enterprise clients, with exposure to the energy, technology, business services, public & not for profit, food & drink and property & construction sectors.