BDO USA arranges $1.3 billion debt deal with Apollo, launches ESOP

15 August 2023 2 min. read
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BDO USA, the country’s sixth-largest accounting and consulting firm, has arranged $1.3 billion in debt financing from private capital group Apollo Global Management, the Financial Times reported on Sunday. The money will be used to purchase a minority stake from current partners to create an Employee Stock Ownership Plan (ESOP), as well as refinance some of BDO’s existing obligations.

BDO officially became a corporation in July, with its 860 partners turning into employee-shareholders. The largest shareholdings went to executives and those with longer tenures, FT reported.

The debt deal with Apollo is one of the largest deployments of private capital into professional services.

Abandoning the partnership model and taking on debt aims to create greater financial flexibility (including for M&A) and new tax advantages, as well as enable the firm to better attract and retain junior talent through broader employee ownership.

BDO USA will remain employee-owned, split between partners and the ESOP, a tax-efficient retirement savings vehicle. Established as a trust, the ESOP allows current and future employees to receive beneficial ownership of the company over time. By allocating company stock, employees will access a retirement plan that requires no out-of-pocket contribution.

BDO USA arranges $1.3 billion debt deal with Apollo, launches ESOP

With 10,000+ participating employees, the BDO ESOP would be among the largest in the country. The firm says the ESOP will be overseen by an independent trustee.

“Amid the changing landscape of our profession, the ESOP unlocks the value of our firm today and embodies our strategy to sustain a strong, caring, and resilient business for tomorrow,” said Wayne Berson, CEO of BDO USA. “We are proud to establish this ESOP to invest in each other so everyone who contributes to our success has the opportunity to benefit from it.”

Investment bank Stout acted as exclusive financial advisor and debt placement agent on the transaction, while law firm McDermott Will & Emery provided legal counsel.

“The ESOP also has material benefit to the firm,” said Steve Ferrara, COO of BDO USA. “It allows for continued investment in quality, as well as operations and growth strategies, while maintaining continuity in leadership and commitment to a longstanding vision and purpose.”

The ESOP and related transactions are slated to become effective on August 31, 2023.