BDO USA’s Innovative Move: Employee Ownership and $1.3 Billion Debt Financing from Apollo Global Management

In a groundbreaking move that has sent ripples through the financial and professional services industries, the sixth-largest accounting and consulting firm has embarked on a journey towards greater financial flexibility, employee ownership, and a strategic partnership with Apollo Global Management. Recently, the Financial Times unveiled a significant development in the business landscape as Apollo provided a staggering $1.3 billion in debt financing to facilitate BDO USA's transformation.

This pivotal shift in BDO USA's corporate structure is rooted in a desire for financial adaptability, tax advantages, and the ability to attract and retain junior talent through employee ownership. Earlier this year, 860 partners of the firm transitioned into employee shareholders, a move that signaled the company's commitment to a more inclusive and egalitarian approach to ownership.

What stands out in this transformation is the creation of an Employee Stock Ownership Plan (ESOP), a trust that endows both present and future employees with beneficial ownership of the company. ESOP participants are given access to a no-cost retirement plan through the allocation of company stock. This innovative approach aims to ensure that the rewards of the firm's success are distributed equitably among those who contribute to its growth and prosperity.

Moreover, BDO USA's ESOP is set to be one of the largest in the nation, with over 10,000 participants. An independent trustee will oversee the ESOP, ensuring its effective management and equitable distribution of benefits. This initiative demonstrates BDO USA's commitment to fostering a culture of shared ownership and inclusivity within the organization.

Wayne Berson, CEO of BDO USA, expressed his enthusiasm for the ESOP, emphasizing that it unlocks the firm's value and embodies a strategy for building a resilient and caring business for the future. This transformation is not just about financial restructuring; it reflects a profound commitment to the well-being and future success of the firm and its employees.

The partnership with Apollo Global Management is a significant milestone for BDO USA. This deal represents one of the largest private capital investments in professional services, highlighting the confidence that Apollo has in BDO's vision and potential for growth. The infusion of $1.3 billion in debt financing will enable BDO to refinance existing obligations, buy out minority partners, and provide the financial flexibility required for strategic initiatives, including mergers and acquisitions.

Stout, the investment bank, played a crucial role as the exclusive financial advisor and debt placement agent in this monumental transaction. McDermott, Will, and Emery provided essential legal guidance throughout the process.

According to Steve Ferrara, COO of BDO USA, the ESOP not only benefits employees but also the firm as a whole. It enables continued investment in quality, operations, and growth strategies while maintaining leadership and a steadfast commitment to a longstanding vision and purpose.

The transformation of BDO USA, set to take effect on August 31, 2023, marks a significant step towards reshaping the landscape of professional services. It exemplifies a forward-thinking approach that blends financial innovation, employee ownership, and strategic partnerships to build a more resilient and inclusive future for the firm and its workforce. As other organizations take note, BDO USA's journey may well serve as a blueprint for the industry's evolution in the years to come.