The tax consultancy firm WTS is bringing the Swedish financial investor EQT on board as an anchor shareholder. „We want to build a tax consulting champion with EQT,“ said WTS CEO Fritz Esterer, explaining the transaction in an interview with Börsen-Zeitung. The strategic partnership with EQT is designed for the long term: „We have really big plans.“

Matthias Wittkowski, who acts as Partner and Global Co-Head Services of EQT, said in the interview that EQT had examined a large number of opportunities in the sector worldwide: „WTS with Fritz Esterer at the helm is an excellent fit in terms of culture, we are very similar in terms of growth ambitions," he said, and announced an accelerated expansion course: „Together, we want to multiply WTS turnover within the next few years, while at the same time increasing profitability.“

This will be achieved with a combination of different growth levers. On the one hand, the market-leading position in Germany is to be expanded, for example by intensifying digitalisation activities and thus tapping into new customer groups. But there are also consolidation plans in the broader European market. WTS is currently only present through its network, but not with its own companies.

Esterer's strategy points in the same direction. „We want to gain a strong presence in the core European countries,“ he said: „In plain language, this means that we are aiming for significant growth, both organically and inorganically.“ WTS has its sights set on the UK, France, Italy, the Netherlands, Eastern Europe, particularly the Czech Republic and Poland, as well as Scandinavia.

The ban on third-party ownership in Germany prohibits pure financial investors from holding a direct and majority stake. When asked, Wittkowski acknowledged that there are legal restrictions on investing in tax consulting companies in Germany, which are of course observed. Esterer emphasised that the foundation, which had previously been the sole owner of WTS, would remain in place: It would continue to be included in the ownership structure. The partners did not provide any further details.

The market for tax advice is characterised by high single-digit percentage growth rates, explained Wittkowski. With the acquisition of new partners and teams, the company will grow significantly faster than this substantial single-digit market growth: „M&A must also make a very substantial contribution so that we can ultimately achieve the goal of multiplying turnover together.," he said.

Esterer emphasised that WTS wants to attract new employees, saying „we want to attract additional teams like a magnet.“

WTS Germany accounts for just under half of WTS Global's turnover, explained Esterer. In Europe, the network is almost on a similar scale, with a further 100 to 200 million euros in tax related revenue in the other regions: „In future, the cross-selling potential is to be better utilised by making WTS an international company with intensive cooperation within the group.“

The Munich-based company WTS Deutschland, which was launched in 2000 as a spin-off from Siemens, increased its turnover by 7% to 242 million euros in the last financial year 2023/2024 with 1,500 employees and 14 locations in Germany. Esterer believes that the company is currently the market leader in Germany in the field of AI and taxes.

WTS does not carry out audits of annual financial statements and is thus deliberately positioning itself against the four major auditors, PwC, KPMG, EY and Deloitte, whose product portfolio also includes consulting. WTS divides its consulting services into three business areas: Tax, Advisory and Digital.

Despite this, Esterer failed to meet the target set at the start of the 2021/2022 financial year of more than doubling turnover to well over 400 million euros within four years, even though almost all DAX40 companies (95%) are customers. Esterer now pointed out that WTS had been more focused on Germany and not so strongly on international acquisitions. Nevertheless, the EUR 400 million target is not that far away: „I am very confident that we will reach this level relatively quickly", he said.

EQT partner Wittkowski did not want to say how much EQT will participate as an anchor shareholder, nor what growth capital the tax consultancy firm can expect. „WTS and EQT have decided not to disclose the financial details of the transactions,“ he said.

The 22 billion euro EQT X fund is currently around 50% to 55% invested. „You can see from this that we are very substantially able and willing to support WTS with additional growth capital,“ emphasised Wittkowski. However, the support goes beyond this. „We at EQT are not only providing our capital, but also our expertise in M&A, the scaling of growth businesses and digitalisation.“

Esterer has sometimes emphasised in the past that acquisitions could also be financed from existing capital. In his opinion, however, a different approach is now required. „Consistent expansion in Europe simply requires a larger investment volume, and we won't get any further with just a few million", he said.

Esterer announced that he will remain operationally active. He has a strong responsibility to transfer WTS into good hands, said the 66-year-old, who has been the CEO of WTS since 2009. He will therefore remain with the company: „I will definitely be at the company's disposal for some time to come, and in full.“

EQT partner Wittkowski praised Fritz Esterer's entrepreneurial foresight as a person for taking this step in a situation in which others were reaching the statutory retirement age: „For us, it was always the basis of this partnership that Fritz Esterer would stay on as CEO.“

The WTS investment is being made by the „EQT X“ fund. The financial investor raised 22 billion euros (24 billion dollars) between 2022 and 2024 for its largest private equity fund to date. The volume for an individual investment can range from 200 million euros up to 1.6 billion euros.

Investments to date include the US provider of accounts receivable solutions, Billtrust. In addition to the technology sector, the healthcare sector is a key focus. Last year, EQT also announced the acquisition of cybersecurity specialist Acronis, and the Swedish accounting company Fortnox is to be acquired together with its majority shareholder.

The WTS transaction is expected to be finalised in the summer. WTS was advised on financial matters by Rothschild & Co and on legal matters by Noerr. Hengeler Mueller acted for EQT.