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Orangewood Taps Auditor Amid Regulator Feeding Frenzy

By Quratulain Tejani
Published: April 6th, 2023
The New York sponsor has been on the hunt for outsourced compliance services businesses for at least a year and views today's environment as strengthening the thesis around its minority investment in New Jersey auditing firm DLA.

With an entrepreneurial growth mindset, private equity firm Orangewood Partners LLC saw a unique opportunity in Fairfield, N.J., internal audit and accounting advisory firm DLA LLC at a time when financial accounting and regulatory compliance are set to become increasingly vital services for businesses big and small, the firm told The Deal.

What started over a year ago as a casual introductory meeting between Dave Henry, one of Orangewood’s operating partners, DLA founder and CEO David Landau, and Orangewood founder and managing partner Alan Goldfarb, culminated March 29 in a minority investment in the business by the New York firm.

DLA, a 125-employee firm, wasn’t looking for a sale a year ago, but Orangewood, a sponsor keenly focused on business services, and specifically outsourced business services, was already interested in investments in the company’s arena.

“Businesses that provide accounting advisory, technical accounting, internal audit, and regulatory compliance services is an area we are targeting,” Goldfarb told The Deal. “In the world we’re living in, we think it is becoming a long-term macro theme, with promising growth and opportunity.”

Orangewood, which gravitates toward founder and family-led businesses, typically invests in lower middle market companies in North America and writes equity checks in the range of $25 million to $100 million. The firm closed its second flagship fund in 2021 with $300 million in commitments. Terms of the DLA deal were not disclosed.

While the middle-market deal that has been in the works for the better part of a year involves a small, single player in a $200 billion-plus global auditing services market, the March 29 announcement is aptly timed given the increasing scrutiny business leaders across several industries are facing from lawmakers and regulators in recent weeks.

The U.S. Senate Finance Committee, for example, revealed in a March 29 report that recently sold Swiss banking giant Credit Suisse hid $700 million in accounts from the Internal Revenue Service.

Also on March 29, former Starbucks Corp. (SBUX) CEO Howard Schultz testified before the Senate to defend the coffee giant’s handling of union organizers.

The nation’s top banking authorities — the FDIC, the Federal Reserve and the Treasury Department — were on Capitol Hill for a second day March 29 to explain to the U.S. House of Representatives why they were unable to prevent the failure of a major U.S. banking institution, Silicon Valley Bank.

And Apple Inc. (AAPL) has begun rolling out a “buy now, pay later” consumer lending program that already has faced questions from regulators — Consumer Finance Protection Bureau director Rohit Chopra said in September the agency had found that buy now, pay later companies “are not providing the same rights and protections … that credit card companies provide.”

For its part, Orangewood Partners recognized the tailwinds at play in the space — managing director Eric Engler said in the March 29 statement that “DLA has built a reputation as trusted advisors to leading corporations and developing practice areas that are tailor made for the current environment, which is seeing an increasing focus on regulation, compliance and internal controls.”

In his interview with The Deal, Goldfarb held close to the vest the specific ways Orangewood planned to help DLA build upon these sector trends in the years ahead, but M&A will be part of the equation.

Moreover, beyond acquiring a presence in new markets through bolt-ons, Orangewood also sees its capital helping DLA expand its core services offerings. Goldfarb explained that DLA’s clients are increasingly looking for specialty technological solutions and seeking technical accounting and regulatory compliance specialists when they select an accounting firm for outsourced services.

With capital and other nonmonetary support from Orangewood, DLA plans to accelerate in areas including internal audit, accounting advisory, forensic accounting, valuation and litigation support, tax, and risk management services.

Orangewood looked to Greenberg Traurig LLP for legal counsel, while DLA tapped Cole Schotz PC for legal advice.

Editor’s note: The original version of this article was published March 29, 2023, on The Deal’s premium subscription website. For access, log in to or use the form below to request a free trial.

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