Funds affiliated to Lightyear Capital (Lightyear) have agreed to acquire assets from and partner with Schellman & Company (Schellman) in forming a new venture that will set the standard for the delivery of information technology and cybersecurity compliance services.
Going forward, Schellman, a licensed CPA firm, will provide attest services, and Schellman Compliance, LLC, a newly formed entity, will provide non-attest services. Financial terms of the transaction were not disclosed.
Founded in 2002, Schellman is a leader in the information technology and cybersecurity compliance space and currently ranks as the 65th largest CPA firm in the United States. Schellman has over 300 employees and 700 clients, including numerous publicly traded and Fortune 500 companies. Schellman offers a comprehensive suite of information technology and cybersecurity audits and assessments, including SOC examinations, ISO certifications, FedRAMP assessments, PCI assessments, HITRUST assessments, cloud security assessments, penetration testing, and other compliance services.
As part of the transaction, the majority ownership interests of Schellman’s current Chief Executive Officer and founder, Chris Schellman, will be recapitalised, allowing him to exit the business six years prior to his previously announced 2027 retirement date. Current Schellman President, Avani Desai, will become Chief Executive Officer. All other members of Schellman’s senior leadership team will continue in their current roles.
Currently greater than USD3 billion in the United States, the information technology and cybersecurity compliance assurance market continues to evolve rapidly, driven by key factors such as the exponential growth of data creation, continued migration of data to the cloud, increasing enterprise demands for cybersecurity compliance, enhanced regulatory pressure for cybersecurity solutions, increased awareness of cyber risks, and an increasing requirement by companies for their vendors and service providers to be assessed. Having ranked among Accounting Today and Inside Public Accounting’s Top Fastest-Growing Firms in each of the last three years, Schellman represents a microcosm of the industry it serves, making it an intriguing candidate for partnership as Schellman looks to continue its rapid upward trajectory.
Mark F Vassallo, Managing Partner of Lightyear, says: “We are excited to invest alongside Avani Desai and the management team at Schellman working to support key organic and M&A growth opportunities. The company is well-positioned in the market for cybersecurity and IT audits for continued growth. We look forward to our working together and the Company’s continued success.”
Founder Chris Schellman says: “It gives me great pride to reflect on what our team has built at Schellman. We are truly the jewel of this industry thanks to our obsession with providing high quality services. I am eternally grateful to all of those that have trusted my leadership along this journey and look forward to what this partnership will mean for the next chapter of Schellman’s success.”
Jay Comerford, Managing Director of Lightyear, says: “Over the past several years while actively prospecting growth opportunities in cybersecurity audits and assessments, we developed a relationship with the management team at Schellman. We were impressed by their outstanding service, high quality professionals, comprehensive offering, and diversified roster of blue-chip customers. We want to congratulate Chris on building Schellman over the past 19 years, and we look forward to partnering with Avani and the management team during the company’s next phase of growth.”
Avani Desai, current President of Schellman, adds: “Together with the Lightyear funds, we will continue to carry forward the vision Chris laid out to be the leading provider of compliance assessments with an unwavering attention to quality. We have always been a firm that strives for more, and in Lightyear, we have found a new partner that is just as committed to innovation and value creation. This new phase for Schellman will allow us to take bold steps, and we are all tremendously excited about the possibilities.”
Davis Polk & Wardwell, LLP is serving as legal advisor to Lightyear Capital. Shumaker, Loop and Kendrick, LLP is serving as legal advisor to Schellman & Company, LLC.
