Eide Bailly, the 18th-largest U.S. accounting firm by revenue, agreed to sell a majority stake to private-equity firm Reverence Capital Partners and co-investors in a deal valuing the firm at about $1.8 billion, people familiar with the matter told The Wall Street Journal. The Minneapolis-based firm said the investment will allow it to speed up the adoption of artificial intelligence for its own operations and for its clients.

Reverence Capital Partners and co-investors will collectively take a majority stake in the firm. Eide Bailly and Reverence said they expect the deal to close in the third quarter.

Andy Spillum, Eide Bailly’s chief operating officer, said he expects the firm’s revenue to roughly double in the next three to four years as it expands its capabilities and operations. The firm reported about $840 million in revenue for the year ended in April, up from $780 million a year earlier.

“The technology changes are going to make, for a short period of time, things more confusing,” Spillum said. “Having a capital sponsor like this, with the ability to navigate and get us to the right spot quicker so we can help our clients quicker, was probably the number one driver.”

Eide Bailly hired BMO Capital Markets to explore a possible outside investment late last year. The firm specializes in serving middle-market businesses across audit, tax and consulting services. It has about 50 offices, concentrated in the Western U.S., and a workforce of more than 3,500 people, including more than 400 partners.

To comply with independence rules, Eide Bailly said it would set up an alternative practice structure. The arrangement means its nonaudit business will receive the Reverence investment while the audit business will remain a licensed CPA firm. Securities and Exchange Commission and state accountancy board rules generally prohibit outside ownership of an audit business at a professional services firm.

Eide Bailly is among several of the largest 20 U.S. accounting firms outside the Big Four that have not done a structural overhaul in recent years. Dozens of the 100 largest U.S. accounting firms have either sold an ownership stake to private-equity investors or have been acquired by a firm that has done so since 2021. Most recently, Crowe agreed to sell a stake to KKR in a nearly $3 billion deal earlier this month.