The accounting profession is undergoing a seismic shift. Private Equity (PE) is making aggressive moves into the space, shaking up firm structures, operations, and valuations. While the infusion of capital is accelerating growth and modernization for some, it’s also raising pressing questions for traditional firms. What does private equity mean for me? How can we compete? How might this affect staffing?
Let’s break down what the good PE firms are actually doing post-acquisition—what their impact means for the overall market and, consequently, the day-to-day operations of your firm.
We want to be clear that there are vast differences between PE Firms. Some are implementing very thoughtful, long-term strategic plans, and others are simply interested in consolidation alone. Some of these firms, which are merely opportunistic, are encountering major obstacles as they acquire and operate firms. Also, there is genuine concern about the impact some of these private equity firms will have on the reputation of our highly trusted profession. We share these concerns. Private Equity firms are increasingly reaching out directly to firm owners–often with compelling offers and a sense of urgency.
Many of these PE firms have no experience in our industry. They fail to see the importance of staff and lack an understanding of the complexity of the services provided. They may also overlook the relational nature of the industry. These particular PE firms will not protect the legacy of the firms they acquire, and that is a shame. The firms that do have the knowledge and experience to transform traditional practices into thriving businesses are the ones to watch as they lift the industry.
What Are Good PE Firms Doing After Acquiring Accounting Firms?
Once PE firms acquire accounting practices, they have a mandate to generate a positive return quickly. Most roll up their sleeves and make strategic moves designed to drive value and scale. Here are five positive changes we’re seeing:
1. Funding Partner Buyouts
Many firms are dealing with aging leadership and unclear succession plans. Private Equity provides a clear and immediate solution: capital for partner exits. This relieves financial pressure from younger partners and allows firms to plan for the future more confidently. PE generally wants partners to remain working in the firm, often with equity. Some are more capable than others at buying firms and facilitating quicker partner exits. Negotiating tactics for these firms, even the good ones, can be challenging to navigate. The goal is often to immediately tie up your practice by having you agree to exclusive negotiations. This is because they hope to avoid competition. That’s one of our major value propositions–Poe Group Advisors creates a competitive market for your business–bringing multiple qualified buyers to the table and managing a structured process that drives up your sales price and protects your time and leverage. We’ve seen many try to change terms just before the deal comes to a close. Buyers can also drag negotiations for extended periods of time to get more favorable prices and terms for themselves. Deal fatigue can set in, and owners can capitulate when they don’t have backup buyers.
2. Investment in Talent & Technology
PE-backed firms are investing heavily in people and platforms. They’re offering competitive salaries to attract top-tier talent and equipping them with modern tools to boost efficiency and engagement. The result? A more attractive work environment for today’s talent—and tomorrow’s. Firm culture and competitive salaries, therefore, are crucial for retaining your team members.
For a deeper dive on firm culture, please check out our podcast with Rich Stang and /or our podcast with Randy Crabtree.
3. Business Best Practices
Private Equity often brings operational discipline. By applying best practices from other industries, PE helps firms streamline operations, cut inefficiencies, and unlock profitable growth. It’s not just about accounting anymore—it’s about running a sharp, scalable business.
For a resource along these lines, please check out Accounting Practice Academy.™
4. Financial Planning & Analysis
Many PE-backed firms are expanding beyond traditional compliance work. Tax and bookkeeping services are just the beginning. Firms are leveraging their trusted advisor status to offer more strategic services—FP&A, advisory, and beyond. Take Citrin Cooperman, for example: post-PE investment, they’ve evolved into a more diversified and dynamic firm. This offers your clients more value.
5. Higher Valuations
As more capital flows into the industry, firm values rise. For firm owners, that means the potential for stronger returns on equity and greater flexibility in exit planning.
What This Means for the Industry: A Glimpse into the Future
We’re at the beginning of a new chapter for the accounting profession. Here’s where things are likely headed:
A More Competitive Landscape
Expect a tighter race for both clients and talent. PE-backed firms will have more resources to offer higher-quality service and broader capabilities. However, not all will execute well—firms that stumble post-acquisition may leave gaps that savvy traditional firms can fill. We see salaries rising, especially for more experienced and capable professionals.
Cultural Clashes Will Surface
The marriage of financial investors and profession-driven CPAs won’t always be smooth. Some professionals will push back against PE’s influence, particularly in firms with compliance-heavy, slow-to-adapt cultures. PE has a reputation for managing ruthlessly “by the numbers,” while many experienced firm leaders are much more client and staff-focused.
A Time of Experimentation
PE is forcing the profession to evolve. Combine this with rapid technological improvements, AI, and an aging profession, and there is a perfect storm brewing. Traditional firms will need to rethink everything from service lines to organizational structure. Innovation will become more visible, and firms that fail to adapt risk being left behind. This era will be the wake-up call many firms need.
What Does This Mean for You?
Things are changing—and fast. Traditional firms that want to stay competitive must embrace change, improve operations, and invest in their future. Above all, focusing on firm culture to attract and retain top staff will be absolutely crucial. Streamlining to provide the best client experience possible will also prove to be key in edging out less personable private equity-run competition. Strong firms will have to work on their business consistently, not just in it.
Want to dive deeper into the trends reshaping the accounting profession? [Download our full white paper here] to explore how your firm can stay ahead in the age of Private Equity.
