Private Equity Investments in Accounting Firms: What’s Happening Now?

The rise of private equity (PE) investments in accounting firms has received a mixed reception from practitioners and regulators alike. Some see it as a strategic approach to capital infusion. Others, meanwhile, remain skeptical of its possible long-term impacts on the profession's ethical obligations.  

The biggest concern so far comes from PE investment’s perceived influence on audit quality. This is despite restructuring efforts to separate audit and attestation services from tax and consulting services, or what’s otherwise known as an alternative practice structure (APS). For context, non-CPA firms, such as private equity companies, cannot own audit/attest firms, which explains the need for an APS.  

Seeing this trend, the United States Securities and Exchange Commission – Office of the Chief Accountant (SEC-OCA) released a statement containing some critical points to consider when engaging in complex business relationships and firm restructurings. 

The Commission explained that the mercurial nature of PE investments “can create even greater challenges for maintaining auditor independence by the accounting firm after an investment by a third-party or sale of an accounting firm’s business.” 

“Private equity structures can be complex and can include entities that have varying levels of influence over other entities — either within their investment portfolio or within the contemplated structure,” stated the Commission. 

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Given that it’s an emerging trend, it’s still too early to assess the long-term impacts of these high-stake investment activities on the accounting industry as a whole. However, we can see that PE investments are picking up pace — and investors are not showing any signs of slowing down. 

To date, 10 of the Top 30 CPA firms in the U.S. have already received “strategic growth investment” from various private equity firms. Smaller firms are also being tapped, particularly with the growing interest in consolidating multiple accounting firms into a single group to achieve economies of scale. 

The growing private equity interest in accounting firms 

In mid-2021, when the United States was still preoccupied with the rising cases of Covid-19's Delta variant, a separate historic event took place in the accounting industry: EisnerAmper LLP, a global business advisory firm, had struck an equity investment deal with TowerBrook Capital Partners, an international investment management firm.  

The investment in EisnerAmper was the first successful attempt of private equity to enter the top 20 CPA firm market, with its first attempt in 2006 derailed by the 2008 Great Recession and the 2012 venture not pushing through due to a lack of capital need among accounting firms. 

Four years after the first equity deal, we have witnessed accounting firms — both large and small — going into the same path. The year 2024 saw the greatest number of investment deals, and even the largest transaction thus far. 

Let’s take a look at how this trend progressed year over year. 

PE timeline: 4-year progression of private equity in accounting 

The list below outlines the most prominent announcements related to private equity investments that occurred from 2021 up to early 2025. 

2021

• August: EisnerAmper x TowerBrook Capital

In this historic deal, the global tax and accounting firm EisnerAmper received a strategic investment from the international investment management firm TowerBrook Capital.  

• September: Schellman & Company LLC x Lightyear Capital LLC

PE firm Lightyear Capital LLC acquired stakes in Schellman & Company, LLC, a highly specialized CPA firm that focuses on IT compliance and cybersecurity.  

2022

• January: RSM US LLP x Parthenon Capital

PE firm Parthenon Capital acquired the entire wealth management practice of RSM US LLP and renamed it to Choreo. 

• April: Citrin Cooperman x New Mountain Capital 

Investment firm New Mountain Capital announced its majority investment in Citrin Cooperman, a professional services firm specializing in tax, advisory and accounting for private middle market businesses and high net worth individuals. 

• June: Cherry Bekaert x Parthenon Capital

Parthenon Capital has once again made its move. This time, the PE firm made a strategic investment in Cherry Bekaert’s business advisory practices.  

• November: Smith + Howard x Broad Sky Partners 

The accounting firm Smith + Howard secured an investment from the private equity firm Broad Sky Partners. 

2023

News about private equity investment in public accounting firms slowed down this year. What’s initially expected to be the biggest deal of the year turned into a buyout failure as EY declined an investment offer.

• August: EY turned down TPG

Ernst & Young turned down TPG’s offer to take a stake in their consulting business. 

• October: Goering & Granatino x Ascend

Accounting firm Goering & Granatino received an investment from private equity backed Ascend. 

2024

• February: Baker Tilly x Hellman & Friedman x Valeas Capital Partners 

Baker Tilly, the 10th largest CPA firm in the U.S., announced that they have secured a strategic investment from two PE firms: Hellman & Friedman and Valeas Capital Partners. 

• March: Alter Domus x Cinven

Alter Domus, a professional services firm, secured a strategic investment from Cinven, an international private equity firm. 

• May 

a. Grant Thornton x New Mountain Capital

In its press release, the top 7 accounting firm Grant Thornton announced that they have received a significant growth investment from New Mountain Capital, the same firm that have bought stakes from Citrin Cooperman in 2022.  

To date, this transaction is the largest equity investment in accounting. 

Grant Thornton also mentioned that they have received minority investments from CDPQ and OA Private Capital, respectively. 

b. Sikich x Bain Capital

Professional services firm Sikich received a minority investment worth $250 million from the multi-asset alternative investment firm Bain Capital. Sikich retained majority control of the company and its management and leadership teams. 

• July: Aprio x Charlesbank Capital Partners 

Business advisory and accounting firm Aprio received strategic investment from Charlesbank Capital Partners, a middle-market private investment firm.  

• September: ATA x Copley Equity Partners 

Another minority investment was made when the accounting firm ATA announced partnership with Copley Equity Partners. 

• October

a. Armanino x Further Global Capital Management

CPA firm Armanino secured a minority investment from the employee-owned private equity firm Further Global Capital Management. 

b. Cohen & Co x Lovell Minnick Partners

Cohen & Co, a tax and accounting firm, received strategic growth investment from Lovell Minnick Partners (LMP). 

• November 

a. Carr, Riggs & Ingram (CRI) x Centerbridge Partners x Bessemer Venture Partners

CRI received investment from private equity firm Centerbridge and the venture capital firm Bessemer Venture Partners. 

b. PKF O’Connor Davies x Investcorp x PSP Investments

The accounting, tax, and advisory practice PKF O’Connor Davies received an investment from an alternative investment firm, Investcorp, and another one from the pension investment management firm PSP Investments.  

2025

• January: Citrin Cooperman x Blackstone 

 Three years after receiving its first private equity investment, Citrin Cooperman obtained another majority investment from Blackstone, an alternative investment company.

This transaction — which is considered as private equity’s first flip, or transfer, of an accounting firm — took place after Blackstone acquired majority stakes of Citrin Cooperman from New Mountain Capital.

Revenue-wise, Citrin Cooperman’s three-year partnership with New Mountain Capital proved to be a fruitful one. From a $500 million valuation in 2022, the accounting firm now values at $2 billion. With additional investments from Blackstone, Citrin Cooperman plans to continue expanding its service offerings and technology. 

• March: AICPA seeks feedback in revising independence rules related to APS

Due to the increasing deals involving PE and accounting firms, the American Institute of CPAs’ Professional Ethics Executive Committee (PEEC) is currently seeking feedback on possible changes to the independence rules related to alternative practice structure (APS).

The discussion memo is open until June 15. After which, PEEC will use the comments “to supplement its research and develop a formal exposure draft.” 

• April
  Last year’s major PE deals involving Baker Tilly and Grant Thornton are showing signs of aggressiveness this year. Here’s what’s happening so far.
  

a. Merger of Baker Tilly and Moss Adams

The 13th largest US accounting firm Moss Adams will be merging with Baker Tilly, which currently ranks 10th, in a deal worth roughly $7 billion, according to an exclusive report from The Wall Street Journal.  

As such, the combined firms are expected to become the sixth largest US accounting firm — and “the largest firm in the industry to be partly owned by private equity investors,” the report from WSJ read. 

b. Grant Thornton goes on PE-fueled acquisition spree

Just two days after the announcement of Baker Tilly and Moss Adams’ merger, Grant Thornton US announced its plan to roll up its sister firms in Europe and the Middle East. Backed by its private equity investment from New Mountain Capital, this acquisition plan is expected to “give Grant Thornton an edge in pitching to multinational businesses”.

Effects of PE firm funding  

To remain compliant with regulatory and independence requirements, most accounting firms that have received a PE investment have adopted APS — a move that may have caused transformative changes to their ownership and legal structures.  

However, the potential revisions to AICPA’s independence rules may require concerned entities to make changes as necessary. 

For now, we can only look at the direct effects of PE investments on accounting firms, such as the revenue growth of Citrin Cooperman and the acquisition plans of Grant Thornton. Its impact on audit quality and the accounting profession’s ethical responsibilities may still take some time before it becomes more apparent.  

A study covering the topic was published last year by the Public Company Accounting Oversight Board (PCAOB) but it’s still in the initial phase and no results have been posted yet. 

Why are private equity firms interested in accounting firms?  

Buy-to-sell is a cardinal approach to private equity’s success. Under this approach, PE firms buy a company*, increase its value over a certain period, and sell it to earn a profit. This means they don’t just simply choose well-performing businesses; they choose the ones that show high growth potential in sales and profits. 

To spot and value businesses correctly, PE firms allocate a great deal of their resources to screen tons of potential targets. With this proactivity, we can infer that equity investors have seen untapped potential in the accounting industry, thus, the growth of equity investments in accounting firms. 

For specificity, let's run through the common reasons why private equity firms invest in accounting firms. 

1. CPA firms have stable and predictable revenues

Private equity firms prefer companies that display steady and predictable cash flows. Accounting firms, being essential to all companies, are often resilient to tough economic conditions — something I have observed firsthand during the pandemic.  

Back then, I saw how D&V Philippines has experienced an increased demand for our services. The same goes for one of our clients, an audit and accounting firm from the U.S. who availed of our outsourcing services at the height of Covid-19, because they can no longer accommodate the surge in demand for their accounting services. 

2. Promising consolidation opportunities

The fragmented nature of the accounting sector makes it an attractive market for private equity investors. With no dominant players around, PE investors can easily consolidate smaller firms to achieve economies of scale.  

This strategy lets them roll up several regional accounting firms (and even their sister firms as the case of Grant Thornton US), thereby increasing their coverage and creating more value over time. The higher the value of the accounting firm, the more profit private equity firms can get upon flipping. 

3. Stable customer base

Accounting firms invest in building long-term relationships with clients. Trust is their greatest currency given that they’re being entrusted with sensitive financial data. PE firms see it as an opportunity to cross-sell complementary services, which is a creative way to increase revenue streams. 

*PE firms can only buy stakes in accounting firms, not the entire company per se, due to the regulations that non-CPA firms cannot provide audit and attestation services.  

How do accounting firms benefit from private equity investments? 

Announcements related to accounting firms’ strategic investments with private equity firms revealed a central theme — that is, the extra capital they receive can help them grow and stay competitive. This cash infusion can help them: 

1. Upgrade technology

Accounting firms need to be efficient to provide fast and reliable services to clients. Operating on legacy accounting systems will only keep them behind the competition no matter how qualified their accountants are. 

With access to new capital, accounting firms can upgrade their accounting technology, improve their IT infrastructure, and provide an even faster and more accurate service to clients. 

2. Attract and retain top talent

Accounting firms, especially the smaller ones, can offer more competitive compensation packages. Through this, their firm can become more attractive to job applicants. 

3. Buyout of retiring partners’ benefits

A private equity investment can sound like good news to retiring partners of an accounting firm. Aside from providing the necessary capital to buy out their shares, PE firms can also assist in preparing a transition plan so the retiring partner can exit smoothly. 

4. Added operational expertise

PE firms can bring operational expertise and strategic guidance to accounting firms, especially when it comes to cost-reduction and process improvements. 

5. Increased competitiveness

With enough cash to fund technology improvements, hire competitive talent, and increase their marketing activities, accounting firms can better position themselves in the market. 

Possible downsides of PE investments 

For those who have already benefitted from private equity investments, an involvement with a PE firm can be a good thing. However, we cannot discount that there can also be potential downsides to this, such as: 

1. Implications on audit quality

The biggest concern so far comes from private equity firms’ potential effects on audit quality, especially on an auditor’s objectivity.  

While there’s no apparent case for it yet, some experts express their concern on the possible influence of private equity firms, including their investors, on an auditor’s independence and the accuracy of financial statements. 

2. Changes to organizational structure

As mentioned, most private equity investments resulted in an alternative practice structure. If not managed well, this major change can affect the accounting firm’s internal culture. For an industry that depends on the competence of their people, transitioning to the new structure is a must to keep operations going smoothly. 

3. Risk of public confusion

Aside from the accounting firm’s internal culture, an alternative practice structure — or the separation of attest and non-attest services — can lead to public confusion.  

The normal practice is to establish separate entities following the equity deal, with each entity carrying a slightly different business name.  

For example, EisnerAmper’s CPA firm side that will provide attest services will be called EisnerAmper LLP. Meanwhile, the entity acquired by the PE firm that will provide advisory and non-attest services will be called Eisner Advisory Group LLC. 

This kind of change can lead to an initial confusion, especially for those who do not know about the deal.  

4. More complex regulatory requirements

AICPA’s plan to revise independence rules on alternative practice structure can potentially lead to more complicated regulatory requirements. Both accounting and PE firms then must brace themselves for additional paperwork in case such an amendment takes effect in the future. 

5. Pressure to deliver urgent results

On average, a PE investment lasts for 4-6 years. During this period, both the PE and accounting firms must deliver results, specifically in terms of revenue.  

Once the PE firm is ready to generate revenue from its investment, an exit follows. This takes place in the form of an initial public offering (IPO), recapitalization, trade sale, and management buyout (MBO), among other strategies. 

Short- to medium-term investments such as this can often cause pressure to deliver before the exit, which can then cause compromises on service quality, client experience, and employee welfare. 

Read also: What You Need to Know about Family Office Outsourcing 

Adapting to the changes 

We have yet to uncover the actual effects of PE firms’ investments in accounting firms. However, one thing must remain constant for all professional accountants and auditors: We must stick to our principles and ethical duty to deliver objective and accurate results at all times. 

If your accounting firm has recently received PE investment and is hardly keeping up, getting an outsourced back-office support team can extend your capacity right when you need it. Message us at marketing@dvphilippines.com to know more about our services or download our whitepaper, Outsourcing: How to Make it Work. 

Marly Malis is a Vice President of Global Operations at D&V Philippines. She also spearheads the company’s Product and Solutions Unit. Connect with her on LinkedIn. 

—Written in collaboration with Mary Milorrie Campos, a senior content and creative specialist at D&V Philippines.