Let’s skip the industry hand-wringing and talk about your balance sheet.
Ten of the nation’s 20 largest accounting firms will soon be owned by private equity, according to Wall Street Journal reporting on the Crowe and Eide Bailly transactions. Cornerstone’s deal tracker counted 22 private-equity-backed accounting deals in 2023. Sixty-five in 2024. One hundred four in 2025. In January of this year alone it logged more than 25, the highest single January in its dataset.
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You have read some version of that news already. What you may not have done is the part that matters: work out what those buyers are actually paying for, and whether your firm has any of it.
Because they are going to make you an offer eventually. And right now they are the ones deciding what your practice is worth.
The buyer’s math: Why your firm is already on a list
Start with the structure, because it explains everything that follows.
Outside investors cannot own a CPA firm that performs attest work. State accountancy rules and independence standards prohibit it. So the deals use an alternative practice structure, which has been permitted for decades and which almost nobody outside the M&A conversation bothered to understand.
The firm splits in two. A CPA-owned entity retains the attest practice and the licensed partners. A separate company, which investors can own outright, takes everything else: tax, advisory, technology, administration, and usually the staff. An administrative services agreement ties them together. The audit opinion still comes from licensed CPAs. The capital sits on the other side of that wall.
Once you see the structure, the deal volume makes sense. Most of the 250 transactions in the tracker since 2019 are not headline mergers. They are tuck-ins. A sponsor buys a platform firm, then bolts on practices your size, one at a time.
Here is the part worth sitting with. Those buyers are not paying for your revenue. They are paying for the portion of your revenue that recurs, that does not depend on you personally, and that a bigger platform can grow. Everything else gets discounted or excluded.
The leverage trap: How the billable hour became a liability on your own books
The pyramid priced staff leverage. Junior people did repetitive work, the firm billed the hours, and margin came from the gap between what those hours cost you and what they sold for.
Automation attacks that arithmetic from underneath. When a task that consumed five hours consumes 40 minutes, hourly billing converts your own efficiency into a revenue cut. You did the work faster and you got paid less for it.
Firms on flat fees, fixed-scope engagements, and subscription pricing keep that gain. Firms still on the clock hand it to the client and then hold a partner meeting about why realization keeps sliding.
This is not only a margin problem. It is a valuation problem. An hourly compliance book is the least attractive thing on a buyer’s diligence list: seasonal, low-multiple, tied to individual relationships, and exposed to exactly the automation the sponsor intends to install. A recurring advisory book is the opposite. Same firm, same clients, very different number on the term sheet.
The succession squeeze—and why the offer starts looking reasonable
Gartner’s finance outlook cites 75% of CPAs being at or near retirement age. The graduate pipeline has been thinning for years. You already know both of these things because you have tried to hire recently.
Now combine them. A managing partner in his early sixties, with no internal buyer, and four partners who cannot personally finance a buyout, has exactly one liquid exit. Sponsors know this better than the partners do. It is the single best explanation for why tuck-in volume looks the way it does.
An offer arriving at that moment does not feel like a strategic decision. It feels like relief. That is the problem. Relief is the worst possible frame of mind for pricing an asset you spent 30 years building.
The blueprint: Four moves that let you set the number
None of this requires you to sell or refuse to sell. It requires you to stop being a price-taker. Four moves, in this order.
1. Unbundle advisory from the return
As long as planning work is folded into a compliance fee, the client treats it as free and your staff treats it as optional. Neither behavior shows up as revenue, which means neither shows up in a valuation. A separate engagement letter and a separate price fix both problems at once. This is the highest-leverage change available to most firms and it can be made this quarter.
2. Build one line of revenue that recurs monthly
Fractional finance work is the obvious candidate. Small and midsized businesses need financial architecture and cannot carry a full-time CFO salary. Five to 15 hours a week from an experienced practitioner is a genuine service at a genuine price, and it bills every month whether or not it is filing season. Monthly recurring revenue is the number buyers underwrite. It is also the number that funds your technology spend without a partner vote.
3. Own a niche a platform cannot simply acquire
Sponsors are buying a generalist scale. Scale is what they are good at. Depth is what they are not. Construction, dental, short-term rentals, Section 174, multi-state remote workforces: pick something where your judgment is worth more than a platform’s capacity, and where a competitor would need years rather than a wire transfer to match you.
4. Decide about selling deliberately, and decide early
Both answers are defensible. Neither works as a default.
If you intend to sell within five years, you are building for a specific buyer with specific criteria, and you should be maximizing recurring revenue and reducing owner dependency starting now. If you intend to stay independent, you cannot keep deferring the technology investment, because the firm competing with you for your next hire and your next client just got recapitalized.
Set your own number
Stop treating private equity in accounting as news about other people’s firms. Stop letting a sponsor’s diligence checklist be the first time anyone assesses what your practice is actually worth.
Capacity used to be a headcount question. It is now a question of how much specialized judgment your firm applies per engagement, how much of the surrounding work runs without a person, and whether your pricing reflects either one. That ratio determines your margin, your ability to hire, and the multiple somebody eventually offers you.
You can answer that question on your own schedule, or you can answer it across a table from someone who has already run the numbers. One of those positions pays better.
ABOUT THE AUTHOR:
David A. Perez is a tax strategist and the CEO of Tax Maverick AI. After filing over 50,000 tax returns, David realized the industry was stuck on paperwork instead of helping people save money. He decided to change the game by putting everything he knew into a software that helps the entire tax community. Today, David leads a successful eight-figure company and a team of experts around the world who are dedicated to making advanced tax strategies available to everyone.
Photo credit: ilixe48/Freepik
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