A Top Technology Initiative Article by Randy Johnston | September 2025.
Are you suffering from AI exhaustion? It seems like everywhere I turn, there is another discussion of the use of AI, with many struggling to find a measurable ROI. Managing a practice or a business’s profitability is valuable, and in the past, we have discussed the value of advisory services to clients to augment your compliance services.
While future-facing services are interesting to consider and implement, short-term solutions have been needed for talent, which many have solved through outsourcing. Another issue for many practices is the lack of succession planning. I’m surprised at the number of firms that have an unrealistic partner retirement plan that is not funded.
With the historical profitability of public accounting firms, private equity (PE) firms have seen and seized the opportunity to provide capital, operating expertise, and technology.
You probably have items to add to this list, but if I picked the top concerns of partners this year, in no particular order, they would include:
- Private Equity
- In or out?
- Partner exits
- Protection of Team
- Protection of Clients
- Capital investment required to stay competitive
- Developing strategies and a plan to stay independent or merge
- Profitability for the partners and the firm
- Employee compensation
- Employee experience/motivation/satisfaction
- Trending technology for investment
- AI
- New SaaS solutions
- Audit platforms
- Internal innovation
- Personnel/talent shortages
- Outsourcing
- Portals/client experience
- Future of legacy technology for CPA Firms
- Tax
- Practice Management
- Document Management
- Workflow
PE Everywhere!
Brian Tankersley, my fellow podcaster of the Accounting Technology Lab, and I have frequently discussed the impact of PE on the profession and on the software publishers. We also mentioned the PE impact while discussing “The Accounting Talent Shortage.” Rob Brown notes PE in his new Leaders of the Ledger podcast during the episode discussing “AI, Private Equity, and the Future of Accounting | Goran Gmitrovic.”
While many PE groups have a five-year investment plan before flipping the transaction, we are seeing a few exceptions to that strategy. Some longer-term thinking is evolving. Pay for performance is high on the investors’ list. Firms are frequently “managed by the numbers in the spreadsheet.” Some expectations of billable hours are unrealistic. However, our profession has always prioritized effectiveness and efficiency, and we have endeavored to optimize our work to maximize profits.
I’ve discussed mergers and acquisitions with most of the transaction consultants to the profession. In reference to PE transactions, the volume is wildly increasing. Some take the attitude that only the big (and strong) can survive. Other non-PE-backed firms that have been growing through the acquisition of similar-culture firms have found that transactions are becoming more expensive.
More capital is needed to remain independent if acquisition growth is desired. One of my favorite sayings of a now-retired partner was “you can be profitable, or you can be big, choose one.” While I recognize that you can be big and be profitable, Darren Root’s new book, The Simple Firm, may make you think differently about size and growth.
Darren says, “Early in my career, I built a firm that looked successful on paper. But behind the scenes, I was exhausted, overextended, and realizing I didn’t own my business—it owned me. Over time, I discovered a better way: clarity in what we do, who we serve, and how we deliver. That shift not only transformed my firm, it reshaped my life.”
Indeed, the math of advisory can work. 50 clients netting $20,000 each is easier than 500 clients netting $2,000 each or 2,000 clients netting $500 each. I’m still a fan of relational practices, not transactional practices. Early on, PE was always transactional, but a few PE groups and firms have discovered that relational PE can be profitable PE investments.
What are the benefits of taking PE investment?
- Access to Capital: PE firms provide substantial capital, enabling CPA firms to invest in new technology, infrastructure, and acquisitions
- Higher Financial Rewards: PE-backed firms often see increased financial incentives for partners and key leaders, with opportunities for liquidity events and higher returns
- Corporate Governance: PE firms can help shift CPA firms towards a more corporate governance model, allowing for quicker decision-making and strategic changes
What are the downsides of PE Investment?
- Short-Term Focus: PE firms typically aim for a high return on investment within a few years, which can lead to a focus on short-term gains over long-term stability
- Loss of Control: Accepting PE investment often means giving up a significant portion of ownership and control, which can be challenging for firms used to a partnership model
- Potential Conflicts: The goals of PE investors may not always align with the firm’s culture or long-term vision, leading to potential conflicts
Who are a few of the players (not all are included!)?
- TowerBrook Capital Partners – Invested in EisnerAmper
- New Mountain Capital – Acquired a stake in Citrin Cooperman, Wipfli
- Parthenon Capital – Invested in Cherry Bekaert
- Hellman & Friedman – Partnered with Baker Tilly
- Valeas Capital Partners – Also invested in Baker Tilly
- CDPQ – Invested in Grant Thornton
- OA Private Capital – Another investor in Grant Thornton
- HGGC – Invested in Grant Thornton
- TA Associates – Invested in Armanino LLP
- Francisco Partners – Invested in BPM LLP
- Genstar Capital – Invested in Apex Group
- Warburg Pincus – Invested in Wipfli LLP
- Advent International – Invested in Crowe LLP
- Bain Capital – Invested in RSM US LLP
- DFW Capital Partners – Sorren (13 BDO Firms)
- Ascend – 11+ firms
- Lightspeed Ventures – Modus (audit focus)
Is there a consolidation wave?
- 53 PE-related transactions since 2020; 24 in 2024 alone – Reuters (Apr 2025)
- PE-backed $7B merger in 2025 created the 6th-largest U.S. firm between Baker Tilly and Moss Adams
- 15 of the Top 30 U.S. firms already PE-owned and over half projected by 2025 – CPA Trendlines (July 2025) (8 not as of this article date in bold according to PE Watch)
| Rank | Firm | Revenue |
| 1 | Deloitte | $33,045,000,000 |
| 2 | PwC | $24,335,000,000 |
| 3 | Ernst & Young | $24,146,000,000 |
| 4 | KPMG LLP | $15,200,000,000 |
| 5 | RSM US LLP | $4,034,941,000 |
| 6 | Baker Tilly/Moss Adams | $3,360,900,000 |
| 7 | CBIZ | $2,940,000,000 |
| 8 | BDO USA (ESOP) | $2,885,000,000 |
| 9 | Grant Thornton | $2,365,915,000 |
| 10 | FORVIS | $2,240,523,000 |
| 11 | CLA | $2,045,000,000 |
| 12 | Crowe LLP | $1,277,262,000 |
| 13 | Plante Moran | $1,195,767,000 |
| 14 | CohnReznick | $1,150,246,272 |
| 15 | Eisner Advisory Group | $1,023,406,247 |
| 16 | Citrin Cooperman | $871,000,000 |
| 17 | Eide Bailly LLP | $761,236,000 |
| 18 | Andersen | $731,500,000 |
| 19 | Armanino Advisory | $697,371,918 |
| 20 | Cherry Bekaert | $658,000,000 |
| 21 | Wipfli LLP | $612,200,000 |
| 22 | WithumSmith+Brown | $610,725,000 |
| 23 | Carr Riggs & Ingram | $506,453,960 |
| 24 | Aprio | $485,340,000 |
| 25 | Sikich LLC | $438,869,029 |
| 26 | PKF O’Connor Davies | $410,000,000 |
| 27 | UHY | $382,500,000 |
| 28 | Weaver | $383,404,098 |
| 29 | Kearney & Co | $288,056,673 |
| 30 | HORNE | $271,461,000 |
So, What Should You Do?
It is you and your partner’s decision. I have routinely said, “Live your life and be happy.” An associate routinely says, “You be you.” I will speak up and disengage when people choose to do illegal actions. While I have my moral compass, a “north star,” if you will, I will always choose to do the right thing as I understand it. As professionals, we are often presented with the choice between one or more good things, and sometimes with only bad choices, where we must make the best choice. Consider the pros and cons of any transaction, PE or not.
The phrase “To be or not to be” is a famous soliloquy from William Shakespeare’s play “Hamlet”, specifically from Act III, Scene 1. In this soliloquy, Hamlet contemplates the nature of existence and the idea of life and death, questioning whether it is nobler to endure life’s hardships or to take action against them. This line has become one of the most quoted and recognized phrases in English literature, symbolizing the struggle with existential dilemmas. The full text of the soliloquy explores themes of mortality, suffering, and the human condition.
My sister loved Shakespeare, became a life-long English teacher, and was inducted into the Kansas Teachers Hall of Fame. She helped me with writing and frequently edited my material before AI editing became a thing. When I contemplate the right thing to do, I recall my education and training in great works of literature, social science, physical science, accounting, and mathematics. I know the latest internet search or social media stream won’t be helpful at all compared to quiet reflection when I have a decision to make.
One of the benefits of being in the accounting profession is helping others be successful by managing finances wisely. Involvement in community leadership is another. Furthermore, we are typically blessed with above-average incomes and opportunities to see places and meet people that would typically not be possible in other jobs. While some strive for “one more dollar than I have,” others are pretty satisfied with their current income, the income stability, and the flexible lifestyle of their partners and team members.
Taking a PE transaction can be life-changing for you and those you leave behind. What is in the best interest of your clients, your team, your firm, and yourself? Only you know your situation. You may have a close friend and confidant who doesn’t have a conflict of interest, a financial interest, and will listen to your logic without telling you what to do. Independence is a real thing, and as accounting professionals, we understand that better than many.
Taking a transaction, PE or not, is no small decision that will have many pros and cons. What is right for you? Based on your values and needs, that is for you to decide.
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