Private Equity Is Changing the CPA Profession. The Bigger Question Is: Are You Ready?

I recently attended a webinar hosted by Accounting Today on PE investment in the profession.  Based on what I learned and from my independent research, I have decided this is too important a topic not to discuss here. 

I am neither an advocate nor a naysayer when it comes to this topic. That said, I will present the pros and cons to the best of my ability, saving my personal opinion for last. (Hint: This is not about PE investment).

Today’s Landscape

If you’re a CEO or managing partner of a CPA firm today, you’re leading through one of the most significant structural changes our profession has experienced in decades.

Whether you welcome it or worry about it, private equity has become impossible to ignore. Not too long ago, discussions about private equity seemed limited to the largest national firms.

Today, they’re taking place in firms of every size. Some firms have already accepted outside investment. Others are actively exploring it. Many are wondering whether remaining independent is still a viable long-term strategy.

The conversation isn’t slowing down. It’s accelerating.

As of this year, nearly half of the Top 30 CPA firms have adopted some form of private equity investment or an Alternative Practice Structure (APS), and industry observers expect the pace of transactions to continue. At the same time, firms are investing heavily in artificial intelligence, cybersecurity, advisory services, and acquisitions to remain competitive in an increasingly complex marketplace.

It would be easy to conclude that private equity is becoming the future of the profession.

I Don’t Believe

I don’t believe that’s the right conclusion.

Instead, I believe private equity is forcing every managing partner to answer a much more important question:

“What kind of firm do I want to build over the next five to ten years?”

Whether your answer is yes, no, or not yet, the decision isn’t really about capital. It’s about leadership.

The Recent Past vs Now

For years, CPA firms enjoyed a business model that was remarkably stable. Growth came through referrals, mergers, new partners, and steady client relationships.

Succession happened internally. Technology evolved at a manageable pace. Most firms could plan several years ahead with a reasonable degree of confidence.

Today, that world no longer exists. Today, artificial intelligence is reshaping client expectations, advisory services are growing faster than compliance work, talent remains difficult to recruit and even harder to retain (still), and clients expect more strategic insight and faster turnaround than ever before.

Succession has become more challenging as many younger professionals question the traditional partnership model.

What Firms Need

Against this backdrop, private equity has entered the profession with something many firms need: capital.

✅ Capital to acquire other firms.

✅  Capital to build advisory practices.

✅ Capital to invest in AI.

✅  Capital to modernize technology.

✅  Capital to recruit talent.

✅  Capital to recruit talent.

✅   Capital to accelerate growth.

For many firms, that’s incredibly attractive. And frankly, for some firms, it may be exactly the right decision.

But here’s what concerns me. Too many conversations begin with the money, and very few begin with the vision.

I’ve spent much of my career helping leaders navigate change, and one lesson continues to prove itself over and over again: Money magnifies strategy; it doesn’t create one.

If your leadership team already shares a compelling vision, has a healthy culture, and is committed to serving clients exceptionally well, additional capital can accelerate everything you’re already doing well.

If your firm lacks alignment, struggles with accountability, or hasn’t clearly defined where it’s headed, more capital simply allows you to move faster in the wrong direction.

What I Believe

That’s why I don’t believe the first question should be, “Should we take private equity?” I believe the first question should be, “What are we trying to become?”

Those are two very different conversations. One focuses on financing, the other on purpose.

Private equity also tends to expose something that many firms have avoided discussing for years. What business are you really in?

Are you primarily an audit and tax firm? Are you becoming a strategic advisory firm that also provides compliance services?

Let’s be honest here.  Almost every firm says they provide advisory services. I challenge you and your leadership to take an honest look at your culture and the strengths of your team. Can you honestly say you and the team are providing forward-looking, proactive, and best-of-class advisory, or is it really just a hope, or worse, lip service?

Those are different business models that require different talent strategies, different technology investments, different leadership capabilities, and different cultures.

The firms that seem to be thriving today—whether PE-backed or proudly independent—have already answered those questions.

They’re not waiting for the market to tell them who they should become. They’re deciding for themselves. That’s leadership.

Growth vs Standing Still

I also think it’s important to recognize that remaining independent isn’t the same as standing still.

Some of the strongest independent firms I’ve met are investing aggressively in AI, expanding advisory services, strengthening leadership development, and creating remarkable client experiences without taking outside capital.

Others have concluded that partnering with private equity gives them the resources to accelerate a strategy they had already defined.

Both approaches can work. Both can fail. The difference isn’t ownership.

The difference is your firm’s ability to execute on strategies, its culture, the level of trust inherent in your firm, and its leadership. 

The Leadership Trap

As leaders, we often fall into the trap of believing that external solutions will solve internal challenges.

Investing in the next newest technology will save the day. A new compensation plan will attract the right employees and future leaders.

Growth will solve all of our problems, whether via a merger, a new office, or private equity investment.

Sometimes those decisions absolutely create value. But none of them replace the daily work of leading people.

What Your People Need

Your people still need clarity. They still need purpose. They still need to trust where the firm is headed. They still need leaders who communicate consistently during uncertainty.

No amount of outside capital changes those fundamentals. In fact, periods of rapid growth often make them even more important, and if they currently are flawed, problems will only be magnified.

Think About the Future of Your Firm

As you think about the future of your firm, I would encourage you to resist the temptation to frame the conversation around private equity alone.

Instead, ask yourself a few different questions:

🟢  What kind of culture do you want to protect?

🟢  What capabilities will your clients expect five years from now?

🟢  Where will AI create the greatest opportunities?

🟢  What investments will be required to remain competitive?

🟢  What leadership capabilities will your partners need?

Some Final Thoughts

Here is a question I ask nearly all of my clients, before we engage and during our work together:

“If your firm looked exactly the same five years from today, would you be satisfied?

Whether private equity becomes part of your story or not, change certainly will. The firms that thrive won’t necessarily be those with the most capital. They’ll be the ones with the clearest vision.

Capital can accelerate your strategy, but it can never replace your leadership.

That’s why I believe the future of our profession won’t ultimately be determined by private equity.

It will be determined by the leaders who decide what kind of firms they want to build before someone else decides for them.

 Until Next Time!