The Good and Bad Consequences of PE

Over the past few years, Private Equity (PE) and other non-traditional CPA firm owners have become increasingly active in the accounting industry. While PE firms tend to dominate the headlines, non-traditional owners of CPA firms are emerging as headline-makers, as well.

The strong level of activity by these well-capitalized investors has led to significant consequences—some intended, others unexpected. While many view the outcomes as positive, others find them concerning. Regardless of perspective, one thing is clear: the impact is broad and powerful.

We’ve seen firsthand how these new sources of capital are transforming deal dynamics, firm culture, and strategic decision-making. While much of the new investment has been driven by PE, and our findings are focused accordingly, many of the trends may also apply to other types of new ownership.

Here are 10 significant results we’re seeing across the profession.

1) Increased Accountability for Sellers: Firm owners who sell to PE are held to a higher standard of revenue growth and profit enhancement, with increased scrutiny on performance metrics post-transaction.

2) Liquidity and Incentive: Entrepreneurial sellers often welcome the opportunity to take money off the table upfront while continuing to participate in future firm appreciation through equity rollovers.

3) Talent Attrition Among Rising Partners: Younger partners and those in training are increasingly choosing to leave, either just before the deal closes or within the first year, citing uncertainty around the more corporate direction.

4) Senior Staff Resistance to Scale: Long-tenured staff often struggle to see their place in large-scale, investor-owned firms, which frequently leads to departures.

5) Mega Investor Advantage: Large investors are succeeding in disrupting the market by escalating scale, diversifying holdings, and implementing corporate methodology. Local firms are often being targeted to fuel further growth, but in many cases, the fit is not there.

6) Increased Offshoring: To meet aggressive growth mandates and margin expectations, many PE-backed firms are accelerating the use of offshoring and third-party service providers. In response, new businesses are emerging to meet this demand, offering additional options for other firms to use as well.

7) Rapid Deployment of AI and Automation: With greater access to capital and a focus on efficiency, PE-backed firms are fueling rapid implementation of AI tools. This is forcing others in the market to keep pace or risk falling behind.

8) Client Flight to Local Firms: Some clients of newly consolidated firms are not advocates of a corporate, ultra-large platform and are exploring alternatives. This shift creates organic growth opportunities for independent and boutique CPA firms.

9) Increased Focus on Advisory Services: As PE investors introduce new capabilities and expertise, firms are leaning more heavily into high-margin advisory services, fueling a more competitive landscape for traditional consulting and niche practices.

10) Succession Conversations Initiated by Clients: Many “A-level” clients of local firms are proactively inquiring about succession plans, seeking assurance that their trusted advisor relationship won’t be upended by an abrupt outside acquisition.

Ultimately, how these developments are perceived depends largely on your vantage point, but there’s no doubt the effects are felt at every level of the profession. The smart move is to turn disruption into advantage.

We’ll continue to monitor these shifts and share our insights along the way. We also welcome you to share your own insights, experiences, and perspectives with us. Use this summer as an opportunity to sharpen your market intelligence, strengthen your positioning, and prepare for what’s next.