The accounting profession has entered a transformative era of unprecedented consolidation and an influx of private equity (PE) capital. Understanding where mergers and acquisitions and PE-backed transactions are heading is essential to evaluating your strategic options.
The public accounting profession has entered a transformative era – one defined by unprecedented consolidation, shifting business models, and an influx of private equity (PE) capital. What began as a slow trickle of deals a decade ago has accelerated into a structural realignment across the U.S. accounting marketplace. The forces shaping this evolution are not short-lived; they represent a fundamental shift in how firms approach growth, succession, technology adoption, and competitive positioning.
Understanding where mergers and acquisitions (M&A) and PE-backed transactions are heading is essential for firm leaders evaluating their strategic options. The next five years will bring both significant opportunity and heightened complexity.
M&A as a Strategic Necessity
Historically, firm combination activity in public accounting was driven by succession planning and local market consolidation. Today, motivations are far broader:
- Scalability of advisory services – Firms need broader capabilities and deeper specialization to compete in high-growth advisory sectors such as outsourced accounting, digital transformation, cybersecurity, and transaction advisory.
- Technology and infrastructure investments – Automating audit, enhancing tax workflows, and deploying AI-powered tools are no longer optional. Large investments are required, but they can be more cost-effectively spread across a scaled platform.
- Talent shortages – With fewer accounting graduates and rising competition for experienced professionals, M&A offers a path to secure talent and leadership depth.
- Client demand for multiservice solutions – Middle-market and high-growth companies expect their advisers to deliver specialized expertise, industry depth, and seamless support across geographies.
As a result, M&A is increasingly a proactive strategy to accelerate transformation and is no longer simply a reactive succession solution.
The Rise of Private Equity in Accounting
PE investment has emerged as one of the most significant developments in the profession’s history. PE firms are attracted to accounting for several reasons:
- Recurring revenue and recurring client relationships
- Strong cash flow characteristics
- Highly fragmented marketplace
- Opportunities to modernize operations and unlock efficiencies
- Growth potential in premium advisory services
The first major PE-backed platform deals began in 2019-2021. Since then, multiple regional and national firms have entered similar arrangements. This trend is expected to continue, especially with higher-interest-rate environments pushing PE to seek resilient, cash-generating industries.
But PE involvement is more than just a funding source. It has accelerated the following attributes within firms:
- Professionalized operations
- KPI and performance-driven management
- Partner accountability and leadership transitions
- Rapid acquisition pipelines
- Digital and data investment priorities
As buyers, PE platforms have created a new competitive dynamic. They often move faster, pay higher multiples, and bring a sophisticated integration playbook.
The Next Five Years
The pace of consolidation surely will accelerate, but it also will evolve. Below are five new aspects you should expect:
- More “Mega Platforms,” but also niche rollups. Large PE-backed networks will continue to grow aggressively, expanding into new locations and service lines. At the same time, specialty-focused consolidators (e.g., CAS, SALT, R&D tax, forensic services) will emerge.
- Higher selectivity in deal quality. After early fast-growth phases, PE firms will become more disciplined in deal underwriting:
—Strong advisory revenue mix will be preferred over compliance volume.
—Firms with clear industry specialization will command premium valuations.
—Cultural fit and leadership depth will increasingly influence transaction success. - Data and AI will reshape valuation and integration. Firms that are able to deliver meaningful analytics, pricing, high client realizations and firm profitability, client segmentation, and capacity planning will stand out as attractive, scalable investments. AI adoption will reduce cost structures, make audits and tax prep more efficient, and shift the value proposition heavily toward advisory services. PE-backed firms will likely lead the innovation curve due to capital access.
- New partner-level compensation and ownership models. Traditional equity partnership will continue to shift toward:
—Corporate structures with centralized leadership
—Performance-based incentives tied to KPIs
—Earn-outs tied to practice profitability and retention
This model appeals to growth-minded younger leaders, but more conservative partners may resist the cultural change. - Competitive divide between platform firms and independents. Remaining independent will continue to be a strong and viable strategy, but only for firms that actively reinvent their business model. Those unwilling or unable to modernize may struggle to keep pace with technological expectations, compensation competition, and brand visibility.
Risks to Be Managed
While PE creates tremendous opportunity, the model comes with real risks that must be clearly understood. I wrote a blog on this previously, but here is an overview of some of the risks:
- Pressure for faster returns – PE firms aim to drive value creation over defined horizons. Aggressive growth mandates may strain culture or dilute quality.
- Loss of autonomy – Partners who are accustomed to operating independently may find corporate governance challenging.
- Client relationship concerns – Clients may worry about fee increases or reduced personal attention if firm culture becomes too commercial.
- Retention risk – Younger staff may welcome the new structure, but legacy partners and managers may not.
The most successful PE-backed firms will strike the right balance: finance-driven discipline without sacrificing client-centric values and professional integrity.
What Firm Leaders Should Do Now
Whether a firm is actively exploring a deal or simply preparing for the future, the following strategic steps are essential:
- Assess readiness – Evaluate service mix, leadership pipeline, client concentration risk, and financial performance benchmarks.
- Build a differentiated growth strategy – Specialization, whether that be in industry verticals or technical expertise, is becoming a major valuation driver.
- Enhance governance and operational transparency – A strong management structure, reliable financial reporting, and scalable processes are critical for deal success.
- Modernize technology and talent platforms – Automating low-margin work and investing in team engagement are foundational for long-term competitiveness.
- Develop a clear succession roadmap – Transactions are easier when leadership transition plans are already in place and communicated.
Prepared firms attract better opportunities, and as a result command stronger negotiating positions.
The Bottom Line
The future of public accounting will not resemble its past. M&A and PE investment are reshaping the profession at every level, from the services firms provide, to how leadership is structured, to how growth is fueled. The firms that thrive will be those that can do the following:
- Adapt to the changing economics of the profession.
- Embrace specialized, advisory-driven strategies.
- Invest in innovation, talent, and governance.
- View consolidation as a strategic tool, not a last-resort decision.
PE isn’t a fit for every firm, but its presence will continue to raise expectations for performance, client experience, and operational discipline across the entire industry.
In this new landscape, strategic clarity is essential. The firms that proactively define their path forward – whether independent, merged, or PE-backed – will be positioned to lead the next generation of the profession.
Joseph A. Tarasco is CEO and senior consultant with Accountants Advisory Group LLC in Bradenton, Fla. He can be reached at joe@accountantsadvisory.com.
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Statements of fact and opinion are the author's responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.
