Revolutionizing CPA Firms with Private Equity

Private equity is making bold moves, and the accounting world is next on its radar. With heavyweight investments in CPA firms like PKF O’Connor Davies (PKFOD) and Carr, Riggs & Ingram (CRI), it’s clear private equity is gearing up to reshape the profession. Add to this the remarkable bid for Grant Thornton UK (GT UK) by Cinven, a buyout group that outpaced competitors with an offer nearly double GT’s revenue. The UK firm, known for its £654 million fiscal 2023 revenue, reportedly attracted bids reaching £1.3 billion.  GT’s leadership cited the move as a strategic play to fuel “accelerated growth.” Yet, the deal isn’t sealed until GT’s partners sign off. With Apollo CEO Marc Rowan rumored to be in line for Treasury Secretary and private equity eyeing a $24 trillion market opportunity, these developments hint at a seismic shift in accounting’s future. What’s in it for private equity? And how will CPA firms adapt to this influx of capital and ambition? Let’s unpack the story.

A New Era of Professional Services?

When you consider the $24 trillion opportunity in the professional services sector, the investment in CPA firms looks like just the beginning. If private equity starts backing more firms in accounting, law, and consulting, we could see a broad industry transformation, with PE-backed firms setting a new standard for technology, service scope, and market reach. CPA firms may start looking a lot more like full-service financial consultants than traditional accountants—and that could mean better, faster, and more personalized services for clients across the board.

Will Private Equity Revolutionize CPA Firms Like Crypto and AI?

Is private equity in CPA firms just another overhyped trend, or could it become the next big force, like crypto or AI, that started as a myth and turned into a game-changer? The question is on everyone's mind as private equity increasingly targets accounting firms. Why this sudden chemistry between private equity and CPAs? Simple: private equity thrives on underutilized assets, and CPA firms are a perfect example—long seen as steady and conservative, they’ve been sitting on valuable client relationships without the resources to expand into lucrative new areas. Think advanced analytics, strategic advisory, and AI-powered audits. That’s where private equity steps in, offering capital to push these firms into the digital age, setting them up to deliver services that go far beyond taxes and audits. For private equity, this is more than just an investment; it’s a calculated play into a high-demand field with low competition.

Marc Rowan for Treasury Secretary? 

If Marc Rowan, the CEO of Apollo, takes on the role of Treasury Secretary, it could change the private equity landscape in ways that benefit these CPA partnerships. Rowan is known for his deal-making skills and his ability to spot potential in unconventional places. His presence in a high-profile financial position could make the regulatory environment more PE-friendly, opening the door for private equity-backed CPA firms to expand further and faster. Plus, it signals to the market that private equity in professional services isn’t just a trend, it could be the new normal. And for CPA firms, this could mean easier access to capital, bigger client bases, and a more favorable environment to grow their service offerings.

What’s in It for CPA Firms?

Sure, the cash infusion is nice, but for CPA firms, this partnership is more than a payday. With private equity backing, firms like CBIZ and RSM (UK and USA) have merged to capitalize on these investments, enabling them to expand from basic compliance to full-spectrum financial services that compete with top consulting firms. 

This transformation gives CPA firms access to advanced technology, allowing them to offer everything from routine accounting to complex corporate finance. Not only does this open new revenue streams, but it also fosters career growth, making firms more attractive to top talent eager to work with cutting-edge tools and deliver higher-value services. By offering expanded service offerings and improving client relationships, CPA firms can become one-stop shops for their clients. The impact on the industry is clear: private equity boosts competitiveness, raises service standards, and drives innovation across the board.

The Next Frontier for CPAs

It’s still early days, but things are looking good. For CPA firms, private equity means growth, new tech, and a chance to compete like never before. For private equity, it’s a way into a trusted field with tons of untapped potential. Together, they’re shaking up what it means to be an accountant, adding some serious innovation to a profession that’s been around forever. As this evolves, one thing’s clear: the private equity-CPA team-up is just getting started, and it’s going to be a fun ride for everyone.