Private equity investments and merger activity have reshaped the accounting landscape. Between 2020 and mid‑2025, over 53 notable private equity transactions targeted U.S. CPA and accounting firms, bringing nearly $29 billion of capital into the sector. In 2024 alone, there were 24 such deals, with approximately one‑third of the top 30 firms now having private‑equity backing. Baker Tilly’s combined $7 billion merger with Moss Adams, backed by Hellman & Friedman and Valeas Capital, has created the sixth‑largest U.S. accounting firm, targeting $6 billion in revenue by 2030. Recently, Wipfli announced its intent to sell a 40% stake to New Mountain Capital, the same firm that sold its stake in Citrin Cooperman and bought a 60% stake in Grant Thornton.
PE firms are drawn to accounting’s predictability, including stable cash flows, recurring services, and scalability through technology and niche specialization. Yet, simply being an accounting firm isn’t enough; firms must actively demonstrate readiness: robust financials, clean governance, tech maturity, leadership depth, and niche clarity. This article outlines a step‑by‑step guide for small to mid‑sized accounting firms to build credibility, sharpen their narrative, and not only make themselves compelling targets for PE or acquisition, but better run firms.
Recent trends show PE activity holding firm despite macroeconomic pressures. In Q2 2025, PE deal value in the U.S. climbed to roughly $233 billion across 2,159 transactions, with middle‑market buyouts taking a central role. Many buyers in the accounting space are now prioritizing add‑on acquisitions.
Within accounting, this translates to:
Successful examples:
Implication for your firm: PE investment isn’t for later-stage or large firms only. Mid‑size firms in the $10 million–$100 million revenue range with growth momentum are fair targets. In fact, we are seeing private equity going downstream and rolling up firms in the $1–5 million revenue range. Firms with robust niche practices are extremely attractive.
PE and strategic buyers look for clear differentiators. Frame your firm’s story around:
PE investors prize firms that go beyond general accounting—those that offer high‑growth, high‑value niches. This includes areas like AI‑powered forensic audits, ESG compliance advisory, sophisticated tax strategy, or virtual CFO services. As noted by Thomson Reuters, firms with niche focus often secure higher multiples because they can resist commoditization and command better prices.
Sticky, subscription‑style revenue, such as monthly advisory retainers or outsourced finance functions, offers ideal predictability. This consistency not only reduces risk but also makes valuation modeling smooth and attractive to PE buyers.
Rather than serving as internal testbeds, PE-backed firms use technology to deliver services at scale. Cloud platforms, automated workflows, analytics dashboards, and AI tools help improve margins, streamline delivery, and reduce dependence on partner hours. These efficiencies justify higher valuations.
Investors look for firms with clear growth momentum including year-over-year revenue increases, margin expansions, and proof points such as successful integration of bolt-on firms. PitchBook data indicates that 65% of private equity transactions are driven by add-on acquisition strategies. Niche practices and specialized services are extremely attractive.
A strong leadership bench—CEO, CFO, COO, Chief Growth Officer (CGO), etc.—signals that the firm can scale and thrive through complexities. According to The Wall Street Journal, many PE-backed firms now include a CGO to accelerate visibility and inorganic growth.
Becoming “deal ready” isn’t something you can do in a weekend, but it also doesn’t require reinventing your entire firm. Being deal-ready means knowing what buyers are seeking and tightening the areas that create confidence.
That starts with financial clarity. One would think that accounting firms would have clean financials, but that is not always the case. Firms should maintain at least two years of clean financials. Forecasts should extend three to five years and show not just revenue targets, but margin growth, headcount planning, and assumptions about client expansion.
Operationally, governance matters. If you haven’t already, formalize your partner agreement, define roles clearly, and ensure there’s a mechanism for succession, buyouts, or equity changes. Investors want to understand how decisions are made, who has control, and what happens when key individuals leave.
Client concentration is another concern. If a few clients represent more than 20% of revenue, be prepared to explain your plan for diversification. It’s not a deal breaker, but you need a strategy.
Finally, think about your team. Firms that demonstrate leadership continuity and depth, especially a plan for how the next generation is being developed, signals long-term value.
If your firm is seriously considering outside investment, it’s essential to understand how private equity is able to participate in the accounting profession, because they can’t legally own CPA firms outright.
Enter the Alternative Practice Structure (APS).
While some states have allowed limited non-CPA ownership—usually up to a certain minority threshold like 49%—these non-CPA owners typically cannot have control over the firm, must not outnumber CPA owners, and are prohibited from being involved in the delivery or supervision of attest services. Most importantly, non-CPA ownership is not permitted if it would impair the firm’s independence or violate state law or AICPA rules.
With an alternative practice structure, the two entities operate in tandem:
The CPA firm and the management company typically share branding and office space, and operate under a management services agreement (MSA). While legally separate, in practice they feel like one firm to clients.
This structure satisfies both ethical and legal requirements while still allowing investors to generate returns. It also allows firms to preserve the integrity of their audit function while leveraging outside capital to build a high-growth consulting business with outside capital.
For firm leaders, understanding APS is critical. It affects how you communicate with clients, how profits flow, how staff are assigned, and even how leadership is structured. Firms exploring private equity investment should seek legal guidance early to understand the implications and requirements of setting up an APS.
Private equity isn’t just a trend—it’s reshaping the trajectory of the accounting profession. For firms that are well-prepared, the opportunities are real: capital to grow, talent to scale, systems to modernize, and even a path to transition ownership.
Being ‘deal ready’ also doesn’t have to mean selling to private equity. Being ‘deal ready’ is just good for your firm. Taking the action steps needed to be ‘deal ready’ puts your firm in a stronger, more focused, and more operationally efficient position.
The firms that succeed in this environment won’t necessarily be the largest, but they will be the most focused, most targeted, and the best storytellers of where they’re going and why it matters.
If you believe your firm has room to grow, a story worth telling, and leadership ready for the next chapter, now is the time to prepare.
Hollinden supports accounting and advisory firms preparing for private equity investment or acquisition. We help with strategy, financial readiness, leadership alignment, communications, and technology planning—so your firm can compete with confidence. If you're exploring growth capital or an exit strategy, let’s get started. Explore Hollinden’s Services for Accounting Firms.
If your firm has $10 million to $100 million in annual revenue, strong recurring revenue, a defined niche, and a leadership team beyond the founding partners, you’re likely in the range that attracts PE interest. Growth trajectory and scalability matter more than size alone.
Not at all. Investors don’t expect perfection, they expect clarity, transparency, and a plan. If you can tell a confident story about your operations, growth strategy, and leadership structure, you’ll be ahead of most firms that come to the table.
APS is a legal structure that allows private equity to invest in accounting firms without violating CPA ownership rules. Under this model, the CPA firm retains control over attest services, while the PE-backed management company operates the non-attest side. This structure preserves regulatory independence and enables growth across service lines.
It can, but it doesn’t have to. Firms that prepare thoughtfully, retain strong leadership, and articulate their values are more likely to protect their culture post-investment. The key is negotiating terms that preserve your identity while embracing the tools, capital, and talent that PE brings to the table.
Absolutely. PE isn’t only for succession planning. Many firms use it to fuel expansion, build infrastructure, attract talent, or transition from founder-led to professionally managed. If your firm is growth-minded, PE may be a fit—even if an exit isn’t your goal today.