{"id":205390,"date":"2025-04-25T19:51:47","date_gmt":"2025-04-25T19:51:47","guid":{"rendered":"https:\/\/peraltafinancing.com\/accounting\/private-equity-investments-in-accounting-firms-whats-happening-now\/"},"modified":"2025-04-25T19:51:47","modified_gmt":"2025-04-25T19:51:47","slug":"private-equity-investments-in-accounting-firms-whats-happening-now","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=205390","title":{"rendered":"Private Equity Investments in Accounting Firms: What\u2019s Happening Now?"},"content":{"rendered":"


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The rise of private equity (PE) investments in accounting firms has received a mixed reception from practitioners and regulators alike. Some see it as a strategic approach to capital infusion. Others, meanwhile, remain skeptical of its possible long-term impacts on the profession’s ethical obligations.\u00a0<\/span>\u00a0<\/span><\/p>\n

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The biggest concern so far comes from PE investment\u2019s perceived influence on audit quality. This is despite restructuring efforts to separate audit and attestation services from tax and consulting services, or what\u2019s otherwise known as an <\/span>alternative practice structure (APS)<\/span>. For context, non-CPA firms, such as private equity companies, cannot own audit\/attest firms, which explains the need for an APS.\u00a0<\/span>\u00a0<\/span><\/p>\n

Seeing this trend, the United States Securities and Exchange Commission \u2013 Office of the Chief Accountant (SEC-OCA) <\/span>released a statement<\/span><\/a> containing some critical points to consider when engaging in complex business relationships and firm restructurings.<\/span>\u00a0<\/span><\/p>\n

The Commission explained that the mercurial nature of PE investments \u201ccan create even greater challenges for maintaining auditor independence by the accounting firm after an investment by a third-party or sale of an accounting firm\u2019s business.\u201d<\/span>\u00a0<\/span><\/p>\n

\u201cPrivate equity structures can be complex and can include entities that have varying levels of influence over other entities \u2014 either within their investment portfolio or within the contemplated structure,\u201d stated the Commission.<\/span>\u00a0<\/span><\/p>\n

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[Get your free copy] Level Up Your Investment Strategies: Back Office Accounting Support for Fund Managers<\/a>\u00a0<\/h3>\n

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Given that it\u2019s an emerging trend, it\u2019s still too early to assess the long-term impacts of these high-stake investment activities on the accounting industry as a whole. However, we can see that PE investments are picking up pace \u2014 and investors are not showing any signs of slowing down.<\/span>\u00a0<\/span><\/p>\n

To date, 10 of the Top 30 CPA firms in the U.S. have already received \u201cstrategic growth investment\u201d from various private equity firms<\/span>. Smaller firms are also being tapped, particularly with the growing interest in consolidating multiple accounting firms into a single group to achieve economies of scale.<\/span>\u00a0<\/span><\/p>\n

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The growing private equity interest in accounting firms<\/span><\/strong>\u00a0<\/span><\/h2>\n

In mid-2021, when the United States was still preoccupied with the rising cases of Covid-19’s Delta variant, a separate historic event took place in the accounting industry: EisnerAmper LLP, a global business advisory firm, <\/span>had struck an equity investment deal<\/span> with TowerBrook Capital Partners, an international investment management firm.\u00a0<\/span>\u00a0<\/span><\/p>\n

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The investment in EisnerAmper was the first successful attempt of <\/span>private equity to enter the top 20 CPA firm market<\/span>, with its first attempt in 2006 derailed by the 2008 Great Recession and the 2012 venture not pushing through due to a lack of capital need among accounting firms.<\/span>\u00a0<\/span><\/p>\n

Four years after the first equity deal, we have witnessed accounting firms \u2014 both large and small \u2014 going into the same path. The year 2024 saw the greatest number of investment deals, and even the largest transaction thus far.<\/span>\u00a0<\/span><\/p>\n

Let\u2019s take a look at how this trend progressed year over year.<\/span>\u00a0<\/span><\/p>\n

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PE timeline: 4-year progression of private equity in accounting<\/span><\/strong>\u00a0<\/span><\/h3>\n

The list below outlines the most prominent announcements related to private equity investments that occurred from 2021 up to early 2025.<\/span>\u00a0<\/span><\/p>\n

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2021<\/strong><\/span> <\/span><\/h3>\n