Julia Chirkova
The accounting profession is in the throes of a significant transformation, marked by a relentless wave of mergers and acquisitions driven by private equity (PE) investment. Headlines are dominated by the sale of established CPA firms to PE-backed platforms, signaling a profound shift in the industry’s landscape. Recent research from the International Federation of Accountants (IFAC) underscores the magnitude of this trend, revealing that fewer than 200 direct PE investments in accounting firms have catalyzed nearly 900 subsequent transactions. This consolidation rate has quadrupled since 2021, as newly capitalized platforms aggressively pursue smaller firms to expand their market share.
This phenomenon is not confined to any single region. The New Jersey Society of CPAs, for instance, reported over 50 notable PE transactions in the accounting sector between 2020 and mid-2025 alone. These deals injected approximately $29 billion of outside capital into the industry, illustrating the substantial financial firepower being deployed. While these figures capture significant attention, a less discussed but equally important aspect of this market dynamic is the growing number of firms that, despite facing similar market pressures and opportunities, have intentionally chosen to remain independent.
The Strategic Calculation: Weighing PE Investment Against Independence
The allure of private equity investment is undeniable for many CPA firms. PE sponsors offer a crucial injection of capital, enabling firms to accelerate investments in critical areas such as technology adoption, talent acquisition and retention, and essential infrastructure upgrades. These are investments that might take years for smaller, organically growing firms to achieve independently. Indeed, many PE-backed entities are demonstrably serving their clients effectively.
However, the underlying model of private equity is fundamentally built on a defined investment horizon. Traditional PE investments typically operate within a specific timeframe, often measured in years rather than decades, before seeking a profitable exit. This can create a divergence in strategic priorities between the PE sponsor, focused on maximizing returns within their investment window, and the long-term interests of the accounting firm and its established client relationships.
A pertinent illustration of this investment cycle is the recent ownership change of Citrin Cooperman. In January 2025, the firm transitioned from its investment by New Mountain Capital to a new partnership with Blackstone. Such shifts in ownership can usher in new expectations, altered investment priorities, and, in some instances, changes in leadership. These developments can occur even as client relationships, often built over decades, remain constant.
In contrast, independent CPA firms retain complete control over their strategic decisions. This autonomy extends to crucial areas such as pricing strategies, capital allocation for new initiatives, hiring and talent management, the development and offering of new service lines, and the overarching long-term vision of the firm. These decisions are made by partners who possess an intimate understanding of their clients’ businesses, the firm’s personnel, and the communities they serve, rather than being swayed by the return expectations of an external investor.
The Demands of Independence: Proactive Reinvestment and Succession Planning
Maintaining independence in today’s competitive market is not a passive choice; it necessitates active and consistent reinvestment. Firms that opt for this path must cultivate a strong internal discipline for allocating resources toward critical growth areas. This includes ongoing investments in cutting-edge technology, the strategic integration of artificial intelligence (AI) solutions, robust talent development programs, the expansion into new and complementary service lines, and, where strategically advantageous, opportunistic acquisitions. The absence of an outside investor dictating these calls requires a proactive and self-driven approach to innovation and growth.
This disciplined approach extends with equal force to succession planning. For firms committed to remaining independent, the preparation for future leadership must commence years in advance. Without a clear roadmap for identifying and nurturing future leaders, securing appropriate financing for partner transitions, and establishing a workable partner-transition model, a firm’s strategic options can become significantly constrained as senior partners approach retirement. A well-executed succession plan is not merely a transitional event but a cornerstone of long-term organizational viability and independence.
The Invaluable Asset of Continuity: A Client-Centric Perspective
The benefits of an independent, continuity-focused model are particularly evident across firms of all sizes. Client loyalty is a slow-burning asset, cultivated over years of consistent interaction with the same trusted advisor – an individual who understands not only their financial statements but also their historical context and evolving business needs. This deep-seated understanding forms the bedrock of enduring client relationships.
This continuity, while perhaps less tangible than financial multiples or deal terms, is often the most highly valued attribute by clients. For a family business navigating a generational leadership transition or a nonprofit organization grappling with shifts in its funding landscape, the assurance of a consistent, reliable relationship can be paramount amidst surrounding change. In essence, they are not just purchasing accounting services; they are investing in stability and an unwavering point of contact.
Essential Questions for Firm Leaders: Defining the Future Ownership Structure
As firm leaders contemplate their ownership structure, the imperative to access capital must be balanced against a broader strategic vision. The fundamental question is not merely about immediate financial gains but about the kind of organization partners aspire to build over the next decade or two, and crucially, who will be empowered to make the decisions that shape that future.
A platform strategy, driven by PE investment, may indeed be the optimal choice for firms focused on achieving significant scale within specific service lines or competing for large, complex engagements where substantial resources are a prerequisite. Conversely, independence emerges as the more compelling path for firms whose core value proposition is intrinsically linked to the enduring client relationship itself – firms where clients choose them precisely because of the personal connection and the assurance that a familiar, knowledgeable professional will answer their call.
Ultimately, the appropriate ownership structure is intrinsically tied to what a firm seeks to preserve, cultivate, and deliver to its clientele. Firm leaders are urged to align their ownership decisions with the foundational reasons clients initially sought their services, rather than passively accepting a sale simply because market trends appear to be moving in that direction.
The Evolving Landscape: Independence as a Viable Strategic Choice
The consolidation trend within the accounting profession shows no signs of abating. However, independence remains a profoundly viable and strategic choice. The coexistence of both PE-backed platforms and independent firms is likely to persist, each catering to distinct client needs and market segments.
The advantage for firm leaders lies in making this crucial decision with clear intention and a well-defined understanding of what they are committed to protecting and what they might be trading away. To treat a sale as an inevitability solely due to escalating deal volumes would be to abdicate strategic agency.
Both the PE-backed model and the independent path can lead to successful outcomes. The critical determinant of success lies in whether firm leaders approach this decision deliberately, with a comprehensive understanding of their firm’s unique strengths, client relationships, and long-term aspirations, rather than allowing the prevailing market momentum to dictate their future. The choice, when made with foresight and purpose, will ultimately define the firm’s enduring legacy and its ability to serve its clients effectively in the years to come.
About the Author: Jim Haefele, CPA, ABV, CVA, CFF, MAFF, serves as the Leading Partner at hfco, an independent advisory and accounting firm dedicated to serving privately held organizations, nonprofits, and family-owned businesses across New Jersey, Pennsylvania, New York, Delaware, Maryland, and North Carolina. His expertise encompasses tax strategy, business valuation, succession planning, and mergers and acquisitions. More information is available at hfco.com.
