How to Choose an Accounting Firm in the Age of PE Roll-Ups

Choosing an accounting firm today is more complicated than it was five years ago. By 2026, more than half of the 30 largest US accounting firms had sold an ownership stake to a private equity investor, up from none in 2020, and industry deal trackers reported that PE-driven deal volume in accounting rose nearly 70% year over year. That means a firm you hired for its partner-led service and institutional continuity may look, behave, and be governed very differently within 18 months. The right approach is to understand what ownership structure means for you, then ask the questions that reveal whether a firm can actually deliver what you need.

What Should I Look for When Choosing an Accounting Firm?

The foundational criteria have not changed: technical competence, industry experience, appropriate firm size for your complexity, and a team you can communicate with. What has changed is the layer of due diligence you need to add around ownership, independence, and service continuity. In the current market, those factors can determine whether you get consistent, relationship-driven service or find yourself caught in a post-acquisition integration with rotating staff and a new pricing model.

Start with the basics, then go deeper on ownership and quality management before you sign an engagement letter.

Why PE Roll-Ups Change the Calculus

Private equity found accounting firms attractive for the same reasons it has found any fragmented professional-services sector attractive: recurring revenue, low capital intensity, and consolidation upside. By 2026 industry trackers estimated that financial acquirers drove roughly 55% of all accounting firm M&A, up from about 39% a year earlier, with private equity deal volume rising nearly 70% year over year. Those figures are industry estimates from deal trackers, not codified statistics, but the direction is unmistakable. Platforms backed by sponsors including Blackstone, New Mountain Capital, and Hellman & Friedman have completed hundreds of add-on acquisitions since 2021.

What PE ownership actually means structurally

Because AICPA ethics rules, state board regulations, and SEC independence standards require that a firm performing attest work (audits, reviews, and certain compilations) be majority-owned by licensed CPAs, PE-backed platforms use a two-entity structure. The licensed CPA entity performs attestation. A separate management services entity, owned or majority-controlled by the PE sponsor, provides administrative support, technology, billing, and staffing to the attest firm under a shared-services agreement.

This alternative practice structure (APS) is legal, but it creates a relationship in which the attest firm’s compensation practices, partner incentives, and technology decisions are substantially influenced by a non-CPA owner. In December 2025, the AICPA’s Professional Ethics Executive Committee (PEEC) issued an exposure draft proposing significant revisions to APS ethics guidance, seeking public comment on how to address undue-influence and independence threats in these arrangements. The comment period closed April 30, 2026. As of September 2026 no final standard has been adopted: after reviewing the comment letters, PEEC agreed to continue its deliberations at an interim meeting in October 2026 and is weighing whether to issue a second exposure draft. Treat the rules in this area as still evolving.

The practical implication for clients: independence at a PE-backed firm is not necessarily impaired, but it requires more scrutiny. Ask specifically which entity will be your engagement partner, how the attest firm certifies independence from the management services entity, and whether the PE sponsor has investments in any of your competitors, lenders, or other counterparties.

Service continuity and the integration risk window

When two firms merge under a PE platform, there is typically a 6 to 12 month window of integration friction: systems migrating, engagement teams reassigning, billing codes changing, and sometimes partner departures. For you as a client, that can mean higher turnover on your engagement, slower response times, and a learning curve that you end up funding in out-of-scope billing.

That risk is not hypothetical. PE platforms use earnout and retention structures specifically because they know key professionals leave after acquisitions. If you are evaluating a firm that was recently acquired, ask the engagement partner directly: are you subject to an earnout, and what happens to your role if your earnout period ends before our next engagement?

How to Choose an Accounting Firm: A Practical Framework

The questions below are organized by the sequence in which they matter, from threshold qualification through team-level fit.

1. Confirm technical qualification and independence

Before evaluating service quality, confirm the firm can legally and ethically serve you.

• Is the firm registered with the PCAOB if you need a public-company audit, or a member of the AICPA’s Enhancing Audit Quality initiative for private-company engagements?
• Does the firm perform peer review? Ask for the most recent peer review report and rating.
• Are there independence conflicts with your lenders, investors, or major vendors?
• If the firm is PE-backed: which legal entity will sign your engagement letter, and how does that entity document its independence from the management services entity?

Effective December 15, 2025, CPA firms performing audit, review, and other attest engagements under AICPA standards must comply with Statement on Quality Management Standards (SQMS) No. 1, a new risk-based framework that replaced the firm’s prior quality control standard. Ask any prospective firm how they have implemented SQMS No. 1 and who holds the ultimate responsibility for their quality management system. A firm that cannot answer that question clearly has not done the implementation work.

For firms that audit SEC registrants, the relevant standard is PCAOB QC 1000, which the SEC approved in September 2024. In August 2025 the PCAOB postponed the effective date by one year to December 15, 2026, citing implementation challenges reported by firms. If your audit must be performed by a PCAOB-registered firm, confirm the firm is already building toward QC 1000 compliance.

2. Match firm size to your complexity

A firm that is too small will lack the specialist resources your business requires. A firm that is too large will assign your engagement to junior staff while the senior partners who pitched you move on to larger clients.

For most mid-market businesses, the practical range is a regional firm or a national firm with a dedicated mid-market practice. Mega-platforms created through PE roll-up often emphasize national scale in their pitches, but the service you receive is still delivered by a local or practice-area team. Find out who that team is, what their credentials are, and whether any of those individuals were recently integrated from an acquired firm still going through onboarding.

3. Evaluate industry depth, not just industry claims

Every firm will tell you it has healthcare, manufacturing, or technology experience. The question is where that experience lives.

• How many clients do they serve in your industry, and at what revenue range?
• Which engagement team members have industry-specific credentials or prior in-industry experience?
• Can they provide references from clients in your sector?

For businesses with complex accounting issues (ASC 842 lease portfolios, revenue recognition under ASC 606, or goodwill impairment from recent acquisitions), ask the firm to describe how they handled a similar technical question in the past 12 months. A generic answer signals that the experience is in the firm’s marketing, not in the team you would work with.

4. Understand the team structure and continuity plan

Partner access is one of the most common complaints in accounting firm relationships. You negotiate an engagement with a partner, and 90 days into the first engagement, all substantive communication flows through a senior associate.

Ask for the proposed engagement team by name and level before you sign. Ask the engagement partner: what percentage of your client engagements do you work on personally versus supervise? Ask whether any members of the proposed team have been hired in the last 12 months as part of a firm integration. Fresh-hire integration staff are not necessarily inferior, but you should know if the person reviewing your financial statements started at a different firm six months ago.

5. Assess technology and turnaround expectations

Audit and accounting technology has advanced significantly, and the differences across firms are now material, not marginal. Firms that have invested in AI-assisted document extraction, automated workpaper preparation, and real-time client portals can deliver faster turnaround with fewer information requests. That is not just a convenience: it has real consequences for your ability to close your books on time, present to your board, or meet lender reporting covenants.

Ask prospective firms what their typical engagement timeline looks like for a business of your size and complexity. Ask whether they use any AI-assisted or automated procedures, and if so, how they validate those outputs. Ask what the client-facing technology looks like for document exchange, status tracking, and communication.

At Modus, our AI-native audit approach means source-linked workpapers and structured information requests designed to reduce back-and-forth, not generate it. We note this not as a sales point but because these are questions worth asking any firm you consider.

6. Clarify pricing structure and scope management

Accounting firm billing surprises are a persistent client frustration, and they have become more common on PE-backed platforms where margin pressure from sponsors influences how engagement teams manage out-of-scope work.

Ask for a fixed-fee or not-to-exceed quote. Ask how the firm defines out-of-scope work and what triggers a fee change order. Ask to see a sample engagement letter that shows how scope is defined. If a firm is reluctant to provide a clear, written scope definition, that is a signal worth taking seriously.

Red Flags When Evaluating an Accounting Firm

The following warrant additional questions or reconsideration:

• The firm cannot tell you who your day-to-day engagement manager will be.
• The partner who leads the pitch declines to name the team that will do the work.
• The firm was acquired by a PE platform in the last 12 months and cannot describe how its quality management system was integrated.
• The engagement letter contains broad out-of-scope carve-outs without defined triggers.
• The firm cannot produce a clean peer review report from the last 3 years.
• Independence disclosures are vague or the firm is unwilling to confirm in writing that no conflicts exist.

Independent and AI-Native Firms: A Different Option

The PE roll-up wave has produced a visible countermovement. A growing number of firms, particularly newer national practices built around technology-first service models, have structured themselves specifically to avoid the pressures that come with outside-capital ownership. These firms are typically partner-owned or structured so that governance decisions are made by practicing accountants rather than financial sponsors.

For clients who need audit and assurance or advisory services with predictable partner continuity and alignment between the people who serve them and the people who own the firm, the ownership model matters. It is worth asking any prospective firm: who owns this firm, how are partner incentives structured, and what does your ownership structure look like in 3 to 5 years?

The answer will tell you a lot about whether their incentives align with your long-term interests.

Related reading: Hiring Accountants Is Getting Harder: What Mid-Market Companies Can Do

Frequently Asked Questions

How do I choose an accounting firm for my mid-market business?

Start by defining the services you need (audit, tax, advisory, or all three), then find firms that serve businesses at your revenue range and in your industry. Confirm independence and peer review status, meet the actual engagement team (not just the partner who pitches you), and ask for a clear, written scope and fee arrangement before you sign.

Is it a problem if my accounting firm is PE-backed?

Not automatically. PE-backed firms can have strong technical teams and broad resources. The key issues to probe are independence (specifically how the attest entity is isolated from PE governance), engagement team continuity (especially after a recent acquisition), and whether the firm’s service model is still partner-led or has shifted toward lower-cost staffing models to improve margins for the sponsor.

What questions should I ask when choosing a CPA firm?

The most important questions are: Who will actually work on my engagement by name and level? What is your peer review status and can I see the most recent report? How do you manage independence from any related entities or investors? How do you handle out-of-scope work? How have you implemented SQMS No. 1? These questions surface more useful information than general capability discussions.

How often should I change accounting firms?

There is no universal rule, but periodic evaluation makes sense when your business changes significantly (new ownership, new lenders, expansion into new markets), when you experience recurring service problems, or when the firm’s ownership or leadership changes in ways that affect who serves you. Audit committees at public companies generally consider auditor rotation more formally, but the same evaluative discipline applies to private-company leadership.

What is the difference between a PE-backed accounting firm and an independent one?

A PE-backed firm has sold an ownership stake to a private equity sponsor, typically using a two-entity structure where the PE entity owns the advisory and management services business while CPAs retain ownership of the attest entity. An independent firm is owned entirely by its partners. The ownership structure affects governance, partner incentives, service continuity after acquisitions, and the extent to which the firm’s priorities are shaped by financial sponsor return targets versus long-term client relationships.

How do I evaluate an accounting firm’s quality management practices?

Ask whether they comply with AICPA SQMS No. 1 (effective December 15, 2025 for firms performing attest services). Ask to see their most recent peer review report. For PCAOB-registered firms, ask how they are preparing for QC 1000 (effective December 15, 2026). A firm that can speak concretely to its quality management system, including who holds ultimate responsibility and how it monitors engagement quality, is taking the question seriously.