Private Equity Is Buying CPA Firms: What It Means for Clients

Private equity is buying CPA firms because accounting practices combine recurring revenue, fragmented ownership, and a succession crisis that internal partner cohorts cannot solve on their own. PE sponsors bring three things that aging partnerships cannot self-finance: immediate liquidity for retiring partners, capital for technology investment, and a roll-up architecture that stitches smaller regional practices into national platforms. The result is a wave of consolidation that has restructured the top tier of the profession in less than five years and is now reaching mid-size and regional firms.

Why Private Equity Wants CPA Firms

The investment thesis is straightforward. Accounting services are deeply embedded in clients’ financial lives. Engagements renew annually, switching costs are high, and a trusted CPA relationship often spans decades. From a private equity standpoint, that looks like a high-retention subscription business with cross-sell potential in advisory, transaction support, and outsourced finance functions.

Three structural forces make the timing favorable.

Partner succession without a natural buyer. The average equity partner in a mid-size firm is approaching retirement with no internal cohort large or capitalized enough to buy out the practice at a reasonable valuation. Traditional internal succession typically values a firm at one times revenue. PE platforms often pay two to four times revenue or higher multiples of EBITDA, depending on service mix and client concentration. That gap is difficult to ignore.

A persistent talent shortage. The CPA pipeline has contracted sharply over the past decade. U.S. schools awarded roughly 55,000 accounting bachelor’s and master’s degrees in the 2023 to 2024 academic year, a 20-year low, and the number of new candidates entering the CPA exam pipeline in 2024 was the fewest since NASBA began tracking in 2008. Enrollment showed early signs of recovery in 2025, but the profession is still working through a decade of decline. PE-backed platforms argue they can invest in training, compensation, and technology at a scale that independent firms cannot, making them more competitive employers over time.

Technology as a capital expenditure. Modernizing an accounting practice, building a common technology stack across offices, deploying AI-assisted audit and tax workflows, upgrading client portals, requires capital that a traditional partnership model distributes rather than retains. PE investors provide a funding mechanism for that kind of platform-level investment.

The Scale of the Shift

The numbers reflect how quickly this has moved from novelty to mainstream.

According to IFAC research released in March 2026, more than 1,000 accounting firms worldwide have been touched by PE investment over the past decade. Between 2015 and 2025, 177 direct PE investments generated 875 subsequent roll-up acquisitions, roughly five downstream deals for each anchor investment, for 1,052 impacted firm transactions in total. Deal activity has accelerated sharply since 2022 and shows no sign of slowing.

In the United States specifically:

• At least 10 of the 30 largest CPA firms by revenue had sold a stake to PE investors, a count that has risen through 2025 and 2026 as more deals have closed. KPMG Corporate Finance has projected that more than half of the top 30 will be PE-backed as the current wave plays out.
• Major transactions include Blackstone’s acquisition of a majority stake in Citrin Cooperman at a reported valuation above $2 billion, Hellman and Friedman’s backing of the Baker Tilly and Moss Adams combination in a roughly $7 billion arrangement, KKR’s acquisition of a majority stake in Crowe in a deal valued at close to $3 billion that closed in August 2026, and New Mountain Capital’s continued expansion of Grant Thornton, which is acquiring fellow top-10 firm CBIZ in a $5 billion transaction expected to close in Q4 2026.
• PE-related accounting transactions surpassed 180 in 2025 by one industry deal tracker, up from roughly 76 in 2024, more than double year over year. This figure is an industry statistic and varies by source depending on how deals are counted.

The Journal of Accountancy has covered a steady cadence of new deals through 2025 and into 2026, with top-25, top-50, and regional firms all entering agreements with a range of PE sponsors.

How the Structure Actually Works

PE investment in a CPA firm does not look like a standard corporate acquisition. State accountancy laws in most jurisdictions require that the entity performing attest services, audits, reviews, and compilations, be majority-owned by licensed CPAs. That constraint rules out a simple buyout of the whole firm.

Instead, PE transactions use an alternative practice structure (APS). The PE sponsor acquires the non-attest business (tax, advisory, outsourced accounting, technology, and management services) and enters into a services agreement with a separately owned CPA entity that retains the attest practice. CPA partners remain the technical majority owners of the licensed entity. The PE-owned management company handles back-office functions, brand, technology, HR, and growth capital allocation.

This structure preserves the letter of the law on CPA ownership while giving PE investors economic exposure to the combined platform’s earnings and growth. The CPA firm licenses use of the brand and shared services, and fees flow accordingly between the two entities.

Why Regulators Are Paying Attention

The APS model creates genuine questions about independence, particularly for audit engagements. If the PE sponsor that owns the management company also holds a portfolio company that is an audit client of the CPA firm, that creates a conflict that may not be visible through standard independence screening. If PE investor representatives participate in partner compensation decisions, performance evaluations, or quality control oversight, the influence they exert on the attest entity raises additional concerns.

The IESBA issued a Staff Alert in July 2025 specifically flagging these risks. The alert highlighted threats to compliance with the ethics code’s fundamental principles, including undue influence from PE investors over professional judgments, self-interest threats when partner compensation is tied to revenue growth rather than audit quality, and shifts in a firm’s ethical culture driven by new incentives and growth expectations. In March 2026, the IESBA formally launched a standard-setting workstream to consider whether its International Code of Ethics needs revisions to address PE investment directly.

In December 2025, the AICPA’s Professional Ethics Executive Committee (PEEC) issued an exposure draft of proposed revisions to the AICPA Code of Professional Conduct that would update independence rules specifically for the APS context. The proposal distinguishes between “significant influence” and “control” by investors and tightens guidance on what PE involvement in a CPA firm’s decision-making is permissible. The comment period closed April 30, 2026, and PEEC received 81 comment letters, with NASBA and state boards raising concerns about independence in appearance and workability. As of September 2026, no final standard has been issued. PEEC has re-drafted the proposal and is preparing a second exposure draft, so the rules remain in progress.

What This Means If Your CPA Firm Has Taken PE Investment

If your current accounting or audit firm has entered a PE transaction, that does not automatically mean a problem. Many PE-backed platforms have invested meaningfully in staff compensation, technology, and service breadth. For clients of firms that were struggling with succession or underinvestment, consolidation has sometimes improved service delivery.

That said, a few things deserve a deliberate conversation with your firm.

Confirm Independence Has Been Evaluated

For clients who receive audit or attest services, ask your firm directly whether it performed an independence analysis in connection with the PE investment and any subsequent roll-up acquisitions. PE portfolios are broad, and a new investment by the sponsor can create a conflict that did not exist at deal close. Large PE firms hold dozens of portfolio companies. If one of those companies overlaps with your audit engagement, that matters.

The audit and assurance professionals at Modus maintain independence tracking as a standing practice, not a one-time checklist. The model of a firm that retains full CPA ownership of its attest practice, without a PE-owned management entity in the background, offers a cleaner independence baseline for clients who need it.

Understand Who Is Setting Service Priorities

One consistent concern raised in industry surveys is that PE ownership shifts firm incentives toward growth metrics and EBITDA over the investment horizon, typically three to seven years, rather than toward deep client service. That pressure may be invisible to the client until it affects staffing decisions, partner continuity, or responsiveness on complex technical matters.

Ask whether the partners and managers on your engagement team will remain consistent through your current agreement term, and whether the firm’s quality-control function remains under CPA leadership with no PE oversight role.

Ask About Data and Technology Practices

PE-backed platforms are consolidating data systems across dozens of merged firms. Clients should understand where their financial data is stored, who has access, and whether data sharing agreements exist within the combined platform. This is especially relevant for clients with sensitive financial structures, family office arrangements, or M&A activity of their own.

The Case for Independent Firms

The consolidation wave has not reached every corner of the profession. A meaningful number of well-run, independent CPA firms continue to compete effectively, particularly in audit-intensive markets where independence is a primary client concern.

Independent firms make different trade-offs. They typically retain deeper continuity on client engagements, because partner retention is not subject to PE-driven turnover around liquidity events. They have no PE portfolio company conflict exposure to monitor. And they operate under governance structures where partner judgment, not investor return targets, drives service decisions.

The Modus advantages model reflects this: CPA-owned attest practice, AI-native workflows that reduce turnaround time without compromising independence, and national reach without a legacy partnership hierarchy. Scale and capability do not require PE backing when the firm’s operating model is built for efficiency from the start.

What Clients and Finance Leaders Should Do Now

Whether your current firm has taken PE investment or not, this is a good moment to review your accounting and audit relationship with fresh eyes.

• Ask your audit firm for a written confirmation of independence specific to your engagement and the firm’s current ownership structure.
• If you are evaluating a new audit firm or accounting relationship, ask candidates directly whether they are PE-backed, who owns the management services entity, and how independence is maintained across the combined platform.
• If you are a PE-backed company yourself, pay particular attention to whether your audit firm’s PE sponsor has any overlap with your own ownership chain or your acquirer’s portfolio.
• Review your engagement letter terms on partner continuity, service level commitments, and data handling, particularly if your firm has recently merged.

The accounting profession is in the middle of a structural shift that will continue for several more years. Staying informed about your firm’s ownership and governance is now part of sound financial risk management for any mid-market business.

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

Frequently Asked Questions

Why is private equity buying accounting firms?

Private equity is buying accounting firms because the sector combines recurring service revenue, high client retention, fragmented ownership, and a partner succession crisis that internal cohorts cannot resolve on their own. PE sponsors pay significantly higher valuations than traditional internal transitions, provide capital for technology modernization, and use roll-up strategies to build national platforms from collections of regional practices.

How does PE investment in a CPA firm work legally?

Most states require that the entity performing attest services be majority-owned by licensed CPAs. PE sponsors use an alternative practice structure (APS): they acquire the non-attest business (tax, advisory, technology, management) while a separately owned CPA entity retains the licensed attest practice. The two entities operate under services agreements that allow PE investors economic exposure without directly owning the audit practice.

Does a PE-backed CPA firm create independence problems for audit clients?

It can. If the PE sponsor holds a portfolio company that is also an audit client of the CPA firm, that creates a potential independence conflict. The IESBA issued a Staff Alert in July 2025 specifically warning about this risk and launched a standard-setting workstream on the topic in March 2026. The AICPA is revising its Code of Professional Conduct to address independence in alternative practice structures, with a second exposure draft in progress as of September 2026. Audit clients should ask their PE-backed firm for a written independence confirmation specific to their engagement.

What is an alternative practice structure (APS)?

An APS is the legal arrangement that allows a PE investor to hold an economic interest in an accounting firm while complying with state laws that require CPA majority ownership of the licensed attest entity. The PE sponsor owns a management services or non-attest entity. That entity provides shared services, brand, and capital to a separately structured CPA firm that performs audit and other attest work. The two entities are linked by services agreements.

Are all large CPA firms now PE-backed?

No, but the fraction is substantial and growing. As of mid-2026, at least 10 of the 30 largest U.S. accounting firms by revenue had sold a stake to PE investors, with more deals closing through 2025 and 2026 and industry analysts projecting that more than half of the top 30 will be PE-backed as the wave continues. Hundreds of smaller and mid-size firms have also been acquired into PE-backed platforms. A significant number of independent CPA firms continue to operate without PE investment, particularly those focused on attest services where independence requirements are most demanding.

What should a CFO ask their CPA firm about PE involvement?

A CFO should ask: Is the firm PE-backed, and if so, who is the sponsor? Has the firm conducted a formal independence analysis for our engagement given the sponsor’s current portfolio? Who owns the management services entity, and does that entity have any oversight role in quality control or partner compensation? Will our engagement team remain consistent through the current term? Where is our financial data stored, and who within the combined platform has access?