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Accounting firms and private equity: The leading edge of a new era



As I reflect on the current state of the accounting profession, the sense of a sea change is ubiquitous. For those of us who love what we do, value the colleagues and clients with whom we work, and are proud of the services we provide, there is more opportunity than ever to help them succeed as the traditional CPA firm model is energized and transformed by new capital, strategies and innovations.  

A major contributor to this transformation has been the growing number of partnerships between accounting firms and private equity investors. Accounting has attracted the attention of PE due to the growth potential of diverse business advisory services, along with the importance of stalwart attest services in a rapidly evolving business world. It’s no surprise, then, that PE has partnered with our firm, Eisner Advisory Group LLC, as well as several other top-tier firms.

While opinion varies as to the impact of PE partnerships on the profession, I can say that Eisner’s experience has been very positive.

Expanding client services and accelerating growth   

Partnering with PE enables accounting firm leaders to accelerate the evolution of their service offerings, boost investment in talent and technology, and expand capacity for both organic growth and targeted mergers and acquisitions. The capital provided through PE investors also can greatly enhance the quality and capacity of core businesses (tax and audit) on which firms such as ours were founded. Consequently, PE firms should benefit from the strong growth projected for our industry, with the potential to create solid ROI.  

Our profession has an admirable track record of helping businesses improve their performance by streamlining operations, managing risk exposure and advising on optimizing tax efficiency, while maintaining clients’ financial integrity. Furthermore, our practitioners have a strong sense of mission: A milestone report by the American Institute of CPAs found overwhelming agreement that the profession’s core purpose remains: “Making sense of a changing and complex world.” Essentially, we’re about making the complex simple for clients. Joining forces with a PE partner is a strategic move that allows our firms to further that mission, especially during economic uncertainty and disruption. 

From EisnerAmper’s perspective, I would even go beyond the word “partnership.” To borrow an iconic line from the movie Casablanca, it has been “… the beginning of a beautiful friendship.” Our PE partnership has met our every expectation. EisnerAmper operates under an alternative practice structure: EisnerAmper LLP, a licensed CPA firm providing attest services; and Eisner Advisory Group LLC, providing clients business advisory and nonattest services. Our mission remains unchanged (with our CPAs as the professionals driving our reputation as trusted advisors), but we’ve gained access to a powerful new means to fulfill that mission. 

TowerBrook’s investment has enabled EisnerAmper to launch new practice areas, such as ESG, cryptocurrency and family office technology services, while scaling up M&A activity, with an eye toward firms that seek partners to enable them to serve their clients’ rapidly evolving needs.   

Any accounting firm contemplating a PE partnership should understand that, as in any business transaction, there will be some challenges and complexities. There will be bumps in the road. That said, there are some lessons learned that I can offer on this emerging model and its promise for our profession. 

 Pillars of a successful PE partnership 

First, firms must properly articulate their vision for the future and how an investment would further their long- and short-term goals. A clear, shared vision will enable the firm to choose its future path and allocate capital most effectively. It is essential to have that vision before embarking on the journey. 

Second, a firm must assess how a deal might impact its culture. We still have the same core culture of collaboration, innovation and collegiality we’ve had in years past, and while our firm will look radically different 10 years from now, we’re confident our culture will endure. 

Third, and finally, a firm must assess how the investment arrangement will further its ability to attract the best and brightest talent, enabling great client service and accelerated innovation.

In the past year, we successfully completed several combinations of firms that allow a more diversified range of work experiences. This not only allows us to expand our talent base, grow our footprint and enhance our client offerings, but also allows budding talent to build on their expertise and explore new opportunities and new markets.

These opportunities will only continue to grow as we invest even further in technology and innovation. Not long ago, the accounting profession was essentially a two-lane road of tax and audit. Today, it is a superhighway of cybersecurity, outsourced solutions, digital health services, compensation consulting and much more. For the firm, its practitioners and clients, the destinations and opportunities are endless. In a growing field of service provider firms not rooted in, nor bound by the traditional CPA ownership model, our new structure and these new service offerings will make us more competitive. 

Over the past year, many partners from traditionally structured firms and other nontraditional competitors have joined EisnerAmper because of our new ownership model, a myriad of resources and the opportunity to recognize the value they create as the firm grows. Capital from our PE partners allows for further investment in technology and training to unlock potential with a “can-do” perspective, helping our professionals realize their full potential as trusted business advisors — the apex of client service. 

 A new model for a new generation of talent

Additionally, the incoming workforce generation shows less interest in the traditional accounting firm ownership model and working as a partner for 25-plus years before realizing the value they have created. The pandemic-unleashed remote and hybrid work model has further moved the pendulum for accounting professionals, and they are even more likely to work at a range of firms and in different businesses during their careers. Accounting firms must structure themselves creatively to continue to be successful. 

An infusion of capital allows for the new possibilities of expanded product service offerings and dovetails with the goal of attracting and maintaining key talent; it provides more arrows in our quiver, more tools to offer diverse and adaptive careers, which also makes the sky the limit for our staff. 

A substantial private equity investment in an accounting and consulting firm isn’t buying into a name, a roster of clients or a geographic practice area. It’s an investment in the most powerful of all resources: people. 

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