Only a few years ago, private equity investment in accounting and consulting firms appeared unlikely due to risk‑averse cultures, partnership governance and restrictions on outside ownership. Since 2020, however, dozens of US transactions and more than $50 billion in capital have reshaped the profession.
Valuation growth now outpaces revenue growth, reflecting confidence in advisory‑led, technology‑enabled models built on strong client relationships. Advisory work has become the industry’s economic engine, supported by high‑margin consulting, scalable delivery and rising demand for M&A support, finance transformation, cybersecurity, risk management and AI integration.
AI has accelerated this shift. What began as experimentation has become part of daily operations – tax research, document review, workflow automation, analytics, enabling firms to create repeatable, branded solutions such as automated reporting packs, compliance modules and portfolio‑readiness dashboards.
Industry fragmentation adds further momentum. With tens of thousands of CPA firms across the country, investors see consolidation opportunities to build national platforms. Recent headline transactions, including New Mountain Capital’s backing of Grant Thornton Advisors and Blackstone’s acquisition of Citrin Cooperman, signal growing maturity and sustained roll‑up potential.
Challenger firms once viewed as mid‑tier are expanding across states, investing in technology and competing for national mandates. Their agility makes them natural candidates for investment‑supported growth.
Drivers of the shift and rationale for alignment
The sector combines stability with significant upside. On the stability side, accounting and compliance services provide recurring, cycle‑resilient revenue that supports investment in higher‑growth advisory offerings.
On the growth side, advisory now spans transaction support, outsourced CFO platforms, digital transformation, data governance and risk consulting services with stronger margins that scale through technology, process and IP rather than individual partner relationships.
AI and automation amplify this growth. Firms that streamline repeatable work, from tax preparation and compliance documentation to analytics, unlock capacity, strengthen margins and create reusable IP. Advisory units serving government and regulated industries attract capital due to long‑term contract visibility and defensible market positioning.
Outside capital enables modernization, M&A, national branding and succession planning. It also supports investment in data platforms, AI tools, cybersecurity and shared services that often exceed firms’ organic funding capacity. Recent deals reflect these themes: Armanino’s acquisition of Strategic Accounting Outsourced Solutions expanded its outsourced finance capabilities, while BDO’s combination with Horne added disaster‑recovery expertise and more than 1,300 professionals.
Transaction design within a complex regulatory environment
Capital inflows have diversified deal structures. Traditional minority equity stakes are now only one option.
Continuation vehicles allow investors to extend ownership while providing liquidity to earlier investors. Minority growth capital supports technology investments and acquisitions while allowing firms to retain control. Platform mergers, such as the planned Moss Adams-Baker Tilly combination, illustrate growing ambition. PE‑to‑PE secondaries – including Blackstone’s purchase of Citrin Cooperman from New Mountain Capital – highlight increasing maturity and clearer exit routes.
US independence rules strongly influence deal design. Because outside parties cannot own or control audit practices, firms typically separate attest work (that is, document validation and verification) from advisory, tax and technology services. Alternative practice structure models, where attest services remain CPA‑controlled and advisory businesses operate through separately governed entities, have emerged as practical solutions. The goal is consistent: preserve independence while enabling capital to support scalable, technology‑enabled advisory operations.
Regulatory scrutiny remains high. The American Institute of Certified Public Accountants continues evaluating rules governing firm structures, and the US Securities and Exchange Commission has emphasized governance clarity, cultural safeguards and consistent quality systems.
Operational complexity is an ongoing challenge. Shared services supporting both sides of a separated structure require clear protocols to protect independence and quality. As firms expand through acquisitions, the need to align methodologies, data governance frameworks, ethics training and quality controls becomes increasingly important. Cultural integration also demands attention as partnership models adapt to expectations and performance frameworks typical of PE‑backed environments.
Future trajectory and strategic implications
The US market is entering its next phase. Advisory is now the focal point, structural separation is standard practice and AI has shifted from experimentation to embedded infrastructure. These trends support expectations that select advisory assets may approach ~20× EBITDA, unified advisory platforms may challenge traditional networks and large firms may divest non-core assets to align with regulation and investor interest in technology‑enabled adjacencies.
Differentiation will determine competitive advantage. With more firms adopting similar organizational structures and investors becoming increasingly selective, leaders will demonstrate deep expertise, branded and repeatable solutions, AI‑supported workflows that materially enhance accuracy and efficiency, and scalable quality systems. Firms developing technology‑led offerings – automated ESG packs, transaction‑readiness dashboards and sector‑specific analytics – are already distinguishing themselves.
Internationally, similar patterns are emerging. Europe faces aging partnership models, rising advisory demand, talent constraints and increasing technology costs. Early signs of this shift include Cinven’s investments in Grant Thornton’s UK and German firms, aimed at accelerating technology adoption, strengthening advisory capabilities and positioning both practices for cross‑border growth. Activity is also rising across consulting‑focused platforms and mid‑tier firms pursuing scale.
Across these developments, the conclusion is clear: private capital is reshaping the profession in ways once considered improbable. Firms that invest in technology, develop distinctive solutions and maintain uncompromising quality will not only keep pace, but help define what comes next.
Matthew Dodd is managing director, head of Houlihan Lokey’s accounting and financial reporting advisory practice. Patrick Hughes is a director, corporate finance, in Houlihan Lokey’s business services group. Shivan Arora is a senior vice-president in Houlihan Lokey’s accounting and financial reporting advisory practice.
