How private equity can accelerate technology & enable growth in accounting firms

Private equity investment has transitioned from an industry anomaly to a fundamental restructuring of the accounting profession, with roughly half of the top 25 firms now pursuing PE transactions. These deals provide the patient capital necessary for firms to fund massive technology transformations, including AI-powered platforms and unified data architectures that traditional partnership models often struggle to finance. For the accounting and tax tech sector, this shift accelerates the adoption of automation and data-informed decision-making, widening the competitive gap between PE-backed firms and traditional practices.

The influx of private equity into the accounting sector began gaining significant momentum four years ago with the landmark deal between EisnerAmper and TowerBrook Capital Partners. Since then, firms like Citrin Cooperman have demonstrated the scale of this strategic acceleration; after receiving investment from New Mountain Capital in 2021, Citrin Cooperman acquired more than 20 firms, expanding its reach to 2,800 professionals across 27 offices. This trend addresses a core structural weakness in traditional partnerships: the difficulty of funding multimillion-dollar infrastructure projects. PE-backed firms can deploy capital for enterprise relationship intelligence systems and AI-enabled delivery models without the immediate pressure for returns that often hampers partner-funded initiatives.

Beyond capital, PE investment is driving a shift toward operational efficiency and specialized service delivery. By automating routine tasks that previously consumed high-value partner time—shifting work from a $500-per-hour billing rate to a $50-per-hour automated equivalent—firms are increasing their revenue capacity. This allows partners to focus on complex advisory roles and relationship building. Furthermore, PE-backed firms are adopting a "right to win" strategy, eliminating underperforming service lines to concentrate resources on high-margin areas where they possess a genuine competitive advantage. This data-informed approach, fueled by millions of dollars in market research, allows these firms to align their services more closely with client preferences and premium-rate offerings.

Despite the clear growth advantages, the Thomson Reuters Institute’s Tax Firm Growth Report 2025 reveals significant skepticism within the profession. More than half of practitioners report that PE is not on their radar, and one-third express no interest in such deals, citing concerns over firm integrity, auditor independence, and the potential for earnings to be prioritized over service quality. However, PE-backed firms are leveraging their corporate structures to attract next-generation talent by offering equity incentives and clear career paths that traditional partnerships, with their high buy-in valuations and outdated technology, often fail to match. As the gap widens, the industry faces a cultural shift from relationship-driven assumptions to a more sophisticated, technology-first business model.