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The Changing Landscape of M&A in the Accounting Industry

How private equity has fundamentally reshaped CPA firm valuations, deal structures, and succession planning — with data from hundreds of recent transactions.

We Wrote the Book

The Complete Guide to M&A of CPA Firms

By Cindy Ragan
CVA, Economist

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Part I

Snapshot of the PE Invasion

Why PE loves CPA firms

  • Recurring revenue from audits, tax, and advisory
  • Roll-up and regional consolidation potential
  • Tech and AI-driven efficiency gains
  • Succession-planning gaps in small firms

PE sees accounting firms as prime investments

  • Since 2021, 12 firms have accepted PE deals
  • Grant Thornton and Baker Tilly among early adopters
  • EisnerAmper — the 18th largest firm in the US — struck a deal with TowerBrook Capital Partners
  • PE now holds majority control in several top firms, reshaping firm governance and operations

Big firms acquiring smaller firms

  • 3 of the 5 fastest-growing firms in 2023 were fueled by PE-backed M&A
  • EisnerAmper made 14 acquisitions post-PE
  • Citrin Cooperman made 13 acquisitions post-PE
  • 5 of the top 26 US firms were acquired in under 3 years
  • PE is now driving industry-wide M&A strategies and transformation

Consolidation across all firm sizes

  • Mid-sized PE firms acquiring mid-sized and small CPA firms
  • Strategy: acquire a platform CPA firm, then tuck-in smaller locals
  • This activity is driving consolidation in a fragmented industry

Roll-up platforms are scaling fast

  • PE-backed roll-ups target firms with $5M–$50M revenue
  • These firms need capital but want to retain autonomy
  • Firms retain brand, culture, and operating independence
  • Ascend (Alpine Investors) purchased $400M in revenue in 2 years
  • Crete Alliance purchased $165M in revenue, achieving top-50 firm status

Banks and other money chasing CPA firms

  • Sovereign wealth funds and family offices are competing in the space
  • Financial Times reports 10 of the top 30 firms are likely to be PE-owned soon
  • PKF, Carr Riggs, Armanino — all in M&A talks with banks
  • Aprio is striking a deal with Charlesbank Capital Advisors
  • This transformation is fueled by AI and new technology

Why PE targets CPA firms

PE traditionally focused on tech, healthcare, and manufacturing. They are now targeting accounting because of:

  • Stable and recurring revenue streams
  • Higher profits through scalability and economies of scale
  • Growing demand for specialized services driven by regulatory complexity

Benefits for smaller CPA firms

  • Capital access: funds, tech upgrades, hiring, acquisitions
  • Operational expertise: scalability, efficiency, and best practices
  • Competitive edge: attracting larger clients and leveling the playing field
  • Talent strategy: ability to offer better pay and career growth
  • Exit path: attractive exit options for founders while ensuring continuity

Challenges to PE-backed firms

  • Pressure for rapid ROI may shift focus from long-term client relationships to short-term profits
  • Cultural clashes between the target firm's approach and the PE firm's strategic direction
  • Many deals involve splitting attest and non-attest services to comply with independence rules
  • Who will maintain high-level client relationships once legacy owners retire?

Part II

Trends in PE investment for CPA firms

Deal volume & valuations

  • 11 of the top 30 firms are now PE-backed
  • 90+ PE deals since 2020; 52 in 2025 alone
  • $28.7B of PE capital invested
  • PE-backed CPA firm valuations near $200B — almost double the entire industry's annual revenue
  • PE-backed platforms going international through cross-border M&A

Hyper-specialization

  • PE capital is fueling advisory growth, tech investment, and market expansion
  • PE firms target niche services: forensic, cannabis, AI analytics
  • Specialty firms command premium fees in the PE market
  • Targeted PE interest in high-margin verticals
  • PEs are targeting small and mid-sized firms for bolt-on growth in specific regions

Open architecture models

  • PE firms are combining regional players into national platforms
  • Multi-firm platforms typically split between attest and non-attest entities
  • Partnerships with RIAs, ERP consultants, and boutique law firms
  • Bundled advisory services to boost cross-selling
  • Heavy investment in AI, automation, and analytics
  • Establishing tech-enabled divisions and spin-offs

Part III

Long-term implications for the accounting industry

Advisory evolution

  • PE is reshaping the CPA landscape: consolidation, specialization, tech adoption
  • Expect more platforms, niche services, and bundled models
  • Firms are shifting from compliance to multi-disciplinary advisory
  • Bundling services such as tax, wealth, ERP, legal, and cybersecurity

Ownership shift

  • The partner-owned model is declining in favor of PE models
  • PE-backed firms adopt corporate governance, external boards, and investor-driven KPIs
  • IPOs and strategic exits may change the trajectory for future CPAs

Market changes

  • AI, automation, and analytics will become central to service delivery
  • Equity incentives and performance-based pay will attract top talent while alienating traditionalists
  • The industry may divide between corporate-style PE-backed firms and boutique legacy firms
  • Client expectations will shift toward real-time insights, dashboards, and strategic advice
  • Compliance-only firms risk obsolescence

CPA firms becoming tech-enabled consultancies

  • PE is transforming firms into scalable, tech-driven advisory platforms
  • The profession is becoming faster, broader, and more competitive — but also more corporate and complex
  • Success requires rethinking business models, talent, and services

Part IV

Key strategies in a PE-driven landscape

Split attest & advisory services

  • Why: PE firms can’t own audit practices due to independence rules.
  • How: Create separate legal entities for audit (attest) and consulting/tax (non-attest) services.
  • Benefit: Enables aggressive growth in advisory while maintaining compliance.

Invest in technology and AI

  • Automate routine work: bookkeeping, tax prep, audit sampling
  • Adopt AI-powered analytics for real-time insights
  • Use cloud platforms for collaboration, workflow, and client portals

Build scalable advisory platforms

  • Expand beyond compliance into consulting, wealth management, ERP, and cybersecurity
  • Bundle services to offer holistic client solutions
  • Use PE capital to acquire niche firms and build national reach

Enhance client experience

  • Shift from transactional to relationship-driven engagements
  • Use dashboards, portals, and predictive analytics to deliver proactive advice
  • Focus on industry specialization to deepen client trust

Redesign talent models

  • Offer equity incentives, performance-based pay, and flexible career paths
  • Upskill staff in data science, advisory, and technology tools
  • Build a culture that blends professionalism with innovation

Prepare for exit and succession

  • PE-backed firms must plan for liquidity events (IPO, secondary sale)
  • Legacy firms should develop succession plans to stay competitive or attract investment
  • Consider mergers or affiliations with larger platforms

Strengthen governance & compliance

  • Adopt corporate governance structures with external boards and KPIs
  • Ensure regulatory compliance as firm complexity increases
  • Monitor conflicts of interest in bundled service models

Part II

Current market valuations — legacy CPA firms

Traditional valuations

  • The days of a 20% down payment and 20% per year of collections for 5 years are long gone
  • Smaller CPA sellers (under $10M) have realized traditional formulas put most of the risk on the sellers
  • Legacy CPA offers are now structured so risk is shared — both sides have skin in the game
  • PE valuations and deal structures have pressured legacy firms to make better offers
  • Larger local, regional, and national CPA firms now offer much more attractive proposals
  • Multiples up to 1.5× revenue, down payments of 30–50%, with shorter payout periods and lower interest

Legacy deal structure

Up to 1.5× revenue

Down payment

30%–50%

Payout period

Shorter, 3–7 years

Multiple

Up to 1.5× revenue

Payout basis

Collections

Part V (cont.)

Current market valuations — PE-backed offers

Firms with more revenue trade at higher multiples of EBITDA. Firms under $10M are still trading at higher than traditional EBITDA multiples but remain more anchored around revenue. Some of the larger CPA firms (top 100) are seeing multiples of 15× EBITDA. A general rule of thumb for PE-backed offers is a minimum of $1.5M in revenue.

Standard PE valuations by firm size

Revenue > $20M

8–12× EBITDA

Revenue $10M – $20M

6–8× EBITDA

Revenue $1.5M – $10M

3–5× EBITDA · or 1.1–1.5× revenue (bigger is more valuable)

Revenue < $1.5M

1.1–1.25× revenue

Profit Margin Benchmarks

What drives higher margins for PE firms?

Typical profit margin range, depending on firm size, service mix, and region
0 %
High-performing firms — especially those with strong advisory practices and tech leverage
0 %+

Service diversification

Firms offering consulting, wealth management, and advisory services outperform traditional audit/tax shops.

Operational leverage

Better use of staff and automation increases partner profitability.

Pricing discipline

Firms with formal pricing strategies and value-based billing report stronger margins.

Embracing tech

Firms embracing tech, AI, and strategic growth consistently outperform peers.

Profit Margin Benchmarks

What drives higher margins for legacy firms?

Profitability of the firm

A trend analysis over 5 years tracking owners' total discretionary income, above their compensation.

Performance ratios

Productivity, realization, utilization, and effective billing rates.

Quality of staff members

The expertise, experience, credentials, client relationships, and amount of high-level work staff perform

Quality of clients

A smaller number of clients paying higher fees, with potential to up-sell and cross-sell additional services.

Scope of services offered

The depth and breadth of services offered, including niche markets.

Strategic positioning

Firms with a clear specialty and disciplined growth strategy command stronger multiples and more durable margins.

Transaction Structures

How PE and legacy deals actually get done

PE-backed structures

70–80% down, equity-for-equity, EBITDA-tied earnouts

  • Shift from transactional to relationship-driven engagements
  • Often trade some of their equity for the target firm's equity
  • Require both growth and EBITDA thresholds for a full payout
  • Owners' compensation must be reduced to meet required EBITDA going forward

Legacy structures

30–50% down, 3–7 year payouts, collections-based

  • 30%–50% down payments with 3–7 year payouts
  • Payouts based primarily on collections, which can move up or down
  • Owners' compensation typically reduced to support deal economics
  • Risk shared more evenly between buyer and seller

Industry Benchmarks & Trends

The accounting industry by the numbers

Projected industry revenue by 2025, including $8.7B in consulting revenue
$ 0 B
Employees in 2025; the workforce has declined ~10% since 2019
0 M
CPA firms operating in roughly 55,000 locations across the US
0 +
Average revenue per employee; average pay is $91K
$ 0 K
Projected job growth through 2033 — higher than the average for all occupations
0 %
Of CPA firms have fewer than 20 employees — smaller firms still rule
0 %

From Blog

Many of our competitors promise their clients all cash deals. But we have found that those are the worst M&A transactions for long-term success, for both parties.

If the Seller gets all cash at closing then he/she has no incentive to carefully transition the clients over time, and it takes time. Instead, they are off sipping martinis, believing they got the best deal ever, only to find themselves in court a year later.

Once the Buyer realizes that he/she is not going to get all of the clients/revenue that they paid for, they litigate. And a majority of the clients won’t transfer without Seller involvement, so attrition will be high.

We know this because they call us as expert witnesses. In addition, all cash deals get lower multiples because all of the risk is with the Buyer, so they pay less.

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