What private equity means for accountants

October 30, 2023 10:59 AM

Enjoy complimentary access to top ideas and insights — selected by our editors.

Private equity is developing into a critical part of the accounting ecosystem as outside investors become increasingly involved — but its eventual impact on the profession remains a matter of much speculation.

Here are the insights of a range of insiders from our Voices series on the role of private equity in accounting, and how it's going to impact the profession — for good and ill.

Accounting and analysis with laptop and calculator

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PE organizations and accounting firms could be a match made in heaven

Fast-paced and transaction-driven vs. slow-and-steady and relationship-driven. The differences between private equity and accounting could not be more pronounced.

However, understanding and appreciating the distinctions between the two could make a significant difference in whether an accounting firm decides to go it alone or seek outside capital, and whether a private equity firm makes a strategic move to invest.

Gale Crosley, President of strategic growth consultancy Crosley & Company, takes a look at what you need to know to bridge the gap.

Read more:

Pathways to Growth: The private equity/CPA cultural divide

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Football, not golf, is the new analogy for growth

Gale Crosley, President of strategic growth consultancy Crosley & Company, believes that in the current environment, with private equity firms showing increasing interest in making acquisitions, accounting firms must change their strategic approach.

"Most firms operate like a loose confederation of golfers, where personal score — their individual book of business — matters most," says Crosley in outlining her views on why revenue segment leaders are the future rather than book-of-business individuals. For success, firms need to "Think football not golf."

Read more:

Pathways to Growth: Driving demand with revenue segment leadership

Breaking the norm with outside investment

Accounting firms typically operate under a partnership structure, but an uptick in private equity interest in the profession is taking many senior leaders out of their comfort zone, says Bob Lewis, President of accounting M&A and advisory consultancy The Visionary Group.

"The challenge in the accounting world with outside investment is that it is breaking the norm," says Lewis. But, could PE investment improve the way a firm works? "Outside investors are just a new element of change — one you should explore because it might be the right move for your firm."

Read more:

The impact of outside investment in accounting

Regulators seek to ensure auditor integrity in private equity deals

Auditor independence and professional ethics have come under the spotlight for public accounting firms as they seek to take advantage of private equity capital to fund their strategic growth plans and investment in tech innovation.

Natalia Greene, senior vice president of risk management at Lemme, examines the concerns of the SEC and PCAOB over auditor independence, discusses the guidance the two regulators have offered and outlines what firms need to consider as they move forward.

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Private equity and auditor independence