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How many accounting firms are looking for private equity investment? Turns out that it may be far fewer than you might think.
Almost two-thirds of accounting firms (63%) in Accounting Today's 2025 State of PE in Accounting Survey reported they had no need for outside capital, and over two-fifths (45%) said they had not been contacted by PE or reached out about it themselves.
Apart from sole proprietors, that two-thirds figure is remarkably consistent across firm sizes — until you get to firms with 100 or more employees, where less than two-fifths (39%) said they could go without extra capital, and 50% reported having already taken PE investment.
What's more, of the third of firms that said they need or had already taken outside capital, the most common reason they cited wasn't the one you might expect.
Funding the future
Investment in technology came at the top of the list in terms of places where firms would apply new capital.
"With the rapid advancement in technology, talent, offshoring, etc., we felt compelled to partner with a PE-backed company where we could maintain our independence yet receive the investment support from a much larger entity," explained a partner at a midsized firm.
While a number of firms mentioned technology and talent in the same breath as requiring new capital, only a third (32%) named increasing capacity with staff as a priority.
Instead, after technology, the next two most commonly cited capital priorities were firm acquisitions (51%) and geographic expansion (37%).
Interestingly, a number of respondents said they needed capital for M&A because target firms now expect cash at closing, a phenomena that is largely driven by cash-flush PE firms' entry into the market — meaning that PE is, in some ways, driving the need for more PE.
"While we have solid organic growth, the current market is such that acquiring other firms requires cash up front, which in the past has not been the case," reported a partner at a large firm. (They also noted that their PE partner "brought a great deal of expertise in the technology that will be necessary for us to thrive going forward.")
"We are in a period of consolidation and hit our limit with our bank in terms of borrowing limit," said a partner at another large firm. "We wanted capital to continue expanding to stay relevant and create opportunities for our employees."
The partner also noted, "We felt this is where the industry was heading, so why not control our own destiny, instead of hopping on the train five to 10 years from now and feeling like we missed the boat?"
A cash grab?
In the debate around the role of PE in accounting, a frequently voiced concern is that current partners are cashing out — enriching themselves at the expense of the future independence and integrity of their firms.
However, less than a third of respondents said they had taken PE or were interested in PE for succession issues (29%), and less than a fifth (18%) specifically cited funding retirement mandates.
Some of those firms were quite open about the fact: "We have recently (within the past five years) retired a significant amount of partners, and as such had a significant retirement liability," explained a partner at a midsized firm. "With a relatively young partner group, we had upward mobility concerns for our middle management and felt like without significant growth we could risk losing them. We felt we were being reactive in managing the firm and not proactive."
"We couldn't fund the retirement/buyouts of the existing partners without it," said a manager at a larger firm, before adding a second priority: "We wanted more robust resources to recruit staff without paying exorbitant recruiting firm fees for hires that never work out."
Of course, not everyone accepts their accounting firm's official rationale at face value.
"The publicly stated objectives were 'capital for mergers and acquisitions, technology and staff,'" said one partner of his large firm's decision to do a deal with a private equity firm, "but the real purpose was to provide more retirement value to the partners."
And a vocal minority were even clearer in their assessment of the reason their firm went with PE: "It is just a money grab by selfish and greedy partners at the expense of everyone else in the firm," said a director at a large firm.
Read more from the 2025 State of PE in Accounting Survey:
