An AICPA survey conducted in 2020 found that 26% of single owners and sole practitioners were planning to retire within the next five years. Today those partners have either hung up their hats and left a critical role to be filled, or they have realized too late that proper succession planning is as important as it is difficult. So what becomes of their practices now?
Many simply cannot find a capable replacement, and years of built-up equity are squandered. This is more than a talent shortage. Buying out the owning partner at full price means taking on millions of dollars in personal liability for a practice that a would-be successor doesn't have the resources or bandwidth to shepherd through a leadership transition. That's a bad deal. Most good CPAs know their odds are better taking a salaried position someplace else.
Other practices get acquired. This makes good sense; a well-structured acquisition can rescue all that equity by offering the organizational and financial support the practice needs to maintain an upward trajectory in lieu of their founding partner. And yet so many of these deals dwindle all the same, bleeding clients and revenue for a lack of strong leadership on the practice level.
The problem lies in the structure. I've spent 20 years buying into accounting firms, and I have seen just how quickly a deal will founder if the buyer's incentives diverge from that of the operator. The ones that succeed aren't just acquisitions; they're partnerships, and they build alignment into every part of the arrangement.
Ownership
Most acquirers want 70–100%. That's just the standard play — a large controlling majority or the whole thing, so the conglomerate or private equity firm can take full control and maximize returns for their shareholders. The selling partner effectively becomes an employee, maybe with a title and an earn-out, but with no real equity left to care about.
But an operating partner with no equity in their own firm behaves exactly as you would expect. They work for a short term-reward that is entirely divorced from the long-term success of the practice. That apathy begins to affect the client experience, and before long it affects the revenue, too.
A slim-majority structure flips this philosophy on its head. I call it the Partner-Owner-Driver model. Say that instead of taking 100%, the acquiring party takes just 51% while the operating partner keeps 49%. Not as a holdback, not as a transitional stake that vests and vanishes. As permanent equity.
In this scenario the partner still owns nearly half their firm. They still run the clients. They still make the decisions that matter at the local level. And because they own the outcome, their incentive to grow the business, retain staff and protect client relationships is identical to the parent's. That alignment is worth far more than 100% of a practice with no real leadership.
Support
The typical post-acquisition playbook strips autonomy. The acquirer imposes its own billing rates and governance structure, adding layers of reporting that only serve to frustrate the processes that made the practice valuable in the first place. The intentions are good, of course; they've merely mistaken centralization for support.
A practice in this situation needs the parent to offer the capabilities they couldn't afford on their own, precisely so they can continue doing what they were doing before. A $3 million firm doesn't have the budget for a dedicated HR function, a compliance audit, a technology team, a marketing department or a recruitment pipeline. The operating partner has to personally fulfill all of those rolls in the margins, if at all.
A good acquisition model offers a management team that handles everything the partner doesn't want to do, at a scale and efficiency that a small firm could never dream of. This leaves the partner to focus instead on the two things they're best at: looking after their people, and looking after their clients.
Security
Private equity has entered public accounting in force, and the capital is moving fast. Faster, in most cases, than the businesses underneath it can absorb.
The typical PE structure in accounting acquisitions runs on a three-to-seven-year fund cycle. Buy firms, consolidate them, grow revenue, sell the platform to the next buyer at a higher multiple. Every decision inside that structure, from pricing to hiring to technology investment, is filtered through the question of what makes the platform more sellable in year five. That's the incentive.
But accounting firms don't operate on five-year cycles. Their clients are multigenerational. Their referral networks are built over decades. Their staff stay because they believe the firm will still be there when they're ready to become partners themselves. Without the security of long-term stability, relationships suffer.
The alternative is permanent capital. Capital that isn't trying to exit. A long-term ownership structure that starts with a 10-year minimum and is built to renew. When the operating partner knows their efforts will be paid back upon their retirement in 30 years' time, they work with purpose.
The bottom line
Accounting's succession crisis is real, and acquisitions offer a real solution. But a good acquisition is more than capital.
There's plenty of capital. Private equity firms like Thrive Holdings and Alpine Investors are pouring billions of dollars to buy up small practices and overhaul them with new technology and top-down governance.
And yet accounting is not a top-down industry. It's an industry where the partners who have their boots on the ground, building relationships with their clients and leading their teams, determine the value of their business. So when their long-term interests aren't structurally aligned with the interest of the acquiring party, the whole thing inevitably crumbles — from the bottom up.
