New Paper Links Post-2020 Surge to Consolidation and Pricing Power.
By CPA Trendlines
A new study says private equity’s post-2020 rush into accounting is pushing up fees.
In “Financializing the Professions: The Rise of Private Equity in Accounting,” Inna Abramova of London Business School and John M. Barrios of Yale School of Management examine what happens when outside capital enters a profession historically organized around partner ownership and licensing rules. Using data from 1999 to 2024 that link “more than 3,600 PE transactions” to mergers and acquisitions, labor markets, and audit pricing, the authors report that private equity investment “increases sharply after 2020.”
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The paper lands amid a widening regulatory and standards-setting response. State boards of accountancy, NASBA, the AICPA and international ethics setters have been studying whether alternative practice structures and private equity investment create new independence risks or oversight gaps. The study adds market-level evidence — not a case study of a single deal, but measurable signals of consolidation and pricing power.
“The word has gotten out there that accounting firms are great investments,” consultant Allan Koltin says. Finance professor Sabrina Howell, who has studied private equity, describes it as “the tip of the spear driving consolidation” in a traditionally fragmented industry.
A key finding centers on a segment where audits are relatively uniform: audits of employee benefit plans governed by the Employee Retirement Income Security Act. The authors call ERISA audits a “highly standardized” service and report that “ERISA audit fees rise by roughly 7 percent in the year after PE entry.” In such a setting, they add, higher fees are “much more likely to be a price effect” — a shift in markups rather than inputs.
The authors do not argue that private equity investment is inherently harmful. But they frame the profession’s dilemma as “preserving independence and competition in a market increasingly driven by financial capital.”
A post-2020 inflection point
Private equity has long pursued “roll-up” strategies in fragmented markets by backing a platform and then acquiring smaller firms. Accounting has historically been harder to penetrate because state licensing regimes often restrict equity ownership and require attest practices to be controlled by CPAs.
That has changed as firms adopt alternative practice structures, or APS models. In those structures, attest services remain in a CPA-owned firm while tax, advisory and administrative operations sit in affiliated entities that can accept outside investment. The two sides may share management, branding and back-office services through contracts.
Abramova and Barrios argue that the shift in ownership has accelerated rapidly. Their dataset shows private equity activity rising after 2020 and extending “to both CPA-licensed audit firms and non-CPA advisory practices,” with most activity in “large mid-tier PCAOB-registered firms.” That concentration matters because PCAOB-registered firms serve public companies and operate in the most heavily scrutinized segment of the audit market.
What changes after private equity arrives
The paper reports a consistent post-investment pattern: “After PE entry, firms grow faster,” the authors write. “Non-audit revenues rise, employment expands, and cross-state M&A accelerates.” That combination fits a familiar private equity playbook — build scale, expand geographically and shift the service mix toward higher-margin lines.
Industry commentary has echoed the argument about access to capital. A Thomson Reuters Institute analysis says private equity is “providing small tax and accounting firms with much-needed capital and operational expertise,” while also warning that shorter-horizon return expectations can create pressure for rapid growth and profitability.
The study’s contribution is to connect those deal narratives to measurable market outcomes.
Labor markets: concentration where PE wants to grow
Private equity-backed firms often emphasize tax and advisory services that can scale and produce recurring revenue. Abramova and Barrios test whether that strategy shows up in labor markets.
They report that private equity entry is associated with higher labor-market concentration in “key accounting occupations,” with the clearest effects in roles tied to advisory and tax work rather than core auditing. The authors report an increase in the probability that a metro area will end up in the top decile of concentration for tax professionals and financial analysts after private equity entry, while the effect for accountants and auditors is smaller and weaker.
The magnitude is not enormous, but the direction is consistent with the broader narrative as private equity appears to be pushing firms to concentrate talent and capacity in the lines of business that are easiest to expand and monetize.
Pricing power: ERISA audit fees as a bellwether
The paper’s most concrete pricing statistic is the 7% increase in ERISA audit fees following the entry of private equity. The authors use ERISA audits as a test case because of the constraints on scope and the standardization of the work.
They describe ERISA audits as “highly standardized, slow-moving, and largely homogeneous.” Because the work “leaves little room for scope expansion or quality differentiation,” they argue, sustained fee increases are difficult to attribute to “harder audits.” In that setting, they say, it is “much more likely to be a price effect.”
The result is likely to draw attention because ERISA plan audits are common, often purchased by organizations with limited tolerance for cost escalation, and performed by a wide range of firms. It also bridges two debates that are sometimes separated in professional discussions: whether private equity influences firm governance and culture, and whether it affects client-side outcomes, such as pricing.
How it adds to the broader PE-in-accounting debate
Much of the public conversation about private equity in accounting has been driven by deal announcements and by questions about independence and firm control. Those concerns have been sufficiently widespread that professional and regulatory bodies have been producing guidance and discussion documents.
In the United States, the AICPA’s Professional Ethics Executive Committee voted in December 2025 to issue an exposure draft proposing revisions related to alternative practice structures, including updated independence guidance for private equity-backed arrangements. The exposure draft said the changes “aim to uphold the integrity of the profession while offering practical guidance.”
Internationally, the International Ethics Standards Board for Accountants has published material on ethical and independence considerations related to private equity investment in accounting firms, signaling that the issue is not limited to U.S. ownership rules. In Europe, Accountancy Europe reported a “sharp rise” in private equity transactions in recent years and said it was offering a “neutral, fact-based perspective.”
Other research is beginning to explore related questions. A 2024 registered report proposal for The Accounting Review outlined a research design to investigate whether private equity investment in accounting firms impacts audit quality — a sign that the academic pipeline is shifting beyond deal counts toward outcome measurement.
What accountants should take from the findings
Private equity is not merely a change in ownership. It drives faster growth, expansion in non-audit lines and more acquisitions across state borders — a strategic pattern that can reshape local markets for talent and clients.
For regulators and standards-setters, the paper provides measurable indicators to watch, including occupational concentration in markets where private equity-backed platforms expand and pricing effects in standardized audit segments. If those indicators persist or broaden, they could add urgency to efforts already underway to clarify independence guardrails and oversight frameworks for alternative practice structures.
For clients and plan sponsors, the ERISA audit result offers a warning sign. In a service the authors describe as homogeneous, higher fees may reflect market power. Even if audit quality remains steady, pricing pressure can emerge as consolidation reduces the number of choices.
Abramova and Barrios say the profession is wrestling with “preserving independence and competition” as financial capital becomes more central to how firms are organized and scaled.