PE

How PE Drives Billing Rates Higher

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New Paper Links Post-2020 Surge to Consolidation and Pricing Power.

Barrios and Abramova: As PE moves into accounting, researchers see more roll-ups, more non-audit work and higher fees

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.

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How Private Equity Created $200 Billion in New Riches for CPAs

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The math is simple, even if the implications are not.

By CPA Trendlines

For decades, the value of a CPA firm was constrained by one simple fact: partners had to buy each other out with their own money. That reality imposed discipline, but it also capped valuation. Firms were priced to be affordable, not aspirational.

That changed when private equity arrived.

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Over the past five years, private equity funding has fundamentally altered how CPA firms are valued — not by changing what firms do, but by changing how the market prices scale, recurring revenue and growth potential. The result has been a sharp, uneven reset in firm values, with some practices worth 2 to 4 times what similar firms would have commanded just a few years earlier.

Before private equity entered the market, the top 500 CPA firms, which generate roughly $146 billion in annual net revenue, would have been valued at roughly $170 billion using traditional pricing norms. Applying today’s private-equity-driven revenue multiples implies a total enterprise value of more than $400 billion — a valuation reset of more than $200 billion without any change in underlying revenue. Even the smallest firms may rise with the tide. The 500th largest firm runs about $6 million a year.

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Daiber: Use Succession as a Growth Strategy | The Disruptors

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Firms that wait until a partner is ready to retire have already waited too long, plus 19 more key takeaways.

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The Disruptors
With Liz Farr

Erin Daiber, founder and CEO of Well Balanced Accountants, keeps seeing the same issue in firm after firm. A partner announces their intention to retire within a year or two, and the firm suddenly realizes no one is ready to take over.  “Firms are not starting that conversation soon enough,” Daiber says.

MORE STREAMING:MORE STREAMING: Cannon: Busy Season is Self-Inflicted | Carroll: When One Person Can Break the Firm |  Rampe: Build a Roadmap Even When the Road’s Not There | Chang: Killing SALY, One Agent at a Time | Vanover: 5-Star Firms Don’t Bill by the Hour | Kless: Profit Is a Result. Flourishing Is the Purpose | Whitman: Build Culture on ‘Progress,’ Not Change | Shein: No PE? No M&A? No Problem | Hood and Weber: Time to RISE | Proctor: Turn Dumb Ideas into Brilliant Solutions | Carter-Gray: How 1 Poor Review Strengthened the Firm | Hartman: Upwork to “40 Under 40” in 3 Years |

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“They’re not thinking about succession planning as a strategy,” she explains. Instead of treating succession as an ongoing process, firms see it as simply the point in time when a partner exits the firm. According to Daiber, succession planning should ideally begin with hiring decisions and culture building so that firms can be confident that they won’t lose clients or staff due to uncertainty about what might happen as partners get older.  

When succession planning fails, firms lose key employees before they even reach partnership consideration. “We’re losing them much sooner than that, which creates a big hole in the pipeline,” Daiber notes. She identifies an inability to have difficult conversations as the root cause, particularly when dealing with founders who view the firm as their legacy. 

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Outlook 2026: AI, Not Layoffs, Powers PE Valuations

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How CPAs are using AI to boost EBITDA multiples.

Ilya and Victor Radzinski, TaxDome co-founders

By CPA Trendlines

Private equity investors are paying higher prices for CPA firms that deploy artificial intelligence to expand capacity, deepen professional benches, and systematize growth—rather than cut headcount.

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“If AI were about to replace accountants and advisors, private equity wouldn’t be pouring billions into the sector,” TaxDome founders Ilya and Victor Radzinsky say in a public letter to stakeholders.

As dealmaking accelerates into 2026, the shift helps explain why valuation multiples for accounting firms continue to rise even as automation spreads through tax, audit, and advisory workflows. Private equity sponsors and strategic consolidators have completed hundreds of acquisitions of CPA firms since 2020, often at valuation multiples that would have been rare a decade ago.

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Ten Predictions: PE, Alternate Practice Structures and More

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Every year, the 2025 Rosenberg MAP Survey asks the industry’s top consultants to share their observations from CPA firms across the country: How do you think the next 12 months will unfold? Trends? Predictions? Other thoughts? Also, how would you assess the last 12 months? Trends? Observations? Struggles?

Valuations have changed … and risen.

By Phil Whitman
 The Rosenberg Survey

While many trends will continue, here are my Top 10 predictions:

  1. Traditional M&A activity, CPA firm to CPA firm, will continue to be very robust.

Not all CPA firms will qualify for investment by private equity and other strategic investors. As such, firms will combine for a variety of reasons including: succession and transitions, increasing profitability and gross revenues, expansion of service offerings, expansion of geographic coverage as well as adding additional depth and breadth in existing service lines.

MORE: The 2025 Rosenberg MAP Survey is available from CPA Trendlines here.

  1. Valuations of CPA firms will increase as private equity creates bidding wars between each other. We have already seen demand of CPA firms of certain sizes exceeding supply. As such, we believe that even the larger private equity-backed firms will see acquisitions of smaller firms as not only lucrative additions but significantly more supply. Approximately 10,000 +\- firms with two or more partners that are members of the AICPA. Many of these smaller firms are very profitable and have been seeing multiples of two to three times gross revenues.

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