Accounting
Can PE buy transformation? | Accounting Today
For all the investments private equity is making into accounting, many of the firms receiving the infusion say the money is just a larger piece of the puzzle all forward-thinking firms are trying to solve — of much-needed transformation.
The money is a pivotal step toward becoming that future-focused firm, and the process of obtaining it kicked off a discussion about structuring private equity deals at Accounting Today’s PE Summit last week in Chicago, featuring panelists Jeremy Dubow, CEO of Chicago-based Prosperity Partners, and Richard Kopelman, CEO of Atlanta-headquartered Aprio Advisory Group.
Aprio, which
“We looked at everything,” said Kopelman, including merging up and a debt recapitalization, before the firm’s investigation of the market and internal finances led to PE as the best option.
Meanwhile, Prosperity Partner’s due diligence included cold calls, according to Dubrow, who heads the firm formerly known as NDH before it
“We were looking at the future trying to decide which direction we should go,” he explained. “We were a strong, profitable firm with success in our ranks, but realized we were at a crossroads in terms of people, the labor-constrained environment, and where we wanted to be.”
Alan Klehr
Talent was a ubiquitous topic throughout the two-day summit, as many firms described courting or accepting PE investments due to today’s sparser pipeline, and PE firms spoke about the value of accounting firms with their business being low-risk, with a positive cash flow, recurring revenue, and led by trusted accountants.
For Prosperity, a firm of about 120 people, picking up the phone was the best way to discover what PE could unlock.
“As a small firm, we started with a bunch of cold calls and emails,” Dubow recounted. “The process initially started through cold calls. We didn’t know the tidal wave of change on the horizon. We would take a few phone calls, understand how this is working and how to value your accounting firm.”
For Aprio, value had to be calculated very specifically, as Kopelman explains “we wanted to do away with the mindset to sell assets and monetize it. We see firms that robbed younger partners of the ability to serve younger partners in the right way.”
That meant moving away from the deferred comp model, he continued. “We wanted to move to a model of creating value for the business, for owners, for growing entrepreneurs.”
Dubow and his team had the same concerns for their people.
“Private equity allows us to issue equity to all employees, from top to bottom, where everyone shares in the upside of the firm,” he said. “Everyone participates and is growing in the same direction. Everyone is going to celebrate at the same time.”
The firm of the future
While ownership — or potential ownership — in the business can incentivize younger people to join a firm, there are other elements to a next-generation practice, and PE may help in attaining them.
“We have to create the firm of the future today, in key areas,” said Koltin Consulting Group CEO Allan Koltin, also co-chair of the PE Summit, during his keynote address. “It’s going to cost real money to do it. Nothing in business is forever. Not all private equity deals will be successful. Some are, and some don’t meet the goals of both parties.”
He also stressed that PE is
Dubow would agree. “Don’t just jump into private equity and say this is the only thing I’m considering,” he advised. “We spent time looking into alternatives.”
Once deciding on PE and specifically Unity Partners, Dubow found it accelerated change within the firm.
“As a small firm that changes with a 10% improvement every year, how do we increase that to 100%?” he said, explaining that PE “allowed us to think about people differently and be transformative with technology. We have a different business as a result. It allows us to be a firm of the future. We take that type of risk, and it allows us to move to the next level.”
Alan Klehr
Avani Desai, CEO at Schellman, explained during another PE Summit panel that the firm’s
“It helped me put together a true executive leadership team,” she said. “We now have a CRO, chief growth officer, someone leading digital transformation.”
According to Desai, an employee during a recent firm town hall expressed: “We have changed more in the last three years than the 18 years prior.”
Desai and her fellow practitioner panelists all agreed that PE had eased the administrative burdens and tactical headaches that often fall on partners, and allowed for more long-term strategizing.
This was new for New York City-based Regional Leader LMC Advisors, which joined
“Before Ascend we had no strategic planning, no strategy for top-line growth… no plan of action,” he said. “Through budgeting, and a three-year strategic plan, we really looked at our practice.”
The transition from independence to private equity-backed was not without surprises, according to PE Summit speakers.
This included a larger stress on the financials. “It was a whole new level of reporting, which was the hardest thing for me at the beginning — how much data they wanted,” shared Desai.
“The amount of reporting was a shock to us,” she continued, “but we learned. You can’t live your life in a spreadsheet, I tell my 28-year-old boss. But getting data from there, I’ve come to the realization that it really helps to be able to see that.”
Her co-panelist, Utah-based WSRP Advisory CEO and managing partner Dan Rinehart, agreed that the influx of numbers was helpful, especially for firms considering entering the PE space.
“As a bunch of accountants, we’re supposed to be the experts on accounting, financial reporting,” he said. “We didn’t know we had to really dive into the details of realization, utilization. We understood it, were tracking it, from a strategic planning perspective, but we had to dive into the details…. The extra reporting had actually been really good, to help us make decisions more in real time.”
Rinehart was also pleasantly surprised by the freedom afforded under the firm’s PE structure.
“For us, we haven’t noticed any control change; we look at the private equity partner as a partner,” he said. “Not someone that’s a boss to us, but a partner. I’m trying to think of one decision where I felt like I couldn’t make it. Sometimes I call the private equity partner [and ask] ‘What do you think of this?’ They say, ‘You’re in charge, you run the firm.’ I was scared about taking on private equity — is someone going to be walking the halls of the office, reading all the workpapers, seeing when I take lunch? That’s not going to happen.”
“It’s a partner, they’re not breathing down our backs,” Cohen agreed about LMC’s operations under Ascend. “The executive leadership team is making those decisions. The Ascend board is there to be a thought partner.”
Alan Klehr
Of the many detailed considerations to be made in a CPA-PE firm partnership, the appeal of the accounting profession was a central theme throughout the PE Summit.
Stuart Ferguson shared his perspective, as managing partner of strategic advisory firm Pointe Advisory, during another summit panel.
“One thing I’m fascinated by is that private equity investment in the space has brought swagger to the CPA industry,” he said. “Ten years ago, if a CPA firm was in the news it was usually for a bad reason, not a good reason. Now, the majority is related to the attractiveness and growth potential, the opportunity of the great businesses built by CPA firms. There’s a swagger, a reason to be proud of the business you built. Private equity, as its prone to do, is a disruptor and accelerates disruption. Firms are forced to think differently about talent [and more].”
“It’s a proud chapter in public accounting,” co-panelist Koltin chimed in. “You sacrificed your life, donated your brain and body to the cause, and never thought the business could be worth this on day one. The bar got raised, and internal valuations — maybe we need to change our valuation.”
During the height of tax season, billionaire Elon Musk’s Department of Government Efficiency is reportedly aiming to centralize all IRS data around a single portal allowing third parties easier access to taxpayer information, and will begin efforts next week with a “hackathon” to find solutions. DOGE apparently believes it can complete this project in about 30 days.
As first reported by
While the IRS already
Such a move would also serve to take the dozens of disparate systems housed in on-premises data centers, purposely compartmentalized from the cloud, into this new API. It is unknown whether, or how, the new API would account for the numerous special permissions currently required to access certain types of data. Wired said this has led to security concerns, as the IRS has sensitive data that would be of great value to criminals, and centralizing everything under a single API could disrupt the systems of control the service already has in place to safeguard taxpayer information.
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A group of over 100 lawmakers reintroduced legislation in the House to expand and strengthen the Low Income Housing Tax Credit.
Rep. Darin LaHood, R-Illinois, Suzan DelBene, D-Washington, Claudia Tenney, R-New York, Don Beyer, D-Virginia, Randy Feenstra, R-Iowa, and Jimmy Panetta, D-California, reintroduced the Affordable Housing Credit Improvement Act on Tuesday along with about 100 cosponsors. The bill has been repeatedly reintroduced in Congress since 2016 without winning final passage. A companion bill in the Senate is slated for introduction soon. Last Congress, the Affordable Housing Credit Improvement Act had 273 bipartisan cosponsors in the House of Representatives and 34 in the Senate.
The Affordable Housing Credit Improvement Act would support the financing of an estimated nearly 2 million new affordable homes across the country by increasing the number of credits allocated to each state by 50% for the next two years and making the temporary 12.5% increase secured in 2018 permanent. The credits have already helped build more than 59,000 additional affordable housing units across the U.S.
The bill would also increase the number of affordable housing projects that can be built using private activity bonds, stabilizing the financing for workforce housing projects built using private activity bonds by decreasing the amount of private activity needed to secure LIHTC funding. Proponents believe that as a result, projects would be able to carry less debt, and more projects would be eligible to receive funding.
“As I travel throughout Illinois’ 16th Congressional District, I frequently hear how the shortage of affordable housing impacts our communities throughout central and northwestern Illinois,” LaHood said in a statement. “To address this growing crisis across the country, Congress must strengthen tools to drive investment into affordable workforce housing and expand housing options for hardworking families nationwide. I am proud to reintroduce the bipartisan Affordable Housing Credit Improvement Act alongside Representatives DelBene, Tenney, Beyer, Feenstra, and Panetta to strengthen our communities and support economic development.”
The bill would also improve the LIHTC program to serve communities such as veterans, victims of domestic violence and rural Americans.
“Too many families are struggling to find a safe, affordable place to call home,” said DelBene in a statement. “This is a pervasive problem across America and in Washington. When people have stable housing, it has a ripple effect throughout other aspects of life. They’re better able to support their families and succeed at work. This overwhelmingly bipartisan legislation makes smart, targeted investments to increase affordable housing supply and help meet the needs of growing communities both in Washington and across the country.”
Since it was created in 1986, the LIHTC has helped build or restore more than 3.5 million affordable housing units, nearly 90% of all federally funded affordable housing during that time. Approximately 8 million American households have benefited from the credit, according to proponents, and the economic activity that it generated has supported 5.5 million jobs and generated more than $617 billion in wages.
In the previous Congress, over half the membership of the House cosponsored the AHCIA, including majorities of both Republicans and Democrats. Key provisions from the bill passed the House with overwhelming support as part of the Tax Relief for American Families and Workers Act of 2024 (H.R.7024): restoring the 12.5% expansion of the LIHTC initially signed into law by President Trump (but allowed to expire in 2021), and easing the private activity bond threshold requirements for accessing four percent credits. This year’s reintroduction of the bill comes as communities across the country struggle with higher housing costs and dwindling supply, according to proponents.
“The overwhelming bipartisan support for the Affordable Housing Credit Improvement Act of 2025 underscores the critical need to increase the supply of affordable rental homes,” said Affordable Housing Tax Credit Coalition CEO Emily Cadik in a statement. “We thank the bill’s sponsors for their leadership and the more than 100 bipartisan House cosponsors for supporting this commonsense solution to expand and strengthen the Housing Credit.”
“With our nation’s housing crisis reaching record levels, there is a strong imperative for Congress to act,” said Dudley Benoit, president of the AHTCC board of directors and executive vice president of Walker & Dunlop, in a statement. “The affordable housing crisis affects every state and all types of communities. The Housing Credit has proven to be an effective tool in urban and rural areas alike. Without action, this crisis will continue to spiral, leaving more families unable to find affordable housing in their communities and making it more difficult for those communities to support a workforce.”
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