Private equity firms have bought five of the top 26 accounting firms in the past three years as they mount a concerted strategy to reshape the industry. 

The trend should not come as a surprise. It’s one we’ve seen play out in several industries from health care to insurance, where a combination of low-risk, recurring revenue, scalability and an aging population of owners create a target-rich environment. For small to midsized accounting firms, the trend is exacerbated by a technological revolution that’s truly transforming the way accounting work is done, and a growing talent crisis that is threatening tried-and-true business models.

How will this type of consolidation affect the accounting business, and what do firms and their clients need to be on the lookout for as the marketplace evolves?

Assessing the opportunity… and the risk

First and foremost, accounting firm owners need to be aware of just how desirable they are right now. While there has been some buzz in the industry about the growing presence of private equity firms, most of the activity to date has focused on larger, privately held firms. In fact, when we recently asked tax professionals about their exposure to private equity funding in our 2025 State of Tax Professionals Report, we found that just 5% of firms have actually inked a deal and only 11% said they are planning to look, or are currently looking, for a deal with a private equity firm. Another 8% said they are open to discussion. On the one hand, that’s almost a quarter of firms feeling open to private equity investments in some way. But the lion’s share of respondents —  87% — said they were not interested.

Recent private equity deal volume suggests that the holdouts might change their minds when they have a real offer on the table. According to S&P Global, private equity and venture capital-backed deal value in the accounting, auditing and taxation services sector reached more than $6.3 billion in 2024, the highest level since 2015, and the trend shows no signs of slowing. Firm owners would be wise to start watching this trend to see how it might affect their businesses — whether they are interested in selling or not.

Focus on tech and efficiencies of scale

The reason this trend is so important to everyone in the industry right now is that the private equity firms entering this space are not trying to become accountants. They are looking for profitable exits. And they will do that by seizing on a critical inflection point in the industry that’s making it possible to scale accounting firms more rapidly than ever before by leveraging technology to deliver a much wider range of services at a much lower cost. So, whether your firm is interested in partnering with private equity or dead set on going it alone, the hyperscaling that’s happening throughout the industry will affect you one way or another.

Private equity thrives in fragmented businesses where the ability to roll up companies with complementary skill sets and specialized services creates an outsized growth opportunity. Andrew Dodson, managing partner at Parthenon Capital, recently commented after his firm took a stake in the tax and advisory firm Cherry Bekaert, “We think that for firms to thrive, they need to make investments in people and technology, and, obviously, regulatory adherence, to really differentiate themselves in the market. And that’s going to require scale and capital to do it. That’s what gets us excited.”

Over time, this could reshape the industry’s market dynamics by creating the accounting firm equivalent of the Traveling Wilburys — supergroups capable of delivering a wide range of specialized services that smaller, more narrowly focused firms could never previously deliver. It could also put downward pressure on pricing as these larger, platform-style firms start finding economies of scale to deliver services more cost-effectively.

The technology factor

The great equalizer in all of this is technology. Consistently, when I speak to tax professionals actively working in the market today, their top priorities are increased efficiency, growth and talent. Firms recognize they need to streamline workflows and processes through more effective use of technology, and they are investing heavily in AI, automation and data analytics capabilities to do that. Private equity firms, of course, are also investing in tech as they assemble their tax and accounting dream teams, in many cases raising the bar for the industry.

The question is: Can independent firms leverage technology fast enough to keep up with their deep-pocketed competition?

Many firms believe they can, with some even going so far as to publicly declare their independence.  Regardless of the path small to midsized firms take to get there, technology-enabled growth is going to play a key role in the future of the industry. Market dynamics that have been unfolding for the last decade have been accelerated with the introduction of serious investors, and everyone in the industry — large and small — is going to need to up their games to stay competitive.

The House-passed version of President Donald Trump’s massive tax and spending bill would deliver a financial blow to the poorest Americans but be a boon for higher-income households, according to a new analysis from the Congressional Budget Office.

The bottom 10% of households would lose an average of about $1,600 in resources per year, amounting to a 3.9% cut in their income, according to the analysis released Thursday. Those decreases are largely attributable to cuts in the Medicaid health insurance program and food aid through the Supplemental Nutrition Assistance Program.

Households in the highest 10% of incomes would see an average $12,000 boost in resources, amounting to a 2.3% increase in their incomes. Those increases are mainly attributable to reductions in taxes owed, according to the report from the nonpartisan CBO.

Households in the middle of the income distribution would see an increase in resources of $500 to $1,000, or between 0.5% and 0.8% of their income. 

The projections are based on the version of the tax legislation that House Republicans passed last month, which includes much of Trump’s economic agenda. The bill would extend tax cuts passed under Trump in 2017 otherwise due to expire at the end of the year and create several new tax breaks. It also imposes new changes to the Medicaid and SNAP programs in an effort to cut spending.

Overall, the legislation would add $2.4 trillion to US deficits over the next 10 years, not accounting for dynamic effects, the CBO previously forecast.

The Senate is considering changes to the legislation including efforts by some Republican senators to scale back cuts to Medicaid.

The projected loss of safety-net resources for low-income families come against the backdrop of higher tariffs, which economists have warned would also disproportionately impact lower-income families. While recent inflation data has shown limited impact from the import duties so far, low-income families tend to spend a larger portion of their income on necessities, such as food, so price increases hit them harder.

The House-passed bill requires that able-bodied individuals without dependents document at least 80 hours of “community engagement” a month, including working a job or participating in an educational program to qualify for Medicaid. It also includes increased costs for health care for enrollees, among other provisions.

More older adults also would have to prove they are working to continue to receive SNAP benefits, also known as food stamps. The legislation helps pay for tax cuts by raising the age for which able bodied adults must work to receive benefits to 64, up from 54. Under the current law, some parents with dependent children under age 18 are exempt from work requirements, but the bill lowers the age for the exemption for dependent children to 7 years old. 

The legislation also shifts a portion of the cost for federal food aid onto state governments.

CBO previously estimated that the expanded work requirements on SNAP would reduce participation in the program by roughly 3.2 million people, and more could lose or face a reduction in benefits due to other changes to the program. A separate analysis from the organization found that 7.8 million people would lose health insurance because of the changes to Medicaid.

The New York State Legislature passed a bill on Thursday that establishes an additional pathway to CPA licensure, and it awaits Gov. Kathy Hochul’s signature.

Backed by the New York State Society of CPAs, the legislation creates a third pathway to licensure: 120 credit-hours (or what is equivalent to a bachelor’s degree), two years of experience and passing the CPA exam. It also ensures practice mobility so out-of-state accountants can serve clients in New York.

The bill passed unanimously in the Assembly and with two negative votes in the Senate.

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“Passing one piece of legislation is not an easy task, let alone passing two,” NYCPA CEO Calvin Harris said in a statement. “Furthermore, the Society with our partners in Albany introduced additional pathway legislation this year. I’ve been told that it is almost impossible and completely unprecedented to pass any form of legislation in just one legislative session, but with the help of nearly 40 members that participated in Lobby Day in May, our exceptional Government Relations Teams and our coalition partners, which includes our PAC and Legislative Task Force, we took the united voice of the profession to the halls of power and demonstrated why advocacy is one of the greatest member benefits.”

New York is one of more than a dozen states that have already passed changes to licensure requirements in an ongoing effort to address the profession’s talent shortage. Most recently, Illinois and Minnesota passed similar bills in May.

The New York State Legislature passed another NYCPA-backed bill on June 9, which would authorize the use of electronic signatures by a person granted Power of Attorney with respect to the submitted tax documents. The bill passed unanimously in the Assembly and with one negative vote in the Senate. It also awaits the signature of Gov. Hochul.