Private equity and the accounting industry
How did we get here?
Brian Goodhart | February/March 2026 Footnote
Editor's note: Updated January 29, 2026
Want to dive deeper into private equity? See how some firms maintain their independence and thrive in the current market.
You have likely heard the term private equity (PE) by now, which represents a multi-billion-dollar asset class involving the direct investment of capital into private companies or the acquisition of public companies to take them private. You may even have a visceral reaction one way or another to this growing sector.
Typically, PE firms are managed by general partners (GPs) who raise funds from limited partners (LPs), such as pension funds and high-net-worth individuals, to focus on “value creation” — improving a company’s operations, governance and financial structure over a specific time horizon (historically four to seven years) before exiting for a profit.
While PE has been making waves across the accounting industry in recent years, it has actually been around for quite a while.
A historical perspective
We are currently seeing a large-scale movement in private equity, but this is certainly not new. In fact, private equity activity is more than a century old. In the early 1900s — and perhaps going back to as early as the Industrial Revolution in the 1850s — there were merchant bankers who assembled private pools of capital to acquire companies.
One famous example is JP Morgan’s 1901 acquisition of Carnegie Steel to form U.S. Steel as a precursor to modern buyouts.
The modern private equity industry emerged after World War II, marked by the 1946 founding of the first venture capital firms, American Research and Development Corporation (ARDC) and J.H. Whitney & Company. It was a partner at J.H. Whitney that coined the term venture capital. ARDC’s 1957 investment in Digital Equipment Corporation, which returned more than 500 times the original invested capital, solidified the viability of the institutional PE model.
The 1980s heralded the golden age of the leveraged buyout and saw the rise of corporate raiders, like Carl Icahn, who leveraged debt to restructure underperforming firms. Since then, the industry has evolved through several boom-and-bust cycles, including the dot-com bubble (1990s) and the pre-2008 mega-buyout era. Following the Great Financial Crisis of 2008, PE capitalized on historically low interest rates to explode in popularity.
In 2002, the Sarbanes Oxley Act (SOX) created a seismic shift in this calculus. Created as a response to the accounting scandals at Enron and elsewhere, SOX had several major features: It increased compliance costs for public companies by mandating stringent requirements for financial reporting, added internal controls and included requirements that CEOs and CFOs personally certify financial statements. The heavy regulatory burden incentivized some companies to go private to avoid the regulations, which increased the potential pool for private equity buyouts. According to a report in S&P Global, private equity assets under management reached $3.1 trillion in the United States by the end of 2024.
As of late 2025, the private equity industry is navigating a moment of selective recovery following a period of high interest rates and geopolitical volatility. PE activity in the United States surged in early 2025, with Q1 deal values reaching heights not seen since 2022, including blockbuster transactions like the $23.7 billion purchase of Walgreens Boots Alliance. Sectors like technology — particularly generative AI — and health care remain dominant, with tech accounting for more than 20% of total buyout value in the preceding year.
PE’s entry into accounting
A recent and transformative trend in the scope of PE is its entry into the accounting profession, traditionally governed by a partner-owned model.
PE firms are attracted to the accounting sector’s stable, recurring revenue and high client retention (often exceeding 90%). In a volatile market, audit and tax services are viewed as recession-resistant. Accounting firms are fetching a significant premium over historical norms, indicating strong investor confidence.
This trend accelerated in August 2021 when EisnerAmper secured investment from TowerBrook Capital Partners, the first top 20 U.S. firm to do so under an Alternative Practice Structure (APS). Other major transactions followed rapidly:
- In October 2021, New Mountain Capital acquired a majority stake in Citrin Cooperman, which it later sold to Blackstone in January 2025 for an estimated value of more than $2 billion, marking the industry’s first “PE-to-PE” ownership transfer.
- Baker Tilly received a minority investment from Hellman & Friedman and Valeas Capital Partners in February 2024, leading to a subsequent merger with Moss Adams that created the sixth-largest U.S. accounting firm.
- In March 2024, New Mountain Capital acquired a majority stake in the non-attest business of Grant Thornton.
- Investments continued into other top firms in late 2024 and 2025, including deals with Aprio, Armanino, PKF O’Connor Davies, Carr, Riggs & Ingram, CohnReznick and Wipfli.
While the full effects remain to be seen, PE capital should allow firms to rapidly scale via buy-and-build strategies, modernizing technology and offshore talent capabilities. However, concerns about governance and succession still abound as PE firms and accounting partners may have different goals and visions for the profession.
Possible future trends
Looking into 2026 and beyond, several trends are poised to redefine the industry:
- Democratization of PE: New regulations, such as those allowing alternative assets in 401(k) plans, could unlock as much as $600 billion in incremental capital from retail investors. Allowing individuals to participate in markets traditionally unavailable to them could enable smaller investors to share in the success of these firms.
- The AI revolution: Beyond investing in AI companies, PE firms are increasingly using AI internally to optimize their portfolio companies’ EBITDA through operational automation. In addition, PE firms are using automation to source new prospective targets, diligence them more efficiently and streamline the deal-making process.
- Secondaries and alternative exits: With traditional IPOs still recovering, the secondary market — where PE firms sell stakes to other investors or use continuation funds — is expected to hit record volumes as a permanent tool for liquidity.
- Consolidation of the “big firms”: In the accounting sector, more than half of the top 20 U.S. firms are reportedly in transformative discussions involving private equity, suggesting a future where a few PE-backed giants dominate the mid-market.
What does all this mean for you and your firm?
We are seeing a complete revamping of the economics and ownership models that have underpinned the accounting profession for decades. These changes will lead to significant changes in the industry, but we should be careful about positioning PE as all-consuming monsters.
There have always been large pools of capital employed by consolidators guided by varying economic conditions. Two decades ago, the bogeymen were large, multi-national corporations that were swallowing up mom-and-pop businesses. Now PE has taken their place as the monsters of the moment. But that narrative is just too simple, and too convenient.
So what does this mean for the small firm and its partners?
Right now, accounting offers many characteristics that are attractive to outside observers and we may be witnessing a market appreciation for accounting that hasn’t existed before. However, I tell my clients to evaluate selling using the same framework as always. Remember that readiness is not just about your readiness, but also the readiness of your business and the market. With that in mind, select the buyer or the investor that meets most of the components in your selling equation: What seller best offers the combination of financial and nonfinancial factors that would inspire you to sell? Using this framework and good judgment will allow you to evaluate and appreciate what’s going on in the market and take advantage of it when it’s right for you.
What the future holds
PE and investors like it are not new, they are simply the latest iteration in a long line. The influx we’re seeing into accounting as well as other industries will likely continue for some time, at least as long as the economics remain favorable. PE presents an opportunity though, and it is important to navigate these waters carefully when contemplating selling. Don’t believe the headlines about PE being monsters; these firms are staffed by individuals tasked with creating value for their owners. It might turn out that these are the right people for you.
Brian Goodhart is the director of Capstone’s M&A advisory services and has extensive experience in conducting middle-market transactions on both the buy and sell sides. He works side-by-side with clients throughout the deal making process.
