The Marcum Retrospective – Part 4
Last week, part 3 of The Marcum Retrospective left off with the entrance of outside capital to the accounting profession. It started with my good friend Charly Weinstein, CEO of EisnerAmper LLP, taking on TowerBrook Capital Partners as a financial partner. And the accounting profession was off to the races, with private equity fund after private equity fund looking to make investments into CPA firms and actually doing so.
EisnerAmper’s transaction in August 2021 was quickly followed in September 2021 by another accounting legend, Joel Cooperman of Citrin Cooperman, bringing in New Mountain Capital as a partner. Next was Parthenon Capital’s investment in June 2022 into Cherry Bekaert.
Things then started to quiet down for the rest of 2022 and all of 2023. Perhaps it was rising interest rates, or perhaps those three were going to be the test cases, with everyone else waiting on the sidelines to see how the first deals played out. Perhaps we’ll never know. But then 2024 started, and the floodgates of private equity capital pounced on the accounting profession.
Baker Tilly, ranked 10 in the Top 100, secured a strategic investment from Hellman & Friedman, and New Mountain Capital doubled down in a big way by making an investment into 7th ranked (at the time) Grant Thornton LLP. When our acquisition by CBIZ is completed, CBIZ will bypass Grant to become the 7th largest accounting firm in the country.
Other firms taking on capital from private equity investors this year have included Aprio LLP and Sikich LLC, and 3 or 4 other deals are set to close before the end of the year. By my count, there will be 10-12 private equity-backed major accounting firms by December 31. The ownership and capital structure, as well as the business model of public accounting, will never be the same.
Only time will tell if the evolution of our profession will be successful, not just for the PE firms but also for the future CPAs navigating the economics of the corporate world as compared to the partnership model. And will it help us attract and retain the talent we desperately need? It will also be interesting to watch how accounting firms fare as they’re traded from one PE firm to another every 3-5 years.
Rosh Hashanah, the Jewish New Year, started Wednesday night and ends at sundown today. To those of you who celebrate Shana Tova.
