Private Equity Firms Buying Accounting and Professional Services Firms

Professional services firms were once rarely bought by private equity. That has changed quickly. Accounting firms, engineering and consulting practices, staffing businesses, and legal and compliance services now attract a growing number of buyers, drawn by long client relationships, high retention and a generation of owners without a clear successor.

Accounting has seen the most visible change. Because rules limit who can own an audit practice, many deals split a firm in two. The licensed CPA firm keeps the audit and attest work and stays owned by CPAs, while a company backed by private equity owns the tax, advisory and other services and provides staff and systems to both. Other professional services, such as engineering, consulting, payroll and benefits administration, can usually be bought outright.

Buyers in this sector look at client retention, revenue per professional, billing rates and how much work recurs rather than coming from one-off projects. They will want to know how much revenue depends on the founding partners, how many younger professionals could take over those relationships, and how hard it is to hire in your market. Technology matters too, since many buyers plan to invest in software and outside support to free up staff time.

For partners, the key questions are personal. How will your pay change? How much of your proceeds will be in cash and how much in equity of the larger platform? How long will you be expected to stay, and what happens to partners who do not want to sell? Firms that have done many of these deals will have clear answers, and the profiles below show who is buying now.

Culture is worth as much attention as price. A firm that has always run on partner consensus may find a private equity owner's reporting, budgets and growth targets a real change, so it helps to talk with partners at firms the buyer has already acquired.

Greymont is paid by buyers, never by owners. Greymont can help partners compare these buyers on structure, pay and culture before any conversation with a buyer begins.