The Rise of Platform Accounting: How Private Equity is Reshaping the CPA Landscape

The Rise of Platform Accounting: How Private Equity is Reshaping the CPA Landscape

The accounting profession, long characterized by traditional partnerships and local firms, is undergoing a profound transformation. A new breed of players, primarily private equity-backed "platform accounting" firms, is rapidly consolidating the industry, fundamentally altering how CPA services are delivered and how firms operate. This shift, exemplified by companies like Ascend, is driven by a confluence of factors, from succession challenges to the escalating need for technology and specialized expertise.

The "Ascend Model": A New Blueprint for Growth

Ascend is a rapidly growing platform that partners with successful regional accounting and advisory firms. Its core mission is to empower these firms to grow and thrive in a competitive and evolving industry by providing them with resources, capital, and strategic support that might otherwise be out of reach for independent entities. The model allows firms to maintain their local presence and client relationships while benefiting from the scale and innovation of a larger organization.

Ascend's strategy involves acquiring or partnering with regional firms, typically those with revenues between $15 million and $50 million, and integrating them into its platform. Since its inception, Ascend has quickly expanded its footprint, adding nearly 20 regional firms across various states. This rapid growth has propelled Ascend into the upper tier of the accounting industry, making it a "Top 30 firm" by Accounting Today in just two years.

At the heart of this trend are platform companies, Ascend being one of them, that acquire or partner with established regional accounting and advisory firms. Unlike traditional mergers where firms fully integrate into a single entity, these platforms often allow the acquired firms to retain their brand, local presence, and client relationships, while providing a powerful backbone of centralized resources and capital.

A key enabler of this model is the Alternative Practice Structure (APS). Due to regulatory rules that historically restricted ownership of CPA firms to licensed accountants, private equity firms couldn't directly invest in or own traditional accounting practices. APS addresses this by typically separating the attest (audit) function into a distinct, CPA-owned entity, while the advisory, tax, and other non-attest services are housed in a separate, often private equity-owned, entity. This legal separation allows for external investment while maintaining regulatory compliance for audit services.

For the regional firms joining these platforms, the following 5 benefits are compelling:

1. Access to Capital: Private equity backing provides significant capital for strategic investments in technology, talent, and further acquisitions, which might be difficult for independent firms to secure.

   
   

2. Enhanced Technology & AI: Platforms invest in cutting-edge cybersecurity, IT infrastructure, enterprise applications, and artificial intelligence tools, modernizing operations and client service.

   
   

3. Talent Solutions: They offer robust recruiting, comprehensive learning and development programs, and more competitive compensation structures, helping firms attract and retain top talent in a tight labor market.

   
   

4. Operational Efficiencies: Centralized back-office functions, shared services (including offshore capabilities), and standardized processes create economies of scale, freeing up local teams to focus on client-facing work.

   
   

5. Succession Planning: For aging partners, these platforms offer a clear and attractive exit strategy, ensuring the legacy of their firm continues.

   
   

Key Players in the Consolidation Wave:

Beyond Ascend, several other prominent firms and private equity-backed entities are actively participating in this consolidation:

• CBIZ, Inc.: A publicly traded company that has long pursued an acquisition strategy, integrating accounting, tax, financial advisory, and consulting firms into its national network.

  
  

• Eisner Advisory Group (formerly EisnerAmper): Backed by TowerBrook Capital Partners, Eisner has aggressively expanded, transforming into a tech-enabled advisory powerhouse through significant M&A activity.

  
  

• Citrin Cooperman: With strategic private equity investment, Citrin Cooperman is rapidly building a national footprint, focusing on middle-market dominance and expanding into high-growth advisory sectors.

  
  

• Cherry Bekaert: This firm has leveraged private equity backing to fuel rapid expansion through numerous acquisitions, broadening its service offerings and geographic reach.

  
  

• Carr, Riggs & Ingram (CRI): Supported by private equity, CRI employs a "roll-up" strategy, acquiring smaller firms to achieve scale while providing centralized resources.

  
  

• Schellman & Company: Known for its IT audit expertise, Schellman has also utilized private equity investment to grow both organically and through acquisitions, expanding its capabilities and market presence.

  
  
  
  

Several factors are fueling this accelerated consolidation:

1. Succession Crisis: A significant portion of CPA firm partners are nearing retirement, and many independent firms lack clear succession plans or internal candidates to take over. Private equity offers a viable and often lucrative exit.

   
   

2. Technology Imperative: The rapid pace of technological change (AI, automation, data analytics, cloud computing) requires substantial investment. Smaller firms often struggle to keep up, making a platform's shared tech resources highly appealing.

   
   

3. Demand for Specialized Services: Clients increasingly seek comprehensive advisory services beyond traditional audit and tax. Platforms can quickly build or acquire deep expertise in areas like cybersecurity, ESG, digital transformation, and niche industry consulting.

   
   

4. Talent Shortages: The accounting profession faces a persistent talent shortage. Larger, well-resourced platforms can offer more attractive career paths, training, and benefits, making them more competitive in recruiting and retaining professionals.

   
   

5. Economies of Scale: Consolidating back-office operations, technology, and administrative functions across multiple firms creates significant cost efficiencies and allows for greater investment in growth areas.

   
   

Implications and Future Outlook

This trend is reshaping the landscape by creating a new tier of large, diversified firms that bridge the gap between the traditional "Big Four" and smaller independent practices. Clients will benefit from access to a broader range of specialized expertise, advanced technology, and deeper resources. However, some may also value the highly personalized, local touch of smaller, independent firms. Lastly accounting professionals will have access to new career opportunities, exposure to cutting-edge technology, and potentially more structured growth paths. It also presents a choice between the platform model and the traditional independent firm, each with its own advantages. From an industry standpoint, Of course this can cause more intense competition but also push firms to be more innovative on service, technology, price and distribution.

The rise of platform accounting is not merely a financial trend; it's a strategic evolution. As private equity continues to invest in and reshape the CPA landscape, the industry will likely become more integrated, technologically advanced, and specialized, ultimately redefining the future of professional services.