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Choosing Between PE Profits and People-First Culture
Authored by: Kelsey Blum – Partner Marketing Manager
Public accounting is at a crossroads, and the stakes couldn’t be higher. On one hand, private equity (PE) firms are making their presence felt, promising efficiencies, scale, and increased EBITDA multiples. On the other, many accounting professionals (partners and staff alike) are questioning whether this final engineering is eroding the very foundation of the profession.
While PE-backed proponents take the stage at industry conferences, championing the benefits of outside investment, a different conversation is unfolding behind closed doors. Many professionals in these firms–even some partners who cashed in during the deal–are disillusioned. What looked like a golden opportunity has, for many, turned into a high-pressure environment that prioritizes short-term financial gains over people and culture.
At first glance, one might assume that resistance to PE-backed firms is simply a case of the “haves” versus the “have-nots.” But the reality is far more nuanced. This isn’t just about who got a big payday–it’s about the fundamental nature of the accounting profession.
Unlike traditional businesses that sell products, accounting firms prioritize relationships to grow their business. Clients don’t just interact with a brand; they rely on the expertise, trust, and continuity of their accountants. When those professionals leave, clients often follow. And yet, many PE-driven firms fail to appreciate this dynamic, treating firms like scalable commodities rather than relationship-driven enterprises.
The Talent Equation: A Non-Negotiable Factor
The accounting industry is in the midst of a fierce war for talent, and the winners will be those who prioritize their people. The formula for success is refreshingly simple: Take care of your people, and they will take care of your clients. Do that well, and growth will follow. The AICPA’s 2023 Trends in the Accounting Profession report showed a 17% decrease in the number of new CPA candidates over the past five years.
Yet, time and again, we see the opposite happening in PE-backed firms. Overworked professionals, cultural shifts emphasizing profitability over well-being, and an exodus of talent leave firms scrambling to maintain client relationships. The resumes piling up at non-PE-backed firms tell the story: it’s not just junior staff looking for a way out–it’s seasoned partners, too. A recent LinkedIn analysis from 2024 indicated a 35% higher rate of partner-level transitions away from PE-backed firms compared to non-PE-backed firms. While the overall accounting profession saw revenue growth of 18.55% in 2022 and 12.88% in 2023, some PE-backed firms have significantly outperformed. For example, Eisner Advisory Group’s revenue grew from $488 million in 2022 to $700 million in 2023, and Cherry Bekaert’s from $293 million in 2022 to $585 million in 2023.
Can PE Work in Public Accounting? Maybe–But It’s Rare
To be fair, not every PE-backed firm is doomed to fail. Some will succeed by using investment capital wisely–investing in technology, improving operations, and prioritizing client service. But there’s a critical distinction that many PE investors overlook: Capital is a commodity. People are not.
PE firms bring money to the table, much like any other commodity investment–whether it’s oil, pork bellies, or soybeans. But public accounting isn’t a factory churning out standardized products. It’s a profession built on trust, expertise, and client relationships–none of which can be mass-produced or easily replaced.
Looking Beyond PE: Smarter Exit Strategies
For firm owners considering an exit, there are alternatives worth exploring. One particularly compelling option is an Employee Stock Ownership Plan (ESOP). It allows firms to maintain their culture, reward employees, and ensure long-term stability without the upheaval often accompanying PE deals. Unlike PE, ESOPs incentivize employees to invest in the firm’s future, creating a model where success benefits everyone–not just outside investors. The National Center for Employee Ownership (NCEO) reports that ESOP companies, on average, experience 5% faster annual productivity growth than comparable non-ESOP companies.
The Road Ahead: A People-First Approach
The next chapter of public accounting is already being written. Firms that prioritize their people, provide stability, have structured teams, and provide client-first service are flourishing. Meanwhile, PE-backed firms that prioritize short-term gains over long-term relationships are struggling to keep both talent and clients from walking out the door.
In the end, the firms that put people first will be the ones that stand the test of time.
