With some of the nation’s largest accounting firms now several years into their investment deals with private equity (PE) firms, PE investment in firms continues to accelerate, with investor interest now expanding to sovereign wealth funds, family office, and private capital. 

Welcome to the new normal, says Allan Koltin, CPA, CGMA, CEO of Koltin Consulting Group.

In its debut as an all-digital magazine, the summer 2024 issue of NewsAccount explores the benefits of PE investment deals through the lens of both the accounting firms and their people, and offers insights from two Colorado firms – Grant Thornton LLP and Baker Tilly – that recently announced their own PE deals. 

“The investment in our firm immediately strengthens our position amid a highly active landscape and allows us to deploy capital for targeted M&A and integrations,” says Lori Davis, market managing partner for Grant Thornton’s Denver office, of the top-10 firm’s March announcement that it would be receiving a “growth investment” from New Mountain Capital LLC later this year.

She adds that New Mountain’s investment enables Grant Thornton to add scale, resources, and agility, which help to redefine the competitive dynamic among the top firms. 

In February, Baker Tilly received a strategic investment from PE firms Hellman & Friedman and Valeas Capital Partners. A Baker Tilly spokesperson says the firm pursued the investment to bolster capabilities in three key areas: 

1. Investment in business, talent, and enhanced client service
2. Talent attraction and retention
3. Growth – both organic and through strategic acquisitions – via enhanced M&A capabilities

The Baker Tilly team is excited about what the PE money means for the future. “Having experienced and collaborative capital partners who share our vision is invaluable as we focus on value creation and accelerating growth,” the spokesperson says.

The PE trend is relevant to another prominent discussion within the accounting profession: the waning talent pipeline. Attracting and retaining young talent is critical, and as one component of that, Koltin says it’s time to address the elephant in the room: increasing the pay scale. Making things great for young professionals is one of the biggest pros of PE investment. 

“There’s such a talent drought,” he notes. “If you can’t pay your talent at market rate, they could become a flight risk.”

Read the full story, “Private Equity Investment Comes to Colorado Accounting Firms,” in the summer 2024 issue of NewsAccount.