Key Takeaways
- • A growing cohort of accounting firm leaders is publicly rejecting private equity acquisition offers and reaffirming commitment to independence, citing cultural preservation and operational autonomy as primary drivers.
- • Los Angeles-based GHJ, led by Managing Partner Tom Barry, conducted formal financial modeling and secured unanimous buy-in from younger partners to remain independent despite receiving regular acquisition and PE solicitations.
- • Private equity capital inflow into accounting has accelerated since EisnerAmper's 2021 deal with TowerBrook Capital Partners, flooding the profession with acquisition capital for partner payouts, technology upgrades, and service expansion.
- • PE-backed accounting acquisitions offer retiring partners favorable tax treatment (capital gains rates), deferred earnout payments, and equity rollover opportunities, creating financial pressure on independent firms to compete for talent and capital investment.
- • Accounting firm leaders cite the risk of irreversible cultural degradation as a non-negotiable factor; GHJ's Managing Partner explicitly stated that flexible, family-first culture "is going to be done on Day One, no matter what anyone tells you" under PE ownership.
Summary
A countercurrent movement is emerging within the accounting profession as a growing number of firm leaders publicly declare their intention to remain independent and reject private equity acquisition offers, even as PE capital floods the sector. This resistance contrasts sharply with the acceleration of mega-mergers and PE deals that have reshaped the industry over the past five years.
GHJ, a Los Angeles-based accounting firm, exemplifies this contrarian positioning. Managing Partner Tom Barry reports receiving regular acquisition and PE solicitations but has committed the firm to independence after conducting rigorous financial modeling and securing unanimous support from younger partners. Barry emphasized the non-negotiable nature of cultural preservation, noting that maintaining the firm's flexible, family-first environment requires independence. "I think we all know that if we didn't remain independent, we'd lose control of that," Barry stated. "That culture is going to be done on Day One, no matter what anyone tells you." The decision required substantial due diligence; Barry acknowledged his custodial responsibility to evaluate all strategic options before concluding that independence was the optimal path.
The backdrop for this strategic divergence is the dramatic transformation of the accounting profession following EisnerAmper's landmark 2021 transaction with TowerBrook Capital Partners. That deal catalyzed a wave of PE entry into tax, audit, and accounting services, with private equity firms attracted by the sector's steady returns and higher margins on the faster-growing consulting side. PE capital has provided significant resources for retiring partner payouts, acquisitions of smaller firms, technology investments, and service expansion. These transactions offer retiring partners tangible incentives, including upfront cash at favorable capital gains tax rates, deferred earnout provisions, and equity rollover opportunities in PE-backed entities.
For independent firms, the competitive pressure is intensifying. Barry's position that "a quick pivot is required to compete as an independent firm in an increasingly private equity-aided environment" reflects the strategic calculus facing firm leaders. However, concerns about PE ownership's impact on firm culture, compensation structures, and professional standards are driving some leaders to resist external capital entirely. The decision to remain independent represents a deliberate trade-off: accepting slower growth potential and internal capital generation constraints in exchange for operational control and cultural continuity. GHJ's approach underscores that a meaningful segment of accounting firm leadership views independence as a defensible competitive position despite the capital disadvantages relative to PE-backed peers.
GHJ, a Los Angeles-based accounting firm, exemplifies this contrarian positioning. Managing Partner Tom Barry reports receiving regular acquisition and PE solicitations but has committed the firm to independence after conducting rigorous financial modeling and securing unanimous support from younger partners. Barry emphasized the non-negotiable nature of cultural preservation, noting that maintaining the firm's flexible, family-first environment requires independence. "I think we all know that if we didn't remain independent, we'd lose control of that," Barry stated. "That culture is going to be done on Day One, no matter what anyone tells you." The decision required substantial due diligence; Barry acknowledged his custodial responsibility to evaluate all strategic options before concluding that independence was the optimal path.
The backdrop for this strategic divergence is the dramatic transformation of the accounting profession following EisnerAmper's landmark 2021 transaction with TowerBrook Capital Partners. That deal catalyzed a wave of PE entry into tax, audit, and accounting services, with private equity firms attracted by the sector's steady returns and higher margins on the faster-growing consulting side. PE capital has provided significant resources for retiring partner payouts, acquisitions of smaller firms, technology investments, and service expansion. These transactions offer retiring partners tangible incentives, including upfront cash at favorable capital gains tax rates, deferred earnout provisions, and equity rollover opportunities in PE-backed entities.
For independent firms, the competitive pressure is intensifying. Barry's position that "a quick pivot is required to compete as an independent firm in an increasingly private equity-aided environment" reflects the strategic calculus facing firm leaders. However, concerns about PE ownership's impact on firm culture, compensation structures, and professional standards are driving some leaders to resist external capital entirely. The decision to remain independent represents a deliberate trade-off: accepting slower growth potential and internal capital generation constraints in exchange for operational control and cultural continuity. GHJ's approach underscores that a meaningful segment of accounting firm leadership views independence as a defensible competitive position despite the capital disadvantages relative to PE-backed peers.
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