While private equity may be transforming the tax, audit & accounting industry by modernizing technology and streamlining work processes, not every firm is sold on it — and many are pursuing alternative growth strategies instead, according to a new white paper
Key findings
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Private equity’s impact — Private equity is transforming the tax, audit & accounting industry by modernizing technology, streamlining work processes and governance, while accelerating the pace of roll-up acquisitions.
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Hesitations and alternative strategies — Despite the benefits, many firms are hesitant about private equity due to concerns about cultural impact, short-term ROI pressure, and client service. Instead, they are exploring alternatives growth strategies.
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Pursuing strategic imperatives — Regardless of their capital structure, all firms need to focus on expanding their advisory services, modernizing technology, and understanding their market value in order to stay competitive
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Private equity has moved from the margins to the mainstream in the tax, audit & accounting industry. In just a few years, private equity-backed deals have helped top tax firms modernize tech stacks, streamline governance, and accelerate roll-ups — reshaping a historically partner-led profession into one that competes on scale, speed, and automation.
Already, early movers are channeling capital into AI, workflow automation, and targeted acquisitions, while offering market-based liquidity to retiring partners that often surpasses traditional buyouts.
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Tax firm growth: Private equity and more
Yet most firms aren’t rushing in. In a new white paper, Tax firm growth: Private equity and more, from the Thomson Reuters Institute, we look at this situation more closely. Indeed, according to our research, 57% of tax professionals surveyed say private equity isn’t on their radar and another 30% say they aren’t interested even if approached. Their reasons for these hesitations are consistent: concern over the cultural impact, pressure for short-term ROI, potential impact on client service, and questions about firm independence. And while only a small portion of firms have completed a private equity deal, every firm is now competing in a market in which private equity-backed players are raising the bar on technology and advisory services.
As the white paper shows, strategy increasingly depends on firm size. Larger firms (those with 30 or more professionals) face the greatest pressure to digitize and scale, and they’re the likeliest to consider private equity, large mergers, or even public ownership paths. Midsize firms (with between 4 and 29 professionals) tend to pursue selective acquisitions, minority capital, or leadership restructuring to modernize without surrendering control. Small firms (1 to 3 professionals) prioritize client retention, succession, and cultural continuity, often using bank financing and retained earnings to fund tech upgrades and partner transitions.
The firms that opt out
For firms opting out of private equity , credible alternatives exist — with tradeoffs, of course. For example, employee stock ownership plans (ESOPs), have now adopted by several prominent firms and can align employee incentives and offer tax advantages but often require structural changes, including splitting the auditing and advisory services.
Mergers of equals, on the other hand, can deliver scale without outside owners. Minority investments can add liquidity while keeping leadership in place. Targeted asset sales — such as spinning off a wealth management unit — can free capital to reinvest in core services. And traditional financing still works for firms with disciplined cash flow and a clear growth plan. Non-private equity buyers — such as family offices, sovereign funds, wealth managers — also are circling, looking to increase their tax and estate planning capabilities.
Regardless of capital structure, readiness is the competitive edge. The white paper points out three imperatives that stand out:
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- Expand advisory — Three-quarters (75%) of firm leaders say their clients want more than prep and compliance. Firms should consider deepening relationships, packaging outcomes, and pricing for value.
- Modernize technology — Nearly half of respondents rank tech as their top priority, meaning firms should focus on automating routine work, investing in client collaboration tools, and deploying data to spot advisory opportunities.
- Know your value — Market-based valuations now drive compensation, transitions, and deal readiness, and firms need to be aware of their own value. A third-party valuation can clarify that and what needs to be fixed.
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If your firm is weighing next steps, you should follow a simple framework: Clarify goals (succession, growth, modernization, legacy); get a valuation; educate leadership on models (private equity, ESOP, M&A, lending); learn from peers that have executed a similar deal; and build internal alignment before talking to investors or lenders. If private equity is on the table, firms should conduct due diligence on the culture fit, governance terms, ROI timelines, and exit paths — and make sure the investor’s plans match your firm’s strategy.
As the white paper shows, private equity is one path to accelerate, not a mandate. Firms that act deliberately — upgrading tech, growing advisory, and aligning structure with strategy — can compete and thrive, whether independent or private equity-backed. The only losing move is standing still.
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a full copy of the Thomson Reuters Institute white paper, “Tax firm growth: Private equity and more”, by filling out the form below:
