What faculty should know about private equity in accounting

Alternative practice structures are not new in the accounting profession, but use of these business models has seen a recent uptick since private equity (PE) began making strategic investments — making it essential for accounting faculty to understand and be prepared to address factually. Understanding this trend isn’t just about staying current, it’s about preparing students to thrive in a profession that’s evolving faster than ever.

The rise of private equity in public accounting

Historically, CPA firms have been structured as partnerships, with ownership limited to licensed professionals. However, regulatory shifts, market pressures, and investors’ recognition of the strength of public accounting firms have ushered in different ownership structures since the 1990s.

PE funds have become significant investors in various industries, including the accounting profession. CPA Trendlines recently reported that more than 53 significant PE-related transactions have occurred in CPA firms from 2020 through mid-2025, with 24 of those taking place in 2024. These figures do not include unreported transactions. The publication also reported that PE has stakes in 10 of the 30 largest U.S. accounting firms.

This influx of capital is reshaping the landscape in several ways:

• Consolidation: Merger-and-acquisition activity, of which PE is a part, is combining smaller practices into larger entities, creating economies of scale and centralized service models. 
• Innovation and investment: Investment is fueling digital transformation, including the adoption of artificial intelligence, cloud-based platforms, and advanced analytics, as well as succession planning and talent acquisition.
• Expansion: While not PE-specific, but perhaps encouraged by the investment, accounting firms are moving beyond traditional audit and tax work and diversifying further into advisory and consulting services.

Opportunities and questions

While PE investment brings modernization and growth potential, it also raises questions.With the recent influx of outside investors, there is growing discussion of how a public accounting firm separates into an attest entity (the CPA firm) and a nonattest entity that receives the outside investment. The AICPA is highlighting that the quality, objectivity, and independence (where required) of the work performed by accounting firms is paramount. These foundational principles create the public trust in, and value of, the CPA.

The AICPA is reinforcing these principles across multiple initiatives. An AICPA Professional Ethics Executive Committee (PEEC) task force recently sought feedback on preliminary conclusions about potential revisions to independence rules related to alternative practice structures designed to help firms navigate independence in complex ownership structures. PEEC will be considering an exposure draft with revisions to the code in November. Also, the Peer Review Board is examining what resources and changes might be needed to monitor compliance and safeguard quality.

What faculty should tell students

As educators, your role is pivotal in preparing students for this new reality. Here’s what to emphasize:

1. Adaptability is key. Encourage students to develop a broad skill set that includes data analytics, communication, and strategic thinking. Most firms, including PE-backed firms, seek professionals who can thrive in dynamic, tech-driven environments.

2. Understand the business model. Help students be prepared as they consider the job market to evaluate the differences between traditional and alternative practice structures, including those with PE investments, including in areas such as career paths. For example, does the firm use a partnership-style structure or a corporate structure?

3. Ethics and independence matter. Reinforce the importance of professional ethics. Regardless of the practice structure they are working in, CPAs must uphold standards that protect the public interest.

4. Explore diverse career paths. The profession continues to expand beyond audit and tax. Students might consider roles in advisory, ESG reporting, and technology consulting — areas where PE investment is creating expanded opportunities. 

5. Stay informed and involved. Encourage students to engage with professional organizations and stay current on industry trends. Faculty can model this by integrating real-world developments into coursework and hosting practitioners in class and at student organization meetings.

The faculty’s role in shaping the future

Faculty are uniquely positioned to inspire the next generation by contextualizing market changes and helping students see the profession’s evolving relevance.

As we have emphasized in recent Academic Updates, the future of accounting depends on how well we prepare students to navigate complexity, embrace innovation, and uphold the values that define the profession.

— Jan Taylor, CPA, CGMA, Ph.D., is senior director–Academic in Residence at the Association of International Certified Professional Accountants. To comment of this article or to suggest an idea for another article, contact Jeff Drew at Jeff.Drew@aicpa-cima.com.