A recent article about private equity in the medical field raises important questions about the evolving landscape of the accounting industry, particularly concerning consolidation and private equity.
While the questions about maintaining quality and client focus should be asked, the article paints an oversimplified picture of the challenges driving this shift and misses important nuances and context vital to the conversation.
As someone who grew up in my family's boutique accounting firm and has seen firsthand the value these local firms provide to clients and communities, I think it's important to talk through these questions with facts, data and a true pulse on the industry, as opposed to fear or nebulous concerns that may not align with reality.
The accounting industry has faced a confluence of pressures that have necessitated change for a long time:
Consolidation, when done with intentionality and expertise, offers a powerful mechanism to address these critical challenges:
I want to be clear: Consolidation can lead to lessened quality or client care, and it's a valid concern. The first thing to note is that private equity is not a ubiquitous term. There are many forms of private capital in the market, and behind that capital are varying philosophies on how to build a good business. If consolidators or private equity come into a category like accounting focused solely on maximizing short-term profits to support the quick "flip" to the next buyer, or don't understand the intricacies and value these firms bring, everyone loses. But the resources and collaboration that come with joining a larger group can have enormous benefits for everyone.
We don't think we need to "fix" boutique accounting, but it does need to evolve in the face of the aforementioned challenges. We also believe we need to support the evolution in a way that preserves what has made it special.
Here's what matters when it comes to consolidating accounting firms:
Consolidation, when done right and with clients and people at the forefront, is not about sacrificing quality for profit. It's about creating economies of scale, expanding service offerings, providing growth opportunities and ensuring business continuity.
The accounting industry is at a critical juncture. Private equity is now a mainstay, and we can either vilify it and consolidation, or we can, with intentionality and a discerning eye, embrace a new model that has the potential to address the challenges we face and position us for future success.