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Accounting firms are facing significant pressure to invest in technology, including AI, and to operate more efficiently as the industry consolidates. Increasingly, the race for scale is being funded by private equity.
To wit, this week, two more Top 30 US accounting firms announced they’d received private equity investment, which means that a third of the 30 largest CPA firms in the US now have at least some backing from PE companies, which have been consolidating accounting practices and supercharging their growth.
Carr, Riggs & Ingram (CRI) and PKF O’Connor Davies—the 25th and 27th largest CPA firms by net revenue, according to Inside Public Accounting—each announced on Monday that they’d received investments from private equity firms.
New York-based PKF received an investment from Investcorp and a Canadian pension fund. CRI, based in Enterprise, AL, picked up an investment from Centerbridge Partners and VC firm Bessemer. The parties didn’t share the size of the investments or their terms.
One to grow on. PKF will use the cash infusion to “accelerate growth and enhance [its] competitive position in the accounting, tax and advisory verticals,” Vitali Bourchtein, principal at Investcorp, said in a press release. PKF said its newly “strengthened balance sheet provides flexibility for increased M&A activity as well as investing in cutting-edge technology and new service lines.”
Bulking up. The deals cap a busy few years in PE investment in accounting firms. In October, Inside Public Accounting reported that Armanino, the 20th largest firm, had accepted investment from Further Global, and that Cohen & Company, the 47th largest, announced an investment from Lovell Minnick Partners. (The other top 30 firms that have taken PE money are Grant Thornton, Baker Tilly, Eisner Advisory Group, Citrin Cooperman, Cherry Bekaert, Aprio, and Sikich.)