What to Look for in a CPA Firm as the Accounting Industry Consolidates

Alternative investment funds and the landscape in which they operate are growing and becoming more complex. They often require specialized tax, accounting, and consulting services as they consider a litany of structuring, compliance, and financial options. For these funds, partnering with an accounting firm is about more than numbers. It’s about trust, shared values, and a long-term vision.

Meanwhile, many of the accounting firms serving funds may be undergoing significant changes as well. The pace of mergers and acquisitions in the accounting profession has been accelerating for several years and shows no sign of letting up. Large national or super-regional firms, private equity groups, and some large family offices are increasingly looking for small and middle-market accounting firms to acquire. There is no definitive right or wrong choice between private equity-backed and independent firms. However, the news that a fund’s long-time accounting firm has joined a larger firm or taken on private equity capital can be unsettling and lead to several questions, including:

• Is bigger necessarily better?
• Will the service team remain the same in the long run?
• How will fees and the quality of service be impacted?

Having a clear understanding of a current or potential firms ownership structure, service approach, and long-term pricing model is essential to ensure the provider selected is committed to maintaining high-quality and personalized service beyond the initial year of service. As such, performing the proper due diligence when selecting a service provider is recommended.

Strength in Proactivity: The era when accounting firms focused exclusively on preparing tax returns and financial statements is a relic of the past. Accountants today provide a wide range of consulting services, guiding their clients through the entire business lifecycle from startup to exit. This requires practitioners who value creating long-term relationships and partnerships with clients so they can get to know their businesses from the inside out and be an important part of their success. Understanding the client’s business and the environment in which they operate is crucial to providing timely and relevant guidance.

Firms that are not driven by the short-term financial metrics set by external investors are typically more inclined to prioritize long-term client relationships, providing stable teams and personalized service that adapts to the evolving needs of a business.

Customized and Flexible Solutions: A one-size-fits-all approach to learning and services can limit the ability to tailor solutions to each business’s unique needs. Deep industry expertise and customized strategies are especially critical in times of significant tax and regulatory changes. With a new presidential administration, shifting federal policies, and impending tax reforms, businesses must take a unique approach. Having knowledgeable advisors who understand a fund’s goals and can provide sound guidance is more important than ever.

Client Communication: A client-centric culture and service model are essential for understanding how an accounting firm supports and engages beyond the busy tax and audit seasons. These quieter periods are ideal for strategic discussions about long-term initiatives, allowing funds to gain valuable insights from their advisors on the best ways to achieve their business goals.

Stability: Ownership changes in a firm can lead to substantive changes in pricing structures as these firms may be required to be more focused on financial metrics. For funds, this unpredictability can be a challenge. Independent firms are less likely to experience these substantive shifts, providing a pricing model that facilitates long-term planning and collaboration.

Whether you are seeking a new accounting firm relationship or want to talk with your existing firm about their long-range plans, discussing the ownership structure of the firm is a fair topic given the rapid rate of consolidation in the industry.

As consolidation continues to reshape the accounting industry, one thing remains clear: firms that prioritize their clients demonstrate their strength by staying agile and responsive to evolving market demands. The increasing complexity of audit, tax, and consulting services has made it essential for firms to have dedicated subject matter experts who understand the industry and stay abreast of technical and regulatory changes impacting that industry. Those that offer specialized services or cater to highly regulated industries can quickly adapt to change and provide timely, actionable advice.

Ultimately, the most critical consideration is the firm’s commitment to long-term relationships. As your business grows and evolves, will your accounting firm be able to scale with you? Will they continue to provide the same level of personalized attention and expertise? Ensuring your firm is a true partner in your success is more important than ever in today’s shifting accounting landscape.

As an independent, partner-owned firm for over 100 years, Anchin has built strong, lasting relationships with both clients and staff. This sense of ownership fosters a deep commitment to partnership, ensuring that clients receive dedicated, long-term support and guidance.

For further information and guidance, please reach out to George Teixeira, David Horton, Matthew Talia, or your Anchin Relationship Partner.