Inside the CPA Firm Merger Frenzy: How Demographics, PE, and AI Are Reshaping the Accounting Landscape
By Joe Tarasco, CEO and Senior Consultant at Accountants Advisory Group
The public accounting profession is amid one of the most transformative periods in its history. The traditional firm model is rapidly disappearing, replaced by mega-firms backed by private equity and mid-sized practices. The forces driving this change—partner demographics, succession issues, talent shortages, rising technology costs, and the introduction of AI—are redefining what it takes to stay competitive.
The Generational Shift Accelerating M&A
The youngest baby boomers turned 61 in 2025, and many firm owners are entering a critical decision-making stage regarding succession. After decades of leading successful firms, these partners are realizing that time and resources are no longer on their side. Additionally, smaller firms, often with two to four partners, are resource-starved and struggling to compete for talent, invest in technology, and deliver expanded advisory services.
For many, a merger or acquisition has become the most practical way forward. “There’s no better time to grow your firm than right now,” Joe shared during the interview, “but smaller firms often lack the staff capacity and technical and advisory services depth to take advantage of the opportunity.”
The Private Equity Catalyst
Private equity’s entrance into the accounting profession has accelerated this consolidation wave. Historically, accounting firm deals were valued at around one times revenue, with little to no money paid upfront. PE changed that model entirely. Valuations are now driven by EBITDA multiples, with around 50% of the purchase price often paid upfront in cash and equity.
PE-backed platform firms such as Citrin Cooperman, PKF O’Connor Davies, and EisnerAmper, are rapidly acquiring smaller firms, bringing advisory services, industry expertise and infrastructure support and growth capital to the table. “PE firms aren’t just buying revenue,” Joe explained. “They’re buying talent and client relationships that allow them to cross-sell additional services. It’s growth for both sides.”
Technology, Talent, and the Changing Business Model
Technology costs—particularly cybersecurity, compliance tools, and workflow automation—are rising steeply. A large firm might spend tens of thousands of dollars monthly on IT infrastructure alone. Smaller firms can’t achieve the same economies of scale. And with AI now entering the profession, the pace of change is accelerating.
Joe predicts that AI will reshape public accounting within two to three years, not ten. “It won’t eliminate jobs—it will change them,” he said. “Firms will still need people to interpret results, advise clients, and apply insight. But AI will drive efficiency, allowing firms to handle more work with fewer hours.”
Combined with offshore staffing, this shift will redefine firm capacity—and may even enable smaller firms to upgrade their client base by leveraging technology and AI to deliver more sophisticated services.
Why Running a Firm ‘Like a Business’ Matters
Joe emphasized a long-standing theme: many smaller firms never adopted a true business model. “It’s difficult at the two- or three-partner level,” he acknowledged. “You need infrastructure—marketing, HR, IT, leadership—and that’s expensive.” Still, running the firm like a business rather than a partnership is key to long-term value creation.
Firms with well-documented processes, accountability systems, and leadership development programs are significantly more attractive to buyers. “Even if you plan to sell in a few years,” Joe advised, “make the improvements now. Raise your fees, maximize technology, outsource compliance work, train your people, make partners accountable, and increase profitability. You’ll increase the firm’s enterprise value and run a better business in the meantime.”
The Human Side: Talent and Culture
Talent remains a defining factor in every transaction. Buyers are not only acquiring clients, but they’re also acquiring people. Retaining and developing top talent, training staff in business development, and creating growth opportunities all impact valuation. “If a buyer feels your talent is weak, you’ll sell at a discount,” Joe said. “Invest in your people now, even if it means overpaying to keep them.”
He also cautioned that cultural fit is critical. “Meet the team, ask questions, and understand what accountability looks like in the new firm. If you’re used to running independently, make sure you’ll be comfortable in a more corporate environment.”
Making the Firm Sale-Ready
Joe outlined several practical steps firm owners can take immediately:
Evaluate profitability and raise underpriced fees.
Assess client demographics, as too many aging clients can reduce valuation.
Invest in technology and offshore resources to improve margins.
Build advisory capabilities or outsource to firms that can fill gaps.
Document processes, quality controls, and client transition plans.
Start discussions early—don’t wait until your lease is up or retirement looms.
“Do it before you really have to,” Joe advised. “Even if you’re not ready to sell, start conversations now. The worst that can happen is you’ll learn something—and maybe make a few new connections.”
The Future: Opportunity Amid Change
Joe expects the current M&A wave to continue strong for another five years before gradually slowing as available sellers decrease. He also anticipates further consolidation among PE-backed platform firms. “Eventually, these firms will roll up into even larger entities,” he noted. “Some may even go public.”
Despite the upheaval, Joe remains optimistic. “The profession has been good to a lot of people,” he reflected. “For firm owners, this is a time to make smart, proactive choices—to protect your clients, your people, and the legacy you’ve built.”