Private Equity Reshapes New Jersey’s Accounting Firms

Following a national trend, some Garden State-based CPA firms and others with a strong presence here have taken on private equity investors. The firms say the added capital helps them invest in technology and staff, improving their client services. But do Wall Street investors impair CPA independence? We spoke with some experts to find out.

EisnerAmper was the first large US CPA firm to let private equity into an accounting partnership. Its 2021 deal with TowerBrook Capital Partners initially raised some hackles, but it’s now recognized as a blueprint.

EisnerAmper Vice Chair of Services Christopher Loiacono said the decision was years in the making — driven by CEO Charlie Weinstein, who had long argued that professional services firms needed a new capital structure as they embraced technology.

“Charlie predicted 15 years ago the need to make significant investments in technologies,” Loiacono said. “Balancing people and technology, especially today’s artificial intelligence, requires a different capital structure and a substantial amount of capital.”

To satisfy independence requirements, the firm uses an alternative practice structure. Loiacono explained that the audit arm remains EisnerAmper LLP, a licensed CPA firm owned by CPAs, while PE-backed Eisner Advisory Group LLC houses tax, advisory, outsourcing and wealth management. He said state boards of accountancy and the U.S. Securities and Exchange Commission have approved the setup, and that everyone at the advisory group must remain independent from audit clients “as though we were a single firm.”

Before choosing TowerBrook, Eisner interviewed a number of suitors, some of which offered a check and little else. “We weren’t just looking for a cash infusion,” he said. “We were looking for a partner that would buy into our strategy.” Culture mattered, too. “It was important that TowerBrook is a certified B Corp,” he added.

A talent draw

EisnerAmper tripled in size over five years, Loiacono detailed, growing from about 1,800 people to nearly 5,000 and expanding into nine countries. It has completed some 30 combinations since 2021 and ranks among the top 15 on Inside Public Accounting’s list, with revenue of about $1.3 billion.

Talent acquisition has followed. “Our recruiting has been the highest it’s ever been,” Loiacono said. He noted the expanded footprint lets the firm hire from more campuses and bring in experienced staff nationwide.

Private equity also handed the firm a tool that traditional partnerships lack. “Equity is now part of our language,” Loiacono explained, allowing the firm to use equity instruments for incentives and retention. “Those are perks that make us more competitive.”

His advice for firms weighing a deal: scrutinize cultural fit, the resources an investor brings and whether it is committed for the long haul. “Some PE funds just don’t have the longevity,” Loiacono said. “You need to check all the boxes.”

Speed, with guardrails

Other CPA firms are also reaping PE benefits while establishing guardrails to address independence concerns.

CohnReznick‘s partnership with investment giant Apax, announced last year, is about speed, explained Neil Gerard, New Jersey office managing partner at CohnReznick Advisory LLC. “The partnership enables us to invest more quickly in key priorities, including talent, technology, service expansion, and targeted acquisitions,” he explained.

The receipts are tangible. Offices opened in San Francisco, Tallahassee and Richmond. Acquisitions of HL&B in Texas and Smith Schafer in Minnesota signed. The firm welcomed 25 lateral partners in fiscal year 2026, and a proprietary AI platform for audit execution and analysis is scheduled to launch this fall. Employees share in the upside through a new Value Creation Bonus program, which Gerard noted lets them “share directly in the value we are creating together.”

Then comes the awkward question: Can a firm with financial investors credibly certify a client’s books? Gerard’s answer is architecture. Under an alternative practice structure, licensed CPA firm CohnReznick LLP, led by CEO Kelly O’Callaghan, handles audit and attest work. CohnReznick Advisory, led by CEO David Kessler, handles tax, advisory and consulting.

“Audit judgments are made by licensed CPA professionals operating within the CPA firm’s governance structure, not by investors,” Gerard explained. Independence, he noted, is protected by “professional standards, governance requirements and regulatory oversight, not by trust alone.”

For firms eyeing a similar path, Gerard counseled looking past the check. “The right partner should bring operational expertise, strategic insight and a proven ability to help organizations scale,” he advised.

Who will take the reins?

Succession can spark interest in securing a PE partner, particularly for CPA firms without a viable internal transition plan, observed Joseph Tarasco, CEO and founder of Accountants Advisory Group LLC.

“Many owners are evaluating their options because they do not have a clear succession or strategic path,” he explained. “At the same time, firms face increasing demands for technology, talent and specialized services. Private equity can provide resources to address those needs and support growth, including acquisitions.”

A PE-backed platform can provide technology, recruiting support, expanded advisory capabilities and acquisition funding that a smaller firm might take years to develop alone. Selling partners may receive more of their proceeds at closing than under a traditional retirement or deferred buyout, and many deals include rollover equity that lets sellers share in future gains. Some firms consider a minority investment, which allows existing owners to keep majority ownership; though operating autonomy depends on the governance and approval rights negotiated.

“The strongest deals connect the financial investment with a clear strategy,” Tarasco counseled. “They can give current owners liquidity while creating growth opportunities and career paths for the next generation of leaders.”

Dividing responsibilities

A PE-backed transaction can change how decisions are made about compensation, staffing, operations and strategy, he added. So, owners should understand which responsibilities stay with firm leadership, and which are shared with the investor.

“These changes are important to evaluate, but governance and cultural adjustments can also arise in traditional CPA-firm combinations,” Tarasco detailed. “The question is whether the prospective partner’s approach aligns with the firm’s goals, people, culture and client-service commitments.”

Price matters, but so do payment terms. “A high headline valuation does not necessarily mean that the entire amount is guaranteed or paid at closing,” he explained. “Sellers should distinguish among cash at closing, any fixed deferred payments, performance-based earnouts and rollover equity, whose future value and liquidity are uncertain.”

Buyers also often expect key partners to stay on for a transition period, though length and responsibilities vary.

“Private equity has expanded the options available to CPA firms,” Tarasco noted. “Whether owners choose a PE-backed partner, a traditional CPA-firm combination or internal succession, the strongest outcomes start with clear goals and the right fit. A successful deal should reward the owners for what they have built while positioning their people and clients for continued success.”

The clear choice

For CPA firms like Sax LLP, the choice was pretty clear. Joseph Damiano, CEO and managing partner, said the firm was “fiercely independent” but saw the market shifting beneath it. When he took over in 2015, Sax was a $25 million firm. Thanks to a “three-legged stool” of organic growth, lateral partner hires and acquisitions, the firm grossed $138 million in 2025, Damiano noted.

“If I shut off one leg of that three-legged stool maybe we wouldn’t have been that fastest-growing firm in the country anymore,” he said, explaining that after a burst of four transactions in 2022, deal activity stalled in 2023 and 2024, “and private equity was the answer.”

Following a July 2025 investment from Cobepa, Sax completed six add-on acquisitions within nine months, supported by legal counsel at Lowenstein Sandler LLP.

Damiano describes Cobepa as a private equity firm, “but not a private equity fund.” The distinction is that Cobepa has “an evergreen structure and longer hold periods, which means no forced exit in three to five years. It’s really dependent upon us to make that decision of when we actually transact again, if we ever do,” he said.

Advice to others

Sax only sold a minority stake, so partners sit on common shares alongside its sponsor. “That’s a big thing because we still make the business decisions for the business,” Damiano said. “This way, everyone is incentivized,” he said. “We’re on the same common shares as our sponsor is.”

He also barred the sponsor from Sax’s partner compensation committee. “Cobepa can’t go to the comp committee and say, for example, ‘You could only get a 3% raise this year,'” Damiano said. For audit independence, Sax created an alternative practice structure, even though he noted it wasn’t required for a minority investor.

Sax is on pace to top $200 million in 2026, Damiano said. “Organic growth is running about 12%, and our firm ranks 59th nationally,” he detailed. Wealth management assets have grown from $500 million to nearly $7 billion, and AI agents across tax, audit, HR and IT have cut help desk staffing to one person per 60 or 65 employees.

His advice is blunt. “If you’re going to take on private equity, do it for the right reasons,” he said, adding that more firms will probably follow.

“I don’t think it’s slowing down,” Damiano predicted. “It’s not just about taking money. It’s about using that money correctly.”

Contrarian views

The turn to private equity has not been universal. Grassi has stayed independent since its 1980 launch, and the model continues to work, said Jeff Agranoff, operations partner, chief human resources officer and New York City co-market leader. “In fact, our retention over the past 12 to 24 months has been among the strongest ever, and we have attracted more talent from competitors than ever before,” he noted.

Agranoff credits the firm’s ownership model, which features a partial employee stock ownership plan, or ESOP. “There’s a vesting schedule, which incentivizes people to stay with us,” he added. He contrasted that with PE-backed firms, saying Grassi’s profits stay within the firm and flow first to ESOP shareholders. “People want to be here for the long haul because they know the firm is going to be here,” Agranoff said.

Goldstein Lieberman & Co. LLC CEO Phillip Goldstein says the issues behind accepting private equity may be valid, but he still vows to avoid it. “The population of CPA firms in this country is aging at a very rapid pace because fewer students are going into the CPA profession,” Goldstein said. “Partners are burned out; and technology, AI tools and talent all cost more money. Then there is intrinsic value in these CPA firms. Some firms sell for 12 times or more EBITDA.”

But the money has strings. “Partners are no longer their own bosses,” Goldstein cautioned. “Investors want returns of a minimum 10% to 15% a year, and that pressure rolls downhill to staff and clients.”

Even a minority stake worries him. “Once you take a minority investment, it is only a matter of time before they own the whole CPA firm,” Goldstein said, comparing it to George Washington Bridge tolls that were supposed to end once construction was paid off. “Tolls never go away either.”

GLC funds its acquisitions from internal cash flow and has never had debt. “I do not want to take on any debt,” Goldstein said.

He structures combinations on a case-by-case basis, pointing to one partner who sold his firm to GLC at age 68 while requesting a 13-year buyout. “The man loves his clients and his staff, and wanted to stay with the firm,” Goldstein said. “He is now 91 and is still associated with GLC CPAs.”

Despite his decision to stay independent, Goldstein maintains he is neutral on private equity. “It is a very personal decision,” he noted, predicting nearly all of the top 500 CPA firms will be PE-owned or public within five years. Still, he sees the alternatives as pretty clear: “Do you want a relationship with your CPA, or with a company owned by private equity?”

The following article was originally published by NJBIZ.