Intapp Inc.
11/14/2024 | Press release | Distributed by Public on 11/14/2024 18:39
Aligning your accounting firm’s tech investments with private equity trends
As we approach 2025, private equity (PE) investment in accounting firms is emerging as a significant trend. This shift, which began in 2021 with EisnerAmper's acquisition, has gained momentum with recent high-profile deals involving top accounting firms like Grant Thornton LLP and Baker Tilly US.
The growing appeal of accounting firms to PE investors
Private equity firms are increasingly recognizing accounting firms as attractive investments, offering steady revenue streams and growth potential. The global accounting market, which reached over $627 billion in revenue in 2024 according to IBISWorld, presents numerous opportunities - particularly among small to mid-sized firms.
"In 2025 and beyond, the trend of private equity firms acquiring or backing accounting firms will accelerate, as investors see growth potential similar to that in wealth management," said Tom Koehler, Intapp's Global Managing Principal for Accounting and Consulting.
The benefits of PE investment for accounting firms
For accounting firms, PE investment offers several advantages: capital for digitization strategies, enhanced operational efficiency and competitiveness, faster scaling to meet evolving client demands, strategic guidance and expertise, and potential for survival and growth in changing times.
To attract PE interest, accounting firms should focus on demonstrating growth potential, modernizing and increasing efficiency, automating compliance processes, and positioning to attract talent in a competitive market.
"Accounting firms appreciate the infusion of capital to invest in digitization technology, invest in their people and recruitment, pay out their recently retired partners, and expand the services they offer," said Jey Purushotham, Practice Group Leader for Risk and Compliance at Intapp.
The imperative of technological advancement
What's more, clients are demanding improved technology and expanded advisory services. These include streamlined, digital audit experiences; searchable online documents; and enhanced usability and transparency. Yet many accounting firms - especially mid-sized ones - still rely on legacy, on-premise systems.
These firms are at serious risk for losing traction in the marketplace. To remedy this, Koehler suggests examining the firm's tech stack and workflows. "They must carefully consider both their investments in emerging technologies, like generative AI, and their new approaches to work," said Koehler.
Strategies for staying competitive
To remain competitive in this evolving landscape, firms should define clear market positioning, focus on unique strengths and value propositions, develop a future vision, and invest in cutting-edge technology solutions. Accounting firms can improve efficiency and attract investors by automating manual processes, particularly in risk and compliance functions. Intapp offers products that can solve these complex challenges, such as:
- Intapp Intake - Accept only those clients that match the firm's strategic objectives and risk appetite.
- Intapp Conflicts - Surface and safeguard independence impairments across a client's corporate tree.
- Intapp Employee Compliance - Solve for all areas of personal independence.
These solutions use AI-powered decision engines to clear potential new business quickly and safely, enabling firms to take on new work faster and more confidently.
The importance of technology to addressing independence challenges
Independence compliance is another critical issue for accounting firms seeking PE investment. The complexity of maintaining independence from a PE firm's portfolio companies can be a potential roadblock to investment.
"Once an accounting firm gets private equity funding, they'll have a target on their back, because regulators may view the firm as prioritizing growth over compliance," said Purushotham. "They must have a rock-solid independence and risk process in place."
When assessing accounting targets, PE firms will need to solve for independence compliance with their portfolio companies. At this stage, technology investments become critical decision points.
Intapp, with its DealCloud platform widely used in the PE world, offers solutions that are familiar and trusted by many PE firms. This familiarity can provide a sense of confidence to potential investors.
"It's natural for investors, when assessing a potential acquisition, to feel a greater sense of confidence in accounting firms that align with their preferred technology partners, as this compatibility can streamline integration and reduce risk," said Purushotham.
Unlocking growth opportunities
With more than 20 years of experience in the professional services industry, Intapp offers a deep understanding of the complexities surrounding independence, compliance, and collaboration management. Accounting firms leveraging Intapp technology solutions can benefit from a modernized tech stack, improved operational efficiency, enhanced independence compliance, and increased attractiveness to PE investors.
As the accounting industry faces consolidation and increased PE interest, firms must consider their technological partnerships carefully. By aligning with preferred technology partners like Intapp, accounting firms can position themselves favorably for potential PE investments while driving future growth and operational efficiency.
This blog was adapted from the whitepaper paper featured in Accounting Today: Align your firm's tech investments with private equity buyers' growing interest in accounting firms. Read the full whitepaper here.
To learn more about Intapp's solutions for accounting firms, contact [email protected] or [email protected] for a personalized consultation, or visit intapp.com/accounting.