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Buyout barons are wearing pocket protectors and green visors with their tailored suits. Baker Tilly, an accounting firm recently backed by private equity shop Hellman & Friedman, unveiled a plan to merge with rival Moss Adams in a $7 billion deal that would create the sixth-largest U.S. bean counter. Like much investment these days, it turns growing public market liabilities into private market assets.

Below the Big Four of Deloitte, PwC, Ernst & Young and KPMG sits a raft of peers whose size drops off precipitously, according to research outfit Inside Public Accounting. Baker Tilly is the country’s tenth largest while Moss Adams ranks 14th. The combined accountancy will be focused largely on the so-called middle market, broadly defined as clients with $10 million to $1 billion of revenue.

The transaction reflects the times. There were just 4,600 U.S. listed companies a few years ago, more than 40% fewer than in 1996, per World Bank data. The number of private firms has boomed over the same span. Revenue and employment at midsize businesses have grown more quickly than for S&P 500 Index members in recent years, the National Center for the Middle Market estimates. And on a percentage basis, buyout shops squeeze more revenue and EBITDA growth out of smaller enterprises, alternative asset manager FS Investments says.

Appropriately enough, few accounting shops trade on public markets. CBIZ is an exception, a $5.4 billion enterprise trading at just 3 times trailing sales. Baker Tilly and Moss Adams are being valued at a little more than 2 times their combined $3 billion revenue in 2024. On the companies’ $6 billion target for 2030, and assuming higher profitability, it might be on a path to a roughly $18 billion valuation.

It’s possible, considering how many services have swelled in the private market ecosystem. Credit leads the way, extending non-bank loans to buyout-backed firms. Rather than selling disjointedly to individual borrowers, such lenders tend to push their products directly to owners of broader portfolios.

Baker Tilly and Moss Adams could do something similar, becoming a preferred partner for private equity shops such as L Catterton or Vista Equity Partners. In that sense, the accounting deal would further balance the private-fee books.

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Accounting firms Baker Tilly and Moss Adams said on April 21 that they have agreed to merge in a $7 billion deal that will create the sixth-largest U.S. certified public accountant advisory firm. In 2024, private equity firms Hellman & Friedman and Valeas Capital Partners acquired a majority stake in Baker Tilly, valuing the enterprise at more than $2 billion. Combined, the companies booked $3 billion in revenue in 2024, the Wall Street Journal reported. The partners will own a majority of the merged business.

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