Image Source: Pexels

The Slow Shift in Professional Services

Markets are transfixed by artificial intelligence, interest rate pivots, and the next move in credit cycles. But beneath those headlines, capital is moving in a quieter direction. Professional services, long considered stable but unremarkable, are becoming an investment frontier.

CPA firms in particular are at the center of this transformation. Once viewed primarily as compliance shops, they are now being reshaped into scalable platforms that attract private equity, private credit, and institutional allocators. Predictable revenue, regulatory demand, and expansion into advisory services have turned accounting into a business model with traits investors prize.

The central question is whether this financialization is a lifeline or a liability. Is capital turning CPA firms into durable income streams, or embedding new risks in a sector that was once insulated from market cycles? It’s critical to explore the drivers behind the boom, where money is flowing, and what the shift means for retail investors.

Why CPA Firms Attract Capital

CPA firms generate recurring fee income from tax, audit, and compliance mandates, creating predictable cash flow that investors can underwrite. In the U.S., fee income across the tax and accounting market is projected at $145.5 billion in 2025, underscoring the scale of demand for core services. 

Growth is not limited to compliance. Practices are expanding into advisory, including technology consulting, ESG reporting, and transaction services, which has become a material revenue engine for large firms. Evidence from industry analyses shows advisory lines have grown significantly over the past two decades, reflecting client demand for broader solutions. 

Private capital is following these signals. Industry trackers report over 90 private-equity related transactions and firm mergers in accounting since 2020, with momentum building through 2025. European data points in the same direction, noting a sharp increase in PE investment in audit firms despite regulatory hurdles. The investment thesis emphasizes yield and stability, while consolidators and lenders are funding roll-ups, technology upgrades, and expansion into higher-margin advisory work.

For allocators seeking durable income,CPA firms present scalable platforms anchored by mandated services and sticky client relationships. Many firms now deploy local digital marketing and search optimization strategies aimed at capturing qualified leads, reinforcing their growth potential as investor targets. Bloomberg Tax highlights a fragmented market drawing private equity as sponsors pursue operational scale and shared systems across combined practices.

Private Equity and Credit Moves In

Private equity sponsors are building national accounting platforms through targeted acquisitions. In January 2025, Citrin Cooperman announced a significant investment from Blackstone, with Blackstone acquiring its stake from New Mountain Capital, fuel for continued expansion and tech investment. 

Earlier waves laid the groundwork when EisnerAmper took strategic capital from TowerBrook in 2021, a landmark deal that helped normalize sponsor ownership in the profession. The trend is global, as in September 2025, Cinven agreed to acquire a majority stake in Grant Thornton Germany, extending a series of PE-led moves across the network. And consolidation among large U.S. firms continues: Baker Tilly and Moss Adams announced a merger valued around $7 billion, with existing PE investors Hellman & Friedman and Valeas doubling down on the combined platform.

Private credit is a critical financing layer behind these transactions and related tech upgrades. Legal and market outlooks point to direct-lending capital fuelling M&A pipelines across professional services as sponsors favor scale and predictable cash flows. Hedge funds are testing the theme through private-credit sleeves and structured exposures, a shift documented in recent industry coverage of multi-strategy funds moving deeper into direct lending.

The consolidation playbook mirrors other service roll-ups: fragmented ownership, steady demand, and operational scale as the value driver.

Where the Capital Is Flowing

M&A activity is accelerating in accounting. In 2025, thirteen firms merged under one platform backed by DFW Capital Partners, creating a regional entity with about $170 million in combined revenue, showing how PE-backed roll-ups are consolidating fragmented players. Similarly, Baker Tilly and Moss Adams announced a merger valued at roughly $7 billion, signaling the push toward scale in advisory CPA services.

Technology is shaping capital allocations. Tax, audit, and accounting firms are increasingly adopting AI and automation to enhance efficiency and expand advisory services, according to the Thomson Reuters Institute 2025 report. These investments reflect the belief that tech-enabled firms deliver higher margins and scalability.

Advisory and Fee Model Shifts

Advisory services beyond compliance are drawing capital too. AI-enriched forecasting, ESG strategy, transaction advice, and digital transformation work are becoming integral revenue lines. According to Wolters Kluwer, accounting professionals are expanding beyond compliance into higher-value advisory work through technology and analytics.

Additionally, firms are moving from hourly billing toward subscription models and outcome-based advisory retainers, aiming for predictable recurring cash flow rather than volatility tied to busy season billing cycles.

The Investor Pitch

Accounting firms are being marketed to investors as resilient platforms. Demand for tax, audit, and compliance is anchored in regulation and does not disappear in recessions, giving the sector a defensive quality. That base layer of stability makes the profession attractive compared to industries that depend on discretionary spending.

Why Investors Are Taking Note

The yield profile is another part of the appeal. Fee income is steady and predictable, and the expansion of advisory lines adds upside without sacrificing the consistency of mandated services. Investors view this as a way to capture both recurring cash flow and modest growth.

Diversification plays a big role here too, as exposure to professional services is not directly correlated with equity cycles, so allocations into CPA platforms can offset volatility elsewhere in a portfolio.

Sponsors emphasize the scalability of the model, with retention rates being high, client relationships sticky, and revenue flows resembling software-as-a-service economics, recurring contracts, long-term value capture, and efficiency gains as platforms expand. That framing positions CPA firms as more than compliance businesses; they are pitched as growth vehicles with infrastructure-like characteristics.

The Hidden Risks

Talent scarcity sits at the center with the pipeline of new accountants that has been shrinking for years, and the latest AICPA data shows the slide is accelerating. Roughly 67,000 candidates sat for the CPA Exam in 2022, down from more than 72,000 in 2021, marking the lowest level in many years. That decline has already translated into wage inflation across mid-tier firms, straining the margin discipline private equity investors count on.

Technology spending, often pitched as the solution, introduces its own strain. The Thomson Reuters Institute found in 2025 that nearly half of tax and accounting leaders ranked technology adoption as a high priority, but flagged the costs as a direct drag on profitability. The imperative to adopt AI-driven audit systems and cybersecurity protocols forces firms into capital outlays long before efficiency gains show up in earnings.

The SEC and PCAOB have added regulatory shifts on top of this, with signaling tougher oversight of audit quality while tax policy reform could alter revenue predictability. Together, these forces expose the fragility beneath the investment pitch and underscore that financial engineering alone cannot smooth over structural weaknesses.

The Retail Investor Angle

Retail investors rarely get direct access to accounting firm equity, but exposure is emerging through adjacent structures. Publicly traded private equity giants such as Blackstone and Apollo, which hold positions in large professional services firms, provide one route. Their listed shares allow retail investors to piggyback on consolidation trends without participating in private markets directly. For individuals seeking exposure, this is the most transparent and liquid option, though it comes bundled with diversified holdings beyond professional services.

Interval Funds and Semi-Liquid Structures

The more aggressive pitch to retail comes from interval funds and feeder funds. These vehicles are designed to “democratize” private markets by giving accredited and, increasingly, mass-market investors access to strategies once limited to institutions. Morningstar’s semiliquid funds universe, which includes interval structures, grew to $344 billion in assets in 2024, reflecting heightened investor demand for controlled private market exposure.

Business development companies (BDCs) are also raising capital by lending into CPA firm roll-ups, promising steady coupons linked to recurring service revenues. ETFs provide an even looser link, typically investing in listed outsourcing and compliance providers that mirror parts of the CPA business model.

The accessibility comes with trade-offs. Interval funds restrict redemptions, sometimes permitting withdrawals only quarterly and capping them at 5% of net assets. Expense ratios can exceed 2% annually, far higher than broad equity ETFs, while performance marketing often emphasizes stability without addressing leverage or default risk.

For individual investors, the question remains whether these products represent genuine access to a defensive professional services theme, or simply yield-chasing risk under a new label.

Accounting as Capital Strategy

Accounting firms are moving out of the back office and into capital markets. The flows are real: billions in private equity commitments, private credit financing acquisitions, and hedge funds testing yield strategies. What was once a fragmented profession is being recast as a scalable asset class.

The risks are equally visible while talent scarcity, escalating technology spend, and fragile roll-up integrations can break the investment case as quickly as capital builds it.

What comes next depends on the velocity of consolidation and the tolerance of regulators. The question is not whether money will keep flowing, but whether 2026 marks accounting as a quiet lifeline, or the next leveraged boom.

More By This Author:

The AI Revolution In Financial Information: How Content Is Created, Consumed, And Ranked For Today's Investor
BlackRock Has Tagged AI As A "Mega Force": Here's What That Means