Private Equity vs Independence: What Partners Are Really Trading When They Take the Cheque

The Partner Brief | Edition 6

Across the UK and US, private equity’s entry into accounting is no longer theoretical. Deals involving mid‑tier and larger regional firms are now a consistent feature of the profession’s news cycle. For many partners, the appeal is obvious: liquidity, capital for technology and M&A, and a chance to “de‑risk” decades of work.

But the real trade‑offs run deeper than a headline multiple.

The choice between selling to private equity, pursuing an Employee Stock Ownership Plan (ESOP), or remaining fully independent is not only a financial decision. It fundamentally reshapes who you work for, how you lead, and why your next generation of managers and senior managers will choose either to stay or to leave.

This edition examines what partners are really trading when they “take the cheque” – and what staying independent genuinely requires in a market where external capital is reshaping expectations.


1. The New Ownership Landscape in Accounting
Private equity investors have “discovered the gold hidden in accounting and advisory firms” and are restructuring traditional partnership models to accelerate returns. Their interest is driven by predictable recurring revenue, sticky client relationships, and an opportunity to inject capital into a sector facing technology and talent pressures.

At the same time, some firms are dismantling the conventional partnership model in favour of broad‑based employee ownership. BDO USA’s move in 2023 to establish an ESOP has been described internally as “the right option because it was the best option for our people,” giving over 10,000 employees a direct economic stake in the firm’s success while allowing the firm to retain control.

Meanwhile, many mid‑tier firms continue to see independence as a strategic differentiator, emphasising culture and client service in contrast to perceived investor pressure and deal‑driven growth.

Partners therefore face three broad ownership paths:

Private equity‑backed consolidators – external capital, accelerated growth expectations, and investor accountability.

Employee ownership models (ESOPs) – broad‑based internal ownership with potentially significant tax and retention advantages, particularly in the US context.

Independent partnerships – no external equity capital, but full control and the need to self‑fund technology, M&A and succession.

Each path carries distinct implications for capital, control, and talent.


2. What Private Equity Really Brings – Beyond the Cheque
2.1 Capital and growth expectations
Private equity investment typically arrives with a clear mandate: grow faster, increase EBITDA, and prepare for an eventual exit or recapitalisation within a defined time horizon.

The Accounting MOVE Project notes that PE‑backed firms often experience rapid revenue growth. Citrin Cooperman, for example, increased revenues from approximately $315 million at the time of investment in 2021 to a projected $800 million by the end of 2024. EisnerAmper shows a similar trajectory, from $450 million to a projected $1 billion over the same period.

These step‑changes in scale are not accidental. PE owners bring:

Capital for M&A, enabling larger and more frequent acquisitions.

Funding for technology, including AI and automation, that smaller independents might struggle to finance themselves.

Pressure to standardise and industrialise processes, pricing, and service lines to drive margin.

For partners, this can feel like a welcome tailwind. But the capital comes with growth commitments that may fundamentally alter how decisions are made and priorities are set.

2.2 Career paths and ownership timing
One of private equity’s less discussed impacts is on internal career paths. The MOVE Project highlights that PE investors “want people to become owners sooner” and are “pushing down the ownership stakes to earlier in their career.” The model is explicitly designed to identify talent and retain them, with equity incentives and periodic liquidity events every five to seven years.

This can create:

Earlier and clearer financial upside for ambitious managers and senior managers.

Shorter timelines between joining the firm and participating in value‑creation events compared with traditional deferred partnership structures.

A “stay for the next flip” dynamic, where younger professionals have a tangible reason to remain for the next recapitalisation.

In other words, PE can make the economics of staying more compelling for some of the very people your succession depends on – provided they align with the firm’s growth expectations.

2.3 Cultural and people risk
The same MOVE research also records concerns from independent firms about the pressure to increase revenue and fees per client, and the potential impact on culture, workload and client experience.

Grant Thornton’s decision to lay off around 350 employees (approximately 3.5% of its US workforce) is cited as an example of how investor‑driven efficiency measures can conflict with established cultural norms.

Independent firms interviewed for the report consistently position culture as their “killer differentiator” versus PE‑backed competitors, emphasising:

More sustainable workloads and “sane pace” environments.

Stronger emphasis on long‑term relationships with clients and staff.

Greater autonomy for partners in practice‑level decision‑making.

The reality is that PE shifts the balance of power. Investor expectations around returns, headcount and margin inevitably influence decisions about service mix, pricing, and resourcing. For some firms, this is a tolerable or even welcome discipline. For others, it risks undermining the people‑centric strategies that underpin retention – particularly in a tight labour market.


3. ESOPs: The “Third Way” Between PE and Traditional Partnership
ESOP structures – particularly in the US – are emerging as an alternative for firms that want liquidity and capital while preserving independence and broadening ownership.

3.1 Democratizing ownership and retention
BDO USA’s ESOP illustrates the logic. CEO Wayne Berson has described the ESOP as:

“The best option for our people, giving them a beneficial stake in BDO,” and

A deliberate choice to “look after your people first” while retaining control at the firm level.

Key features of the BDO model include:

Immediate ownership stakes for employees, with shares vesting over time.

The potential to use ESOP tax advantages so that “any contribution to the plan, to the ESOP, to an employee’s account, [and] any payback” on ESOP financing is tax deductible at the corporate level, significantly improving cash flow for reinvestment.

Turnover rates for ESOPs in the wider economy averaging around 5.9%, compared with reported staff turnover of 39% across US accounting firms in one AICPA data set; BDO’s own turnover was 18% before the ESOP, already lower than the broader market.

Accounting MOVE’s case studies of BDO USA and Bland & Associates similarly emphasise ESOPs as:

A way to preserve legacy and independence while broadening economic participation.

A tool for attracting and retaining younger and more diverse talent by making ownership more accessible and less capital‑intensive.

3.2 ESOPs, capital and control
Like PE, ESOPs usually require significant external financing. BDO, for example, obtained a $1.3 billion line of credit from Apollo Global Management to fund its transition, but specifically via private credit rather than selling equity. The firm retains governance control and does not cede a stake to Apollo.

From a partner’s perspective, this means:

Liquidity and capital for technology and growth, similar in scale to PE in some cases.

Continued control over strategy, culture and client relationships.

A long‑term commitment to an employee‑owner model which may not suit every partner’s time horizon or risk appetite.

ESOPs are not simple to implement. They are heavily regulated (in the US under ERISA rules) and carry their own governance and valuation complexities. But for firms that can make them work, they offer a genuine “third way” between selling out and staying entirely traditional.


4. Independence: What It Really Demands in a PE World
Choosing not to sell is itself a strategic decision. Independence is no longer the default; it is a deliberate stance.

4.1 Competing with capital without external investors
ICAEW’s research into mid‑tier accountancy firms highlights that:

Many firms are actively considering or have already taken on private equity, seeing it as a route to fund technology and M&A.

Others explicitly identify remaining independent as an opportunity, aiming to attract staff and clients who prefer people‑centred cultures not subject to investor timelines.

However, independence carries obligations:

Funding technology (including AI, automation, and cyber‑resilient audit processes) from partner capital and retained earnings, rather than from external investors.

Financing succession internally – via partner buy‑ins, deferred compensation or hybrid structures – rather than via a PE exit.

Maintaining sufficient capital to compete on talent, training and leadership development, while many competitors deploy investor capital to improve their people proposition.

The BDO analysis of succession options for firms – whether through M&A, PE/ESOP, or “staying the course” – stresses that remaining independent requires realistic assessment of your ability to invest in technology and talent at the pace the market now demands.

4.2 Talent expectations in an age of alternative ownership models
Private equity and ESOPs are re‑writing employees’ expectations of what ownership and upside can look like.

The Accounting MOVE Project notes that PE is “changing the parameters of loyalty”, offering some younger professionals the prospect of wealth creation through equity events multiple times during their career. At the same time, ESOPs such as BDO’s directly link day‑to‑day performance to long‑term wealth accumulation for all employees.

Firms that choose independence but do not modernise their internal ownership model risk:

Looking comparatively less attractive to high‑potential managers and senior managers who now see alternative capital models in the market.

Being perceived as asking for “deferred gratification” (a decade to partnership and a six‑figure buy‑in) in a world where other firms offer earlier, clearer financial participation.

Undermining their own succession pipelines just as partner retirement waves accelerate.

In other words, independence without a credible internal succession and ownership story is likely to feel, to the next generation, like a one‑sided equation.


5. What Partners Are Actually Trading
When a firm takes private equity capital, sets up an ESOP, or commits to remaining fully independent, partners are trading across three critical dimensions.

5.1 Capital vs autonomy
Private equity:

ESOP:

Independence:

5.2 Short‑term liquidity vs long‑term talent proposition
PE deals can deliver substantial near‑term liquidity to existing partners, especially founding or senior partners close to retirement. However, the cultural and workload shifts that often follow may make the firm less attractive to some cohorts of staff – particularly those who value stability, autonomy and people‑centred cultures.

ESOPs generally spread economic benefit more broadly and over longer timeframes, aligning staff interests with firm performance and delivering powerful retention effects.

Independent models that retain traditional, late‑stage, high buy‑in partnership structures risk being out‑competed for talent by both PE‑backed and ESOP‑equipped firms unless they modernise how and when people participate in value creation.

In practice, you are deciding whose balance sheet you are optimising for: today’s partner cohort, or the combined interests of partners and future leaders over the next 10–15 years.

5.3 Investor accountability vs professional autonomy
PE ownership introduces a new class of stakeholder with a different risk–reward profile and time horizon. This can professionalise governance and accelerate decision‑making, but it also constrains the space in which partners can trade short‑term margin for long‑term client relationships or staff wellbeing.

ESOPs and independent partnerships keep ultimate accountability within the profession, but rely more heavily on internal discipline to sustain investment and performance without external pressure.

The question is not whether one model is universally “better” it is whether the form of accountability you are choosing aligns with your firm’s values, your clients’ expectations, and your next generation’s appetite for risk and reward.


6. Questions Every Partner Group Should Be Asking
Before you sign a term sheet, amend your LLP agreement, or decide to “stay the course”, there are several difficult questions worth putting explicitly on the table:

What is our real capital need over the next 5–10 years?

What is our genuine succession plan?

How will this decision affect our ability to attract and retain talent?

What control are we willing to give up – and to whom?

How will clients experience this change?


Baker Thornton’s Take
Baker Thornton works with accounting practices in the UK, USA and Canada on senior‑level recruitment and succession‑critical appointments. Across those markets, we see three clear patterns emerging:

Candidates are significantly more informed about ownership models than five years ago. Senior managers and directors now ask explicit questions about PE ownership, ESOP participation, and partnership economics before joining a firm. They are comparing not just salary, but how and when they can participate in equity‑driven value creation.

Private equity is a double‑edged sword for talent. Some high‑performing individuals are attracted by the prospect of accelerated growth, larger platforms and potential liquidity events. Others are wary of increased pressure, perceived short‑termism and cultural shifts. Firms that fail to articulate a coherent people strategy post‑deal find that the very individuals they hoped to retain become flight risks.

Independence without modernisation is no longer a neutral stance. Independent firms that invest deliberately in technology, leadership development and progressive ownership structures (including staged equity, non‑equity partnership, and transparent pathways) are successfully positioning themselves as alternatives to both PE‑backed and ESOP firms. Those that simply maintain historic models are increasingly struggling to compete for the calibre of talent their future requires.

For partners, the central question is not whether to engage with external capital, but on what terms, with what governance, and with what story to your next generation.

Your retirement timeline is finite. The ownership model you choose will determine not just your personal liquidity event, but whether ambitious future leaders see your firm as a place to build their careers or as a stepping stone on the way to a platform that better aligns with their expectations.


About Baker Thornton

Baker Thornton specialises in connecting accounting and CPA practices in the UK, USA and Canada with qualified audit, tax, and accounting professionals who possess deep understanding of practice environments and operational demands. Our focus is on sustainable placements that enhance your team's technical capabilities for emerging regulatory and market challenges, from MTD implementation to capacity planning for peak periods.

Should you be developing your 2026-2027 workforce strategy, we welcome the opportunity to discuss your practice's specific requirements.


References and Bibliography
(Links are provided to the original sources; all URLs were accessible at the time of writing.)

Accounting MOVE Project (2024), Private Equity Is Changing Accounting & Career Paths – 2024 Accounting MOVE Project Report. Available at: https://accountingmoveproject.com/wp-content/uploads/2024/10/2024-Accounting-MOVE-Project-Report.pdf.

Morgan, A. (2024), ‘2024 Accounting MOVE Project Report: How PE Is Changing Accounting and Career Paths’, Inside Public Accounting, 30 October. Available at: https://insidepublicaccounting.com/2024/10/30/2024-accounting-move-project-report-how-pe-is-changing-accounting-and-career-paths/.

Cleaver, J. Y. (2024), ‘2024 Accounting MOVE Project Report Looks at How Private Equity Is Changing Accounting & Career Paths’, Accounting & Financial Women’s Alliance / Accounting MOVE Project Press Release, 25 October. Available at: https://www.afwa.org/wp-content/uploads/2024/11/2024-Accounting-MOVE-Project-Press-Release-for-firms.pdf.

ICAEW (2024), Evolution of Mid-Tier Accountancy Firms 2024 – Research Findings. Available at: https://www.icaew.com/-/media/corporate/files/technical/practice-resources/evolution-of-mid-tier-accountancy-firms-2024-report.ashx.

BDO USA (2025), ‘What Accounting Firms Need to Know About Business Succession Planning Alternatives’, BDO Insights, 19 November. Available at: https://www.bdo.com/insights/advisory/what-accounting-firms-need-to-know-about-business-succession-planning-alternatives.

Cohn, M. (2024), ‘ESOP Gives BDO Employees a Stake in Firm’s Future’, Accounting Today, 27 March. Available at: https://www.accountingtoday.com/news/esop-gives-bdo-employees-a-stake-in-firms-future.