In August 2021, it was introduced that TowerBrook Capital Companions had made a strategic funding in Prime 20 accounting agency EisnerAmper.  

In an announcement saying the transfer, Charles Weinstein, EisnerAmper CEO, stated, “Reasonably than conforming to conventional frameworks, adopting a brand new mannequin of possession facilitates the perfect construction for the agency to drive development and revolutionary options to our shoppers. Our colleagues will be capable to chart a course for fulfillment in our purpose-built follow construction.”   

Just some months later, Lightyear Capital introduced that it was shopping for into Schellman & Co., LLC.  

Extra just lately, in April 2022, New Mountain Capital introduced a majority funding in skilled companies companies Citrin Cooperman.  

These investments marked a notable transformation within the career, with the belief amongst non-public fairness companies that investing in massive accounting companies can yield nice returns. For accountants, non-public fairness investments could be an effective way to future-proof the agency, gasoline development, and acquire a aggressive edge.  

For companies trying to appeal to non-public fairness traders, there are a number of components to think about and methods to assist draw enchantment. Let’s take a better look.  

The rise of personal fairness investments

Personal fairness has been eyeing the accounting career for greater than a decade, however more moderen market adjustments — corresponding to a higher want for expertise, developments in expertise, and need for strategic acquisitions — have made such offers a actuality, as Allan D. Koltin, CEO of Koltin Consulting Group, defined in a Reuters article.  

It’s a development that can possible proceed to reshape the career as traders understand accounting companies to be low-risk, high-reward funding alternatives.

Why? Companies are usually recession-proof, ship optimistic money circulation with low volatility, and are ideally fitted to development as they shift away from compliance-based enterprise fashions in favor of higher-margin strategic advisory companies. Moreover, accounting professionals are extremely trusted advisors.  

What are the advantages of personal fairness funding for accounting companies?

For accounting companies, non-public fairness investments are the infusion that many must speed up development and increase service choices in at the moment’s advanced enterprise setting.    

As Weinstein wrote in a current Accounting Right now column,

“Partnering with PE allows accounting agency leaders to speed up the evolution of their service choices, increase funding in expertise and expertise, and increase capability for each natural development and focused mergers and acquisitions.”

Weinstein continued, “The capital supplied by means of PE traders can also enormously improve the standard and capability of core companies (tax and audit) on which companies corresponding to ours have been based. Consequently, PE companies ought to profit from the robust development projected for our trade, with the potential to create strong ROI.”  

For EisnerAmper, Weinstein stated TowerBrook’s funding enabled the agency to launch new follow areas — corresponding to cryptocurrency, household workplace expertise companies, and ESG — whereas additionally ramping up M&A exercise.    

The truth is that lots of at the moment’s companies perceive the necessity to evolve their service choices and put money into expertise and applied sciences, however they might lack the capital wanted to successfully fund their development initiatives. For a rising variety of companies, non-public fairness is the capital infusion wanted to remodel their imaginative and prescient right into a actuality.  

How can companies appeal to non-public fairness traders?

Personal fairness companies are usually interested in bigger sized companies, but additionally companies which might be sustainably worthwhile. Companies trying to drive higher profitability ought to take into account the next: 

Get within the cloud

Companies trying to appeal to traders ought to guarantee they’ve the applied sciences in place to streamline workflows and maximize capability. This includes leveraging cloud-based options. When companies function within the cloud, it allows anytime, wherever entry to real-time knowledge and likewise serves because the gateway to higher automation and integration capabilities. 

Standardize processes

Why recreate the wheel for every shopper? When companies are capable of implement standardized, repeatable processes they’ll extra effectively serve shoppers and generate higher revenues. Having standardized processes in place is very essential given the rise in shopper expectations and the bandwidth constraints going through lots of at the moment’s companies. 

Enhance efficiencies

Empower workers to work effectively by eliminating as many handbook, time-consuming duties — like repetitive knowledge entry — as doable. This eases the pressure on workers and likewise supplies them extra time to deal with higher-value, higher-margin companies.   

Reevaluate pricing fashions

It will be significant that companies reevaluate their pricing and pricing fashions, particularly if they’re nonetheless billing by the hour. Companies should be certain that workers is being correctly compensated for the worth they’re offering shoppers. This has given rise to companies bidding adieu to hourly billing in favor of value-based pricing. By adopting worth pricing, companies can guarantee transparency, display worth, and remove billing surprises. Purchasers pays a premium after they perceive the worth that’s being supplied.  

Deal with higher-value companies

By specializing in higher-value companies like strategic advisory companies, companies can degree out the peaks and valleys of tax season and generate year-round profitability — an element that non-public fairness traders will definitely discover enticing. Advisory companies additionally strengthen shopper loyalty as they’re more and more searching for extra proactive, strategic steering.   

Making your agency prepared for the following massive funding

Is a non-public fairness funding proper in your agency? In case you are trying to future-proof your follow, drive strategic development, and stay aggressive, it could be the best transfer for you and your workers.  

To study extra about how one can leverage expertise to assist rework your agency into a horny funding alternative, learn our white paper “How APIs will help rework your follow.”