Many private-equity firms (PEF) have invested capital in larger accounting firms to facilitate the purchase of “technology and talent” (M. Mauer, “Blackstone Buying Stake in Accounting Firm Citrin Cooperman,” Wall Street Journal, Jan. 7, 2025, https://tinyurl.com/wx3fwz72). These expenditures likely include artificial intelligence (AI) software, hardware, and training costs. Depending on the level of control acquired and the expectations for a return on capital, PEFs could spur CPA firms to increase their efficiency, perhaps through reduced over-all hiring and more technology-focused recruiting. These actions could cause larger firms to parallel the Big Four’s movement to implement AI and change their recruiting and retention strategies.
This article examines these trends and shows how some accounting programs are adapting to this new environment.
Capital and Efficiency Trends Facing Large Non-Big Four Firms
Changing Traditional Practices.
The Exhibit shows the details of some recent PEF investments in CPA firms. Seven of the 11 transactions occurred in 2024. Note that Hellman and Friedman invested over $900 million in Baker Tilly; Bain Capital invested $250 million in Sikich, CPAs; and Apollo Global Management invested $1.3 billion to help BDO establish an employee stock ownership plan. (These balances show the amounts that the PEFs invested, while the Exhibit lists the CPA firm’s revenues).
Each of these firms might have a different reason to obtain PEF funding, such as to obtain capital to finance acquisitions, buy out retiring partners, open additional offices, or repay debt. Other firms might use PEF capital to acquire new technology such as AI and needed hardware and software, as well as to develop applications, guidance, and training.
Because only CPAs can perform audits and other attestation services, these firms often use alternative practice structures, wherein the PEF invests in consulting and tax activities. Some PEF investments represent only a minority interest in the firm, functioning akin to long-term debt or preferred stock, with less influence on how to run the firm. A PEF holding substantial interests in CPA firms would, however, provide the PEF with greater influence over their operations.
EXHIBIT 1
Private Equity Firms Recent Investing in Larger, Non-Big 4 CPA Firms
Changing Investor Demands.
PEFs providing much of a CPA firm’s capital could demand relatively quick returns on their investment; CPA firms not meeting PEF goals could lose some control over their operations. Because professional standards prohibit a PEF from investing in a CPA firm’s attest practice, any impact on operations would focus on consulting and tax. Even in those areas, the need to meet professional standards plus the risk of lawsuits for poor work could limit a PEF’s influence on firm operations. Moreover, pressures to greatly expand consulting services could lead to a backlash that might prompt the PCAOB or SEC to further reduce or prohibit CPA firms from performing certain consulting services. The need for more capital could also lead to further mergers, such as the 2025 Baker Tilly-Moss Adams merger (now a $7 billion enterprise), in order to distribute AI research and development costs across a broader client base.
How Will Firms Implement AI?
CPA firms will generally seek to use publicly available general AI tools to do routine work, progressing from simple, standard tasks to ones with more complexity. Firms using general AI tools will still incur training, development and other related costs. While a PEF can provide the capital for much of these costs, CPA firms without PEF funding may still need to adopt AI to compete—as well as keep up with client demands.
Restructuring CPA Firm Operations
Similar to the Big Four, to meet market expectations smaller CPA firms will likely reshape their operations and staffing models to improve efficiency by adopting robotic process automation, machine learning, and AI tools. These forces could cause firms to adjust their hiring practices away from traditional accounting students toward more technologically proficient students such as computer science majors, believing that they can work hand-in-hand with accounting majors as an effective team. The Big Four and large CPA firms also could change the historic “up or out” model—where staff either advance or exit; meaning, firms would retain talent longer to lower turnover costs. This would save resources, add flexibility and scalability, and otherwise let CPA firms focus on higher-value tasks and even outsource more of the manual parts of their services.
Interestingly, citing the AICPA 2021 Trends Report, and other sources, Burke and Polimeni (“The Accounting Profession Is in Crisis,” The CPA Journal, December 2023) warn of a “severe crisis” of a dearth of new accounting majors. Yet, since 2021, the profession may have moved from a shortage to a small surplus of CPAs. Deloitte, PwC, and KPMG recently announced 2-4% global staff reductions, plus declining recruiting efforts—citing AI and offshore labor as key drivers. PwC alone is eliminating 1,500 US entry-level and other jobs and reducing their campus recruiting efforts. (E. Kissin and S. Foley, “PwC to Slash 1,500 US Jobs,” Financial Times, May 5, 2025, https://tinyurl.com/y34kub6y). In addition, the federal government has recently terminated many short- and long-term, internal and external, CPA firm and other consulting contracts (M. Maurer, “Deloitte to Lay Off US Consultants After Government Cost Crack-down,” Wall Street Journal, April 3, 2025, https://tinyurl.com/4sdzwdm8). These changes indicate a likely permanent shift, as technology and outsourcing replace much low-level work that recent accounting graduates have done.
Accounting Education Adapts to this New Environment
This shift towards AI affects CPA firms, their future employees, and the programs that educate them. As the saying goes, “You likely won’t get replaced by AI as much as you will be replaced by someone who knows AI.” Most CPA firms will likely prioritize recruiting from a narrower set of rigorous collegiate programs. Rather than cast a wide net via LinkedIn and virtual fairs, they could recruit “deeper” from schools that produce tech-savvy, highly capable graduates. Like companies that hire only top finance, banking, and other business recruits, the Big Four and other larger CPA firms will often focus their reduced hiring on programs preparing students for a dramatically changed technology environment. Ahmed Saad indicates that successful university programs stress technical knowledge, critical thinking, communication, and innovation to equip graduates to thrive in the ever-evolving accounting landscape (A. Saad, “Adapting Accountants to the AI Revolution: University Strategies for Skill Enhancement, Job Security and Competence in Accounting,” Higher Education, Skills and Work-Based Learning, vol. 15, no. 2, April 2025, pp. 290–305). Accounting faculty should learn how firms use AI (perhaps by spending time in practice) so that they can construct curricula that reflect current practice. Faculty will need to spend more time learning and teaching (and perhaps less time on research). The reward structure should reward teaching, especially of AI, not merely publications.
Many top universities have added AI programs to their curricula, such as Harvard Medical School’s new PhD track (M. Ashford, “How Universities Are Preparing Students for the Future of AI,” AWIS, January 24, 2025, https://tinyurl.com/mv2wrzjy). Moreover, as AI systems automate routine tasks to augment decision-making processes, accounting programs should equip students with related skills and knowledge (A.M.A. Mohamed Saad, “Adapting Accountants to the AI Revolution: University Strategies for Skill Enhancement, Job Security and Competence in Accounting,” Higher Education, Skills and Work-Based Learning, vol. 15, no. 2, pp. 290-305. 2025, https://tinyurl.com/3xx67kzz).
Programs emphasizing AI along with professional and soft skills can effectively prepare future accountants for emerging challenges and opportunities.
Many smaller or less rigorous programs unwilling to adapt to the new environment could attract campus visits primarily from smaller firms, which often have smaller hiring needs. Moreover, if the CPA Exam is updated to test knowledge of how to use AI, smaller or less rigorous programs could face challenges in adapting their curricula to help graduates to pass the CPA Exam. This stratification may well bifurcate the accounting education market: thriving programs willing to adapt to new challenges needed to serve public accounting, private industry, government, internal auditing, and other new markets, as compared to those unwilling to change.
Top programs now integrate key AI technology into their curricula. For example, Moran (“The Essential AI Skills and Knowledge that Business Accounting Students Should Acquire,” Journal of Management and Business Education, vol. 8, no. 2, 2025, pp.147–167) finds that programs emphasizing AI along with professional and soft skills can effectively prepare future accountants for emerging challenges and opportunities. Their graduates master accounting standards and techniques, plus AI tools, data analytics, case studies, and other higher-level written and oral communication skills. These programs rigorously incorporate technology into core coursework, offer AI and other case studies, and partner with tech-forward CPA firms. Leading programs will buttress their admission standards and perhaps offer generous scholarships to attract these high-performing students and teach them cutting-edge skills.
Market Shakeout and Pressures on Weaker Programs.
Weaker programs will face declining enrollment, funding, and increasing forces to lower admission standards. Many universities already face fiscal pressure due to rising faculty salaries, infrastructure, utilities, and other huge, fixed costs, coupled with potential declining state and federal government support. Furthermore, the Trump Administration recently threatened to tie federal student loan eligibility to loan repayment success (see M. Grossman and D. Belkin, “Trump Administration Threatens Schools with Student-Loan Restrictions,” Wall Street Journal, May 6, 2025, p. A1, https://tinyurl.com/ywtux56h). This could imperil schools whose graduates struggle to find the high-paying careers needed to repay their student loans. This new environment might also require programs to alter their faculty reward structure from primarily a research-based model to one that rewards technological, communication, teaching, curricula development, and other higher-level skills.
A Time of Transformation
AI may well fundamentally shift how the Big Four and other large CPA firms deliver accounting services, train their professionals, and hire their employees. In turn, successful accounting education programs will likely continue to place increasing emphasis on technology, critical thinking, and adaptability. Those clinging to outdated models risk irrelevance as CPA firms become leaner, smarter, and more technologically advanced. As large firms raise billions of outside capital to fund innovation and expansion, the accounting education that supports them should recognize the end of the era of traditional accounting education, and focus its efforts on technology, agility, and overall value.
