Key takeaways:

• • • Ways of achieving growth has changed 鈥� Sustainable growth now depends less on raw revenue and more on improving income per partner through smarter leverage, intentional service mix, and disciplined pricing.

    • Proactive firms will be better positioned 鈥� Firms that adopt data-driven pricing, bundled offerings, and subscription models will be better positioned to communicate value, raise fees confidently, and protect margins.

    • Differentiators are shifting 鈥� Leadership depth, culture, and succession planning are emerging as decisive differentiators as demographics shift, private equity reshapes the tax market, and next-generation partners step into control.

Tax, audit & accounting firms are still growing, but not all that growth is reaching the bottom line 鈥� indeed, 2026 is shaping up as a separate or be separated moment for many tax firm leaders. To sustain income per partner while the market shifts, firm leaders need to be far more intentional about how they grow, price, staff, and position their tax practices.

Here are five important ways that tax firm leaders can ensure their bottom-line growth keep pace with their top-line revenue:

1. Be deliberate about how you grow

Revenue is rising, but margins are under pressure. For example, for firms with revenue of more than $2 million, revenue grew 7.9%, yet income per equity partner (IPP) increased only 3.2%. This may imply that although firms are bringing in more money, the remaining profits available to distribute to equity partners isn鈥檛 growing at the same rate. This could mean that it鈥檚 costing firms more to generate more revenue possibly because expenses are eating into margins.

Meanwhile, 13.9% of total growth for firms whose revenue is more than $2 million now comes from mergers, and for firms with revenue of more than $20 million, more than one-fifth of growth is merger-driven.

For growth strategy, leaders should clarify their organic growth plans in light of this robust M&A drive, deciding when acquisitions are truly about capacity, specialization, or geography and when they are merely propping up lagging organic growth.

Leaders need to protect IPP metrics by focusing relentlessly on revenue per partner and revenue per person as primary levers, rather than chasing top-line growth for its own sake. Leaders also need to build optionality 鈥� with private equity, mega-firm consolidators, and independents all active, factors such as succession, capital, and ownership design have become core strategic decisions that can no longer be left to chance.

2. Treat pricing as a growth discipline

In the 成人VR视频 Institute’s pricing report for tax, audit & accounting firms, 64% of decision-makers said their firms saw revenue increases, but only 45% reported increased profits 鈥� a clear indication of margin compression. Further, just about 1-in-5 professionals said they feel 鈥渉ighly confident鈥� that their firm鈥檚 current pricing reflects the expertise of its professionals.

To be sure, key pricing work now involves moving beyond what the market will bear. While hourly billing still dominates (according to the report firms said over 40% of client engagements are billed on an hourly basis) 鈥� value-aligned methods such as fixed fees, subscriptions, and bundled packages are strongly associated with higher pricing confidence and a firm’s greater ability to raise fees.

To excel in this area, tax firm leaders need to use data rather than their gut. Although only 30% of respondents said their firm regularly benchmark their pricing against competitors, leaders overwhelmingly say better market intelligence would increase pricing confidence. Also, firms should expand subscription and bundle pricing options, since respondents form subscription-billing firms report significantly higher confidence that their pricing reflects value. Indeed, many firms using bundled packages have raised prices 10% to 24% or more over the past two years.

3. Build a capacity model that scales

The Rosenberg data is blunt: The fastest path to higher income per partner is not logging more partner hours 鈥� it is using smart leverage and stronger rates. Elite tax firms (those with IPP above $800,000) generate roughly $3.9 million in revenue per equity partner and maintain staff-to-partner ratios of around 17:1.

Several capacity dynamics matter in practice. Leverage drives profitability, for example, and those firms that have staff-to-partner ratios above 10 report IPP roughly double that of firms with ratios below 3, even though they may carry higher salary percentages.

Further, outsourcing has become mainstream. More than 4-in-10 firms (42%) with more than $2 million in revenue now outsource full-time equivalent (FTEs) employees, a figure that rises to 63% among firms with more than $ 20 million dollars. Interestingly, turnover has eased to about 11%, the lowest for the industry in years, but expectations have shifted as firms intentionally reduce average billable hours per staff member to prioritize sustainable workloads.

In fact, the key growth question is no longer Can we find the work? but rather Can we design a capacity model 鈥� onshore, offshore, AI-enabled 鈥� that supports higher rates without burning out our people?

4. Formalize strategy, marketing & service mix

Firms with written strategic plans earn about 4.5% more IPP than those without, according to the data, and firms with a formal marketing plan enjoy about 9% higher IPP. The most profitable firms are also more intentional about service mix, tilting toward advisory and financial services.

Growth-enabling practices start with written strategic and marketing plans. Firms that document these plans consistently outperform their peers, particularly when navigating private equity interest, AI adoption, and succession decisions. Many leading tax firms are deliberately shifting from compliance to advisory, reducing their reliance on commodity tax compliance and expanding into higher-value advisory work to drive stronger profitability. These firms are also packaging and communicating value more effectively by bundling compliance and advisory services into tiered packages, which in turn gives them greater ability to raise fees and justify premium positioning in the market.

5. Invest in leadership, culture & succession

Growth without leadership depth is fragile, especially in the tax profession in which the average partner age has remained high. Most recently, however, the average partner age has dipped slightly to about 52 years old as more retirements occur. And female partners now account for roughly one-quarter of partner groups overall, showing progress but also a persistent equity gap.

For many firms, succession remains a primary concern, and leadership-related growth priorities begin with treating succession as strategy, not an HR project. More firms are revisiting buy-in levels, which average around $133,000, and are experimenting with non-equity roles and alternative practice structures to create more flexible pathways to ownership. At the same time, leaders must protect and modernize their firm culture, recognizing that poorly managed PE transactions, rigid return-to-office policies, and underinvestment in technology-forward talent can quickly erode the very engines of growth they depend on.

Additionally, firms are elevating the managing partner role. In larger practices, managing partners鈥� chargeable hours are now meaningfully lower, reflecting an intentional shift toward having that role work on the business 鈥� strategy, talent, pricing, and M&A 鈥� rather than in it.

For tax firm leaders, these five considerations form a practical checklist for 2026 planning. Grounding each strategic initiative in data and taking visible action can help ensure that the next wave of growth shows up not just in revenue, but in sustainable, rising income per partner.

You can download a copy of the 成人VR视频 Institute’s pricing report for tax, audit & accounting firms, here

Key insights:

• • • Advisory is becoming the strategic core of tax practices 鈥� Tax firms are no longer treating advisory services as an add-on to compliance work but rather as a fundamental driver of business strategy, client relationships, and sustainable revenue growth.

    • Frequent client engagement drives measurably better outcomes 鈥� Professionals from firms that meet with clients quarterly or more frequently report significantly higher satisfaction across every dimension.

    • Technology and capacity are the keys to breaking through barriers 鈥� Firms are rapidly adopting automation to free up their professionals for advisory work, while addressing staff skills gaps through training and strategic hires.

For decades, tax firms built their practices around the predictable calendar of the annual compliance cycle, punctuated by occasional client requests for advice. Over the past five or more years, however, there’s been a seismic shift. Tax advisory services are emerging as the defining strategic function within successful firms, and it鈥檚 being driven mostly by an unprecedented convergence of regulatory complexity, technology capabilities, and evolving client expectations.

Jump to 鈫�

2026 Tax Firm Advisory Services Report

As a result, many firm leaders are fundamentally rethinking their business models, reimagining what a tax practice can be as they move from being transactional service providers to becoming more strategic advisors that can guide clients through complex financial decisions year-round.

To delve into this deeper, the 成人VR视频 Institute has published the 2026 Tax Firm Advisory Services Report, that clearly shows that as regulatory complexity and client expectations mount, firms that systematically invest in building advisory capabilities are outperforming their peers by significant margins 鈥� and the performance gap is widening.

From compliance shop to strategic advisor

For tax firm leaders, this transformation represents both validation and opportunity. The numbers tell a compelling story, especially for firms that are proactively leading the strategic elevation of their advisory capabilities. Among surveyed respondents from firms experiencing revenue growth, 88% report that advisory revenue is growing faster than compliance revenue and that advisory services now represent an average of 31% of total firm revenue.

Not surprisingly, many forward-thinking firms are backing this shift with concrete plans. Nearly 9-in-10 respondents say their firms are planning to expand their advisory services within the next year.

The engagement advantage

What’s driving this transformation? According to the report, the quality and frequency of client relationships have fundamentally recast what’s possible in tax advisory services. Firms that meet with clients quarterly or more frequently see dramatically different outcomes than those meeting clients just once or twice a year.

Tax professionals from firms with quarterly touchpoints rated their own satisfaction significantly higher across every dimension measured, such as knowledge of the client’s business, understanding the client’s industry sector, the overall strength of the client relationship, and the range of services the client uses. Even more compelling, almost 90% of respondents from firms with more frequent client engagement report that advisory revenue growth is outpacing compliance growth compared to just 65% of respondents from firms with less frequent client contact.

As the report underscores: This message is unmistakable 鈥� relationship depth directly drives revenue growth. Firms that use quarterly or more touchpoints with clients are more successfully converting compliance-only relationships into comprehensive advisory partnerships at substantially higher rates than their less-engaged competitors.

The challenging landscape

Despite the opportunities that abound in advisory services, many firms face real obstacles in expansion, the report shows. More than half (52%) of respondents cite staff skills gaps among their colleagues as their biggest challenge, followed closely by client resistance to paying for advice (47%).

These challenges create a reinforcement loop that can trap firms in their current state: Staff lack advisory skills, so they focus on compliance work, leaving no time to develop advisory capabilities or engage clients proactively. Then, clients don’t see the value of advisory services because they haven’t experienced them, and the cycle continues.

Breaking this loop requires intentional strategy and systematic execution 鈥� which is exactly what leading firms are doing differently, the report shows.

How strategic priorities are reshaping the profession

The ripple effects from this advisory transformation have dramatically reshaped strategic priorities for tax firms beyond routine concerns about service expansion. These new priorities represent fundamental shifts in how firm leadership view the purpose of their firm, its client relationships, and competitive positioning.

Interestingly, while revenue objectives dominate the top priorities, 13% of firm leaders cite developing more intellectually stimulating work for their teams as a key objective, the report shows. This speaks to a deeper strategic consideration 鈥� that advisory work itself offers the kind of challenging, engaging work that attracts and retains top talent in an increasingly competitive labor market.

Today, the opportunity is here for tax firms to capitalize on this momentum and operationalize their advisory services offerings through formalized processes, systematic client engagement, technology leverage, and value-based pricing that creates enduring competitive advantages.

As the report shows, tax advisory today is moving beyond simply offering occasional consulting services alongside compliance work. And with the strategic elevation of tax advisory services already underway, it鈥檚 those firms that move quickly enough to capture the opportunity that will flourish.

You can download

a full copy of the 成人VR视频 Institute’s “2026 Tax Firm Advisory Services Report” by filling out the form below:

Key takeaways:

• • • Strategic focus is crucial 鈥� Firms with a clear, written strategy and marketing plan are out-earning peers, and vague ambition is no longer sufficient in today’s competitive tax industry landscape.

    • Advisory services drive growth 鈥� Advisory service lines, particularly investment advisory and proactive tax planning, are expanding faster than traditional compliance work, and firms must blend recurring compliance jobs with scalable advisory to smooth revenue cyclicality and deepen client relationships.

    • Technology and leadership are keys to success 鈥� Firms must harness the power of AI, automation, and private equity to drive growth, and prioritize leadership systems, professionalization of leadership, and culture by design to endure the next decade.

If the last few years felt like standing at a crossroads for tax, audit & accounting firms, 2025 is the turn itself. Consolidation, private equity, AI, and evolving workforce expectations have tipped the profession from gradual change into a full paradigm shift. The illuminates the state of the profession. The annual report on the tax industry shows that those firms that win from here won鈥檛 simply be competent 鈥� they鈥檒l be intentional, strategically focused, and relentless about converting capacity into higher-value client impact. For tax firm leaders, the mandate is clear: Make bold, data-informed choices now or wait and watch competitors outpaced you.

What the numbers are really saying

While revenue growth has cooled from the post-pandemic highs, settling near high single digits across the market, a striking share of that growth now is being powered by mergers and acquisitions, while organic expansion is proving harder to sustain. Meanwhile, income per equity partner has still edged upward, although profit growth lags revenue as costs, partner counts, and investment outlays rise.

The standout tax firms 鈥� especially those with higher billing rates and strong staff-to-partner ratios 鈥� are combing scale, leverage, and premium pricing to widen the gap between them and competitors. The message is clear: Profitable growth now depends less on squeezing more hours and more on getting the business model right.

Indeed, the report noted several areas in which tax firms leaders need to pay special attention.

Talent: Retention is better 鈥� but capacity isn鈥檛 the same as productivity

The report reveals turnover among tax professionals has fallen to its lowest level in years, which is a positive development. Yet billable hours per professional have declined, and many teams are logging less than 1,400 hours annually.

In response, some firms are hiring to build capacity, but revenue per full-time equivalent (FTE) employees slipped for the first time in five years 鈥� a signal that headcount without redesign is a blunt instrument. Offshoring and outsourcing remain in the toolkit, especially for larger firms, but as retention improves, the hiring mix is shifting from emergency capacity to structured, strategic resourcing. The imperative is smarter workload orchestration, not more bodies.

Strategy is no longer optional

Firms with a clear, written strategy and marketing plan are out-earning their peers, the report showed. That鈥檚 not correlation by accident 鈥� it鈥檚 the compounding effect of decisive prioritization. When leaders articulate where the firm will play and how it will win, then firm investments align with strategy, pricing reflects value, and teams understand how to move the needle. Having vague ambitions is expensive, precision pays much better.

Advisory is the growth flywheel

Advisory service lines 鈥� particularly investment advisory and proactive tax planning 鈥� are expanding faster than traditional compliance. The most resilient firms are shaping portfolios that blend recurring compliance jobs with scalable advisory roles, thus smoothing revenue cyclicality and deepening client relationships. Technology is central here because it doesn鈥檛 just compress the cost of compliance work, it liberates capacity that can be redeployed into offering advice for which clients will happily pay a premium.

Private equity & technology: Forces to harness, not fear

Private equity (PE) is no longer an outlier, it鈥檚 reshaping governance, accelerating M&A, and boosting tech investment across the top end of the market. Whether you choose to partner with PE firms or compete against PE-backed platforms, you must operate with PE-grade rigor 鈥� and that means sharper KPIs, faster decision cycles, and a clearer capital allocation model.

On the tech front, AI and automation clearly are transforming tax preparation, workpaper assembly, and research 鈥� often eliminating 50% to 80% of the manual steps in defined use cases. And the top performing firms don鈥檛 just use AI just to cut costs, they turn their teams鈥� freed-up hours into advisory projects, client education, and proactive planning conversations that can fortify loyalty and margins.

Leadership & succession: Redesigned for durability

Today, partner demographics are shifting quickly. There are more younger partners, more women advancing, and more diverse paths into leadership. Non鈥慹quity roles and flexible buy鈥慽n models are becoming standard, while mandatory retirement policies are moderating to support smoother succession.

Compensation and buyout systems are maturing as committees and transparent formulas replacing opaque, personality鈥慸riven decisions. The firms that will thrive over the next decade already are professionalizing leadership the same way they professionalize client service.

The bottom line

Finally, there are several actions that smart tax firm leaders are already abandoning and others that they are strongly focusing on.

What to stop doing

• • • Managing to utilization alone 鈥� Leaders need to shift their thinking to revenue per FTE, realization, and cycle time to reflect true performance.
    • Treating offshore resources as a plug鈥慳nd鈥憄lay fix 鈥� Integrate these resources into your firm鈥檚 standard processes with clear ownership and quality assurance.
    • Waiting for 鈥減ost鈥憈ax鈥憇eason鈥� to improve systems 鈥擨mprovement is a year鈥憆ound muscle that needs to be exercised. Schedule and track system improvement it like any client deliverable.

What to double down on

• • • Focusing on client segmentation and ideal鈥慶lient fit 鈥� Politely winnow misaligned work or burdensome clients and reinvest those hours into high鈥憄otential relationships.
    • Promoting manager leverage 鈥� Equip managers with the ability to own scoping, pricing, and coaching so partners can drive market鈥慺acing growth.
    • Encouraging culture by design 鈥� Flexible work is table stakes in today鈥檚 environment. Promote what differentiates your firm, especially its clarity of mission, feedback cadence, and recognition systems.

The tax, audit & accounting profession鈥檚 fundamentals remain strong, but the rulebook has been rewritten, as the Rosenberg Report illustrates. Firm growth will increasingly come from strategy, not inertia; from advisory impact, not additional hours; and from leadership systems, not individual heroics.

Smart tax firm leaders need to treat 2026 as a pivot year for their firms. Publish the plan, price to value, operationalize AI, and convert freed-up capacity into advice offerings your clients can鈥檛 imagine running their businesses without.

Those tax firms that move first, while measuring what matters, will define the next decade of tax leadership.

For more on the current state of tax, audit & accounting firms, check out the recent 2025 State of Tax Professionals Report from the 成人VR视频 Institute here

Key insights:

• • • Technology is a priority 鈥� Those tax, accounting & audit firms that are prioritizing technology to increase efficiency and profitability are already seeing improved efficiency.

    • Strategic planning is essential 鈥� While technology is crucial, many firms still lack a formalized growth strategy, which limits their ability to extract the most value from their technology investments.

    • Positive financial outlook 鈥� Despite challenges, tax firms are in a strong financial position, with 65% reporting increased revenue in the past 12 months and 45% seeing profit growth.

For today鈥檚 tax, audit & accounting firms, there are a number of differing pathways to reach growth and profitability. Many are expanding their service offerings, such as a move into advisory services; some are looking to increase headcount, betting that more personnel can translate into more work from clients. And a portion are even looking into outside investment, such as from private equity firms, hoping that a bolstered bottom line can help them get a jump start on the competition.

Yet no matter the growth strategy, there is one paramount priority among all firms today: technology, which they see as a necessity to gain greater efficiency. Indeed, improved efficiency and adding more technology are tax firms鈥� top priority for the coming year, and in turn, greater use of technology is seen as the dominant strategy to drive firm profitability, according to the recently released 2025 State of Tax Professionals Report from the 成人VR视频 Institute.

Tying technology to overall growth, however, may be easier said than done. Many firms still have not formalized their growth strategy, and a number are still trying to optimize use of their current technology, let alone keep up with new innovations such as generative AI (GenAI). As a result, technology may be the primary way firm leaders wish to increase profitability, but they need to focus more on strategic planning to better extract value from that technology in order to succeed.

The importance of efficiency

Overall, today鈥檚 tax, audit & accounting firms look to be in a strong financial position. Almost two-thirds (65%) of survey respondents report that their firms saw increasing revenue in the past 12 months, while 45% say their firm鈥檚 profit has grown, too. Similar percentages also report expecting their firm to increase revenue and profit over the upcoming 12 months as well.

Even with these positive indicators, however, many firm leaders indicate there is more room for growth. In particular, many are pointing towards technology as a potential area of interest, with nearly half (49%) of respondents saying their firms are actively applying greater use of technology as a growth strategy, while an additional 32% said their firms are considering technology usage as part of their growth strategy.

This is perhaps no surprise given the tax industry鈥檚 need to do more with less. Previous years鈥� iterations of the Tax Professionals Report have highlighted the recruiting and talent struggles facing the industry, and this year is no exception. Hiring, attracting & retaining talent, and staffing matters still rank among the top challenges for firm leaders, and as such, it鈥檚 no surprise that firms are turning towards automation to fill those gaps.

New advanced tech tools such as GenAI are increasingly included among those strategies that leaders see that could make up for talent shortages by providing more efficient tax return preparation, regulatory research, and document summarization and review, among other tasks. According to the report, however, while firm leaders are interested in GenAI and other new technologies, they鈥檙e still looking to extract more value from the technology tools they already have first.

Indeed, when many firm leaders talk about technology driving growth, it may not be that they鈥檙e really considering investing in new technologies at all. Many firms have invested heavily in technologies in recent years, but don鈥檛 actually get the most value out of those new systems because they are left unused, or because tax professionals are untrained and don鈥檛 use the systems properly 鈥� or even because client demands do not align with the technologies that firms have put in place.

When firm leaders want technology to drive their future, what they really want are more efficient processes and procedures that technology can bring, allowing them to do more with less.

A strategy for technology

With that in mind, how can tax, audit & accounting firm leaders extract the most value from their technology purchases, both new and old? It starts with tying technology usage to the overall growth strategy of the firm.

In some ways this should be straightforward, given how many firm leaders cite efficiency as one of their foremost goals. For some firms, however, tying technology to strategy may run into a fundamental problem: They don鈥檛 actually have a directly defined growth strategy. This is true particularly for smaller firms (those with 1 to 3 employees) at which only 26% of respondents said their firm had a defined growth strategy. However, even in midsize firms (4 to 29 employees), just 40% of respondents said their firm had a defined growth strategy.

Given that, getting the most out of technology may require firms determine a defined strategy for growth first. That strategy can have a number of varying facets, but of those firms that do have a growth strategy, it鈥檚 no surprise that technology and growth are intertwined. About two-thirds of respondents report greater use of technology and automation as a part of that strategy.

With a growth strategy in place, firm leaders should then more easily be able to invest in technologies that would align with that strategy. For example, firms that include growing the client base as a core tenant of their growth strategy may want to invest in marketing and business development technologies, or explore which of their pre-existing technologies can be leveraged for that purpose. Firms looking to grow by moving into advisory services for the first time, meanwhile, may be looking to leverage technologies such as GenAI for idea and document generation.

Regardless of what direction that growth strategy may take a firm, it鈥檚 clear that technology will likely play a major part in its future. Not only are clients clearly indicating that they want their outside tax firms to do more with less, but those firms now see that technology is having a positive impact on their bottom line.

As the Tax Professionals Report notes: 鈥淢any people have concerns about the impact of AI and other emerging technologies on how professional services are managed and delivered, but the evidence thus far suggests that the onward march of technology is helping (not hurting) accounting firms鈥� ability to provide the services and guidance their clients want and need.鈥�

You can download a full copy of the 成人VR视频 Institute鈥檚 2025 State of Tax Professionals Report here

Key points:

• • • Preparation is key for mergers听鈥� Successful tax, audit & accounting firm mergers require years of preparation, focusing on improving the firm’s culture, leadership, and long-term strategy.

    • Importance of culture听鈥� The alignment of goals, values, and culture between merging firms is crucial, because cultural clashes are often the main reason why mergers fail.

    • Desirable characteristics in merger targets听鈥� Firms that are attractive merger targets typically have strong leadership, organic growth, profitability, partner alignment, and a scalable practice.

Selling your tax, audit & accounting firm isn鈥檛 unlike preparing your house for sale, says industry consultant Matt Rampe, partner at Rosenberg Associates. You want the firm looking its best, just in this case 鈥� and that often means raising rates, pruning unprofitable clients, improving margins, and lining up future partners.

These steps can take years, not months. 鈥淎lways be ready for a sale, even if you’re not planning to sell,鈥� Rampe says. 鈥淚t takes time, and it takes planning.鈥�

While firms shouldn鈥檛 jump at the first buyer, the best offers go to those that are best prepared to receive them.

Mergers keep gaining steam

Often, by the time a tax, audit & accounting firm gets to the level of $20 million to $30 million in annual revenue, organic growth usually isn鈥檛 enough for firms to rapidly expand. To scale, many may look to merge with smaller firms.

Allan Koltin, CEO of Koltin Consulting Group and a top advisor on M&A in the tax profession, says that deal-making has not slowed down 鈥� he was busier in the first quarter of this year than ever before. Indeed, history has shown the larger tax, audit & accounting firms are continuing to get bigger, he adds.

In 2000, the 100th largest firm reported $6.5 million in revenue. By 2024, that number had jumped to $53.2 million, according to Accounting Today. In fact, half the Top 300 tax, audit & accounting firms have merged with others over the last decade.

The marriage checklist: What buyers want

With mergers continuing unabated, Koltin has developed what he calls a marriage checklist of desirable characteristics in a merger target, including great leadership, strong organic growth, profitability, partner alignment, great culture, and a scalable practice.

Further, it鈥檚 important for the target firm to be in need of capital for expansion, making its leadership more open to a potential deal. Target firms should also have successful track record making M&A deals, significant next-generation talent, and 鈥� of course 鈥� be respected and admired within the profession.

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Rosenberg Associates鈥� Rampe further emphasizes the importance of geography, explaining that buyers often look for complementary regions or cities. He also notes that firms with strong, profitable niches are more attractive. 鈥淎s private equity continues to come into the market, it becomes more and more important to find the thing that you are number one at,鈥� Rampe says. 鈥淎nd I think specialization can help you get there quickly.鈥�

Yet, while private equity buyers continue to scan the tax, audit & accounting field for potential targets, some firms are standing pat while others are patiently searching for the best deal possible.

Finding 鈥渢he right fit鈥�

Less than three years ago, Woodmere, Ohio-based HW&Co., a $24-million accounting and advisory firm with 14 partners and more than 140 employees, didn鈥檛 change itself to attract a buyer. Instead, it followed a 10-year strategic plan launched in 2019 that pushed it to expand beyond Ohio, grow its healthcare niche nationally, and build career pathways for its younger professionals.

Yet, it was that clarity of purpose that made it an appealing merger partner for Citrin Cooperman, a private equity-funded, top 20 professional services powerhouse. It is Citrin Cooperman鈥檚 first merger since private equity giant Blackstone acquired a majority stake in the firm in January, buying its stake from New Mountain Capital, which invested in Citrin Cooperman in 2022. The deal between Citrin Coopermand and HW&Co. .

鈥淚f we had to flip a switch to be different than who we are today, then that wasn’t going to be a success,鈥� says former HW&Co. president and CEO Brandon Miller, now managing partner of Citrin Cooperman鈥檚 Ohio offices.

Scott MacChesney, Citrin Cooperman鈥檚 vice president of integration and administration, says his firm looks for others that have 鈥済reat cultures鈥� and 鈥済reat growth stories.鈥� HW&Co., which merged with three firms over the last four years, had a strong presence in Ohio, a region in which Citrin Cooperman wanted to grow its presence. A similar, middle-market client base was another attraction. 鈥淭here are a lot of different factors obviously, but I think that consistently the most important one is that it’s a right fit,鈥� MacChesney explains.

Miller agrees. 鈥淎ll the people in the entity really care about each other,鈥� he says. 鈥淭hey care about developing people, they care about teamwork, they care about collaboration, they care about growth, and you just don’t see that in other firms that are out there 鈥� and I’ve met with a lot of them.鈥�

The top consideration

When deals fail, however, it鈥檚 usually clashing cultures that are to blame. A of almost 1,100 M&A leaders showed that 44% cited a lack of cultural fit and friction between the acquiring and target companies as the top reasons that integrations fail. 鈥淢any M&A executives have admitted to us that they gave culture too little attention, too late,鈥� the survey stated.

Rampe concurs. 鈥淥ne of the most important factors that predicts success is probably alignment 鈥� alignment of goals, values, personalities, technology, client mix,鈥� he notes. 鈥淚f I take two successful companies and then mash them together, but they’re really running on very different strategies or cultures, it’s not going to work.鈥�

Koltin sums it up: 鈥淎t the end of the day, culture defines it. Culture is how hard do we want to work, culture is how we treat our people, culture is how we treat our clients. Are we basic compliance providers, or are we the clients鈥� most valuable advisor? All those things are in play.鈥�

You can find out more about how private equity is impacting the tax, audit & accounting industry here

Indeed, growth has surged as the second-highest strategic priority for firms worldwide, jumping from fifth place in 2024, according to the 成人VR视频 Institute鈥檚 2025 State of Tax Professionals Report.

That means, for tax firm leaders who are considering their growth options 鈥� whether planning for a merger, acquisition, internal succession, or just a more profitable future 鈥� it is critical for them to understand their firm鈥檚 valuation and the strategic underpinnings of scalable growth.

The report shows that over the past five years, the tax, audit & accounting industry has experienced increased consolidation, driven primarily by mergers and acquisitions (M&A), private equity interest in the industry, and contraction in the available pool of talent. At the same time, clients are indicating that they want their outside tax firms to offer more advisory services and new non-traditional competitors, such as tax-focused fintech firms and AI-powered platforms, are entering the market.

In response, tax firm leaders should be asking some variation of the following three questions:

• • • How do we stay competitive and attract the right clients?
    • Are we building a firm that will be desirable to a buyer or to the next generation of partners?
    • What is our firm worth, and how do we increase that value over time?

Factors that drive valuation

Valuation is about more than revenue. A buyer or successor is buying into the firm鈥檚 future 鈥� such as what potential revenue opportunities exist or can be created 鈥� not the past. While historic financial performance is foundational, tax firm value should be based on the following:

Recurring revenue and client mix 鈥� This can be a key indicator of a firms鈥� value. Firms whose business is primarily seasonal tax prep without any significant ongoing advisory work are clearly less valuable than those firms that can offer that. With the increase of tax prep work automation, clients can become agnostic as to where their tax prep work is done; or even may decide to utilize tax tools for themselves, depending on the levels of complexity they require. Thus, an outside tax firm that has a mix of tax prep and strong advisory service offerings may have the breadth in revenue stream and the potential for increasing offerings that makes it more valuable.

Owner dependence 鈥� If the survival of a firm is solely or mostly dependent on its founders or some of its partners its value is inherently less. For example, if the founder or key partner is hit by the proverbial beer truck and all or most of the firm鈥檚 clients head for the door, the firm will likely go under. This clearly isn鈥檛 a sound business model, and no one likely would invest in something that seems so tenuous. For most owners and founders the tendency is to do all or most of the heavy lifting work because they know what they want to get done. However, if firm growth in anywhere in your valuation consideration, then firm leaders should delegate to ensure clients not only have strong relationships with the owner, but with the firm鈥檚 entire staff.

Technology & operational efficiency 鈥� The Tax Professionals report highlights the correlation between a firm鈥檚 desire to grow and the understanding that to drive efficiency you have to utilize advanced technology. Today, tax firms still using outdated technology or those that are mired in manual processes will be unable to scale up enough to become attractive to a buyer, investor, or even potential talent.

Staff & culture 鈥� As the war for talent rages on in the tax, audit & accounting profession, those firms with stable, engaged teams obviously are more valuable than those with high turnover or looming mass retirements. Firms that foster a culture of strength and flexibility are more attractive to potential buyers, whether through M&A or private equity investment.

Brand & market position 鈥� Naturally, a firm brand and where it sits in the market is a significant valuation factor for a potential buyer or investor. Firms that operate in a profitable niche and have a strong reputation are clearly more valuable, period. For example, a firm specializing in an industry can position itself as an expert and therefore attract and retain clients in those target markets.

What growth really requires

For many tax, audit & accounting firms, growth isn鈥檛 just about adding more clients or increasing revenue. It鈥檚 about building systems, teams, and strategies that create sustainable, transferable value. In terms of being truly strategic, firm leaders should start by looking at their roster of clients and how each is served and priced. Knowing where each client resides 鈥� as high-value or low-margin customers 鈥� is the first step to making the necessary adjustments and focusing on more productive relationships.

Similarly, if growth is top of mind, then so must be succession planning. Firms that want to grow and retain value need to identify and groom future leaders early. This includes not just offering technical training, but also providing leadership development, creating equity pathways, and establishing client relationship handoffs.

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Further, investing in technology and client experience is no longer a nice to have, it鈥檚 an essential requirement. Most of us live in a world in which we expect immediacy and ease for everything, and tax firm clients are no different. They now expect fast responses, online access, and proactive advice 鈥� not just a completed tax return each year. Firms that invest in client relationship management systems, client portals, and advisory frameworks are better positioned to retain clients, charge premium fees, and scale effectively than those firms that don鈥檛.

Yet, despite best intentions, some firm leaders fall into avoidable traps on their path to increasing valuation, including:

Focusing only on tax season 鈥� Firms that don鈥檛 develop year-round advisory-based services miss major opportunities for revenue and client loyalty.

Underpricing services 鈥� Undervaluing your firm鈥檚 own expertise hurts margins and attracts the wrong type of clients.

Failing to document processes 鈥� Institutional knowledge can become trapped in the owner鈥檚 head, which limits scalability and valuation, and is disastrous should a sudden loss of owner occur.

Ignoring succession planning 鈥� Similarly, many firm leaders wait too long to think about a transition to new leadership or managerial talent, which can result in the loss of firm valuation, key talent, and most importantly, clients.

Much like test driving a vehicle before you need one, firm leaders should get a fix on the valuation of their firm before any transaction or major change. Determining a baseline valuation is a good exercise that can help set goals and spot red flags. Based on the valuation data, firms then can use the information to help move everything forward, from streamlining processes and automating operations to defining ideal clients and what type of additional services (think advisory) the firm could offer or what other revenue opportunities it could pursue.

The foundation of a more valuable and scalable tax, audit & accounting firm isn鈥檛 built on working harder every tax season; rather it鈥檚 built on making intentional decisions, creating repeatable systems, establishing strong teams, and forging a deep understanding of what drives value in today鈥檚 tax, audit & accounting firm market.

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We sat down with Pat Walsh, CEO of tax advisory and audit firm , to get his insights on these industry shifts and his firm鈥檚 stance going forward.

The rise of private equity

Private equity’s interest in accounting firms is not unprecedented. Private equity sees the industry as an attractive investment due to its steady profitability and high cash flow. Walsh recalls past attempts by American Express and HR Block to roll up independent accounting firms into larger conglomerates, which ultimately failed. However, today’s environment is different as firms are now more open to private equity because the liquidity it provides and the ability to grow rapidly through acquisitions.

Walsh acknowledges that while private equity can and will be successful for some firms, time will tell if it suits all.

Withum’s approach to independence

Withum’s philosophy is rooted in stewardship rather than ownership, Walsh says, adding that the firm sees itself as a custodian of its legacy, aiming to pass on a better firm to the next generation. This stewardship involves focusing on industry expertise and investing in people. Walsh likens Withum’s strategy to Warren Buffett’s buy-and-hold approach, prioritizing long-term benefits and control over short-term financial gains.

Walsh advises other firms to consider their firm philosophy and long-term goals. Are they stewards of their firm, or owners who can sell their interest to outside investors?听 Will being a larger firm make the firm better? He encourages firms to evaluate whether a combination with another firm provides opportunities for the next generation or simply capitalizes on market disruptions. For Withum, the focus is on building a better firm through organic growth and strategic acquisitions.

Withum’s philosophy is rooted in stewardship rather than ownership, and the firm sees itself as a custodian of its legacy, aiming to pass on a better firm to the next generation.

While M&A are part of Withum’s strategy, Walsh stresses that organic growth is the ultimate arbiter of success. Organic growth reflects a firm’s ability to provide opportunities for the next generation, invest in technology, and support its communities. Withum’s scale allows it to prioritize such organic growth, ensuring it remains relevant and competitive in the market.

Client relationships and private equity

Walsh notes that clients rarely inquire about firm ownership. Instead, they prioritize the quality of service and expertise provided by their client service team. Whether a firm is owned by its partners or by financial investors, what matters most is the firm鈥檚 ability to deliver exceptional service at a fair price. Walsh acknowledges potential concerns around independence for those clients that are registrants with the Securities and Exchange Commission but adds that he believes the American Institute of Certified Public Accountants (AICPA) is effectively managing these complexities.

The primary competition with private equity-backed firms lies in M&A. Indeed, private equity’s financial incentives can be appealing to firms seeking a larger platform, Walsh says, but Withum’s focus on culture and long-term vision resonates with firms that prioritize stewardship over short-term gains. As for go-to-market activities, Walsh explains that he sees little impact from private equity, emphasizing the importance of being a better firm through efficient management and profitability.

Walsh notes that there are other key issues that Withum had to address (as would any firm that鈥檚 considering growth strategies or private equity investment), including:

Impact on pricing 鈥� The profession has experienced turbulent times, with growth rates soaring during the pandemic. Walsh observes that the current correction is a return to traditional growth patterns, with clients pushing back on pricing. Inflation has decreased, making rate increases more challenging.

Attracting and retaining talent 鈥� To attract and retain talent, Withum strives to be the employer of choice. Walsh highlights initiatives like covering 25% of childcare costs for working parents, which demonstrates the firm’s commitment to its team members. Withum’s culture emphasizes relationships, development, and connectivity, fostering an environment in which employees feel valued and engaged.

The role of culture 鈥� Walsh notes that culture is paramount in both client and team interactions. Withum invests heavily in its culture, hosting events like the State of the Firm, in which all team members gather to celebrate achievements. Walsh asserts that this investment distinguishes Withum from other firms, reinforcing its commitment to people-first values.

Future trends & challenges

Looking ahead, Walsh identifies technology as a key driver of industry transformation. He dismisses fears of AI replacing accountants, likening it to past disruptions like blockchain and QuickBooks. Instead, technology will enable firms to right-size their service offerings and maintain high-quality service with fewer people. Walsh also highlights the importance of leveraging global resources to meet client demands.

In an era of private equity and industry shifts, Walsh’s insights offer a compelling perspective on the future of accounting. Withum’s commitment to stewardship, organic growth, and a people-first culture positions it well as it strives to build a better future for its clients and team members.

As the advisory, tax, audit & accounting profession continues to evolve, Walsh’s emphasis on relevance, relationships, and technology will continue to guide Withum’s path forward.

You can find out more about听the talent challenges facing tax, audit & accounting firms听丑别谤别

A on the chronic labor shortage in accounting shows that 72% of students said they believe a more manageable workload would be a 鈥渧ery effective鈥� strategy to grow the pipeline of new accountants. Greater flexibility in work arrangements was cited by 77%.

Forward-thinking firms are turning around accounting鈥檚 bad reputation by easing the grind.

鈥淲e really want to find opportunities to retain the great employees we have. We also think it鈥檚 a selling point for recruiting,鈥� says , managing partner at , a 50-person, 100-year-old tax & accounting firm in Oak Brook, Ill. 鈥淚f we can come out and say, 鈥�Hey, we never ask for more than X hours鈥� 鈥� I think that really can be a driver.鈥�

The path to 50 at Sassetti

Freiburg has initiated what she calls The Path to 50, a firmwide program designed to limit hours worked during tax season. The firm is in the middle of a five-year effort to get there, with maximum hours dropping from 65 a few years ago to 58 this year. She also offers alternative schedules for those who want to work no more than 40 hours.

Many firms offer free lunches, pizza, ice cream breaks, or chair massages to help ease the stress, but that鈥檚 not enough, consultants say. 鈥淲e can鈥檛 sustain the profession doing it the way that I did it,鈥� says , founder of and former partner at a Top 20 tax firm. 鈥淚 didn鈥檛 know I had a choice, so I worked 80 to 90 hours a week. Young people have too many options now.鈥�

A 50-, 45- or 40-hour-a-week goal may seem impossible considering the intense labor shortage, last-minute tax law changes, and delays in receiving required tax documents, but it is achievable.

Tax firm leaders need to consider these ways to hit their hour-reduction targets:

Find your ideal clients and cull the rest 鈥� Freiburg has become more selective about the clients the firm takes on, as well as the clients it鈥檚 already serving. Ideal clients are ones that appreciate firm guidance, offer more challenging work, and hit revenue targets. Sassetti also conducts a yearly reassessment of the workload and refers less profitable clients to firms that are more suited to take on such work.

Some firms only accept clients that are agreeable to tax extensions and the bulk of their work being done outside tax season, Thomson explains. This way, work weeks can drop from 55 hours to 45 to 40 over time.

Price right and encourage timely responses 鈥� Freiburg implements surge pricing 鈥斕齝harging an extra fee to clients that provide tax documents late in the season. She also trains clients to provide their information sooner so the tax team can slowly increase their hours to 45 in January rather than all at once later.

Leverage technology and outsourcing 鈥� The Sassetti tax team meets weekly during busy season to share efficiency tips. And, automation has sped up processes and improved data gathering, for example. , founder of , says he estimates that 50% to 70% of firms are using some form of outsourcing, either within the United States or offshore. Sassetti has been outsourcing, with a 48-hour return time, for 10 years, Freiburg notes.

Hold clients to a schedule and meet capacity 鈥� Kuesel compares CPAs to physicians. Patients don鈥檛 expect their physician to work weekends; instead, they wait for the next available appointment. Reject the bigger is better mentality, he says, and if you鈥檙e aiming to create a 40-hour firm, don鈥檛 schedule more appointments than staff can reasonably handle. CPAs should consider the model of doctors who offer concierge service. A limited number of patients are charged more to receive quicker, more comprehensive care.

Count the hours and shift them 鈥� Thomson advises firm leaders to calculate the number of hours worked in the busy season to determine how many hours need to be taken away from staff. For example, if you want no staffer to work more than 45 hours and no partner to work more than 50, figure out how many hours are needed to be made up through interns, outsourcing, or moving advisory work to lighter times of year. 鈥淭here鈥檚 a very tactical way to move the needle,鈥� he says.

Starting over

Think about building a firm from scratch, Kuesel suggests. If you could, would you set a 40-hour week all year, or 50 during tax season and 30 afterward, or another arrangement? 鈥淚f you鈥檙e promising a 40-hour work week, and you stick to it, you鈥檙e going to have a strong pipeline of talent because it鈥檚 a rarity in public accounting today to be able to offer that kind of arrangement for your team,鈥� he says, adding that upstart firms are upending traditional rules to provide better experiences for clients and staff.

鈥淚f you鈥檙e truly 100% resistant, take caution because someone is engineering this in your backyard. Maybe you don鈥檛 see it yet, maybe it鈥檚 not impacting you yet, but something like this is coming,鈥� Kuesel advises. 鈥淏e on the lookout because I don鈥檛 think sustainability is particularly high in the way we鈥檙e currently running our firms.鈥�

You can find out more about听the talent challenges facing tax, audit & accounting firms here