Capstone Partners Sees Accelerating Private Equity Investment in Accounting Sector Moving into 2025

Capstone’s recent work advising PKF O’Connor Davies—one of the nation’s largest accounting and tax advisory practices—highlights the growing trend.

Boston, MA – Capstone Partners (“Capstone” or “the Firm”), a leading middle market investment banking firm, reports that leaders in the Accounting and Professional Services space are increasingly partnering with financial sponsors as private equity seeks to deepen its sector penetration—a trend highlighted by the Firm’s recent work advising leading accounting practice PKF O’Connor Davies (“PKFOD”).

Last month, PKFOD, one of the largest U.S. accounting and tax advisors, secured a strategic growth investment from Investcorp and PSP Investments in one of many similar recent transactions from top U.S. accounting firms. Capstone served as sole financial advisor to PKFOD on the transaction and says it marks the continuation of the ongoing trend in the space: high-quality accounting and advisory firms partnering with financial sponsors to strengthen balance sheets for M&A, create a model to retain and reward talent, and to gain operational expertise from private equity sponsors.

As referenced in Capstone’s latest Accounting Services M&A Report, private equity backing via the alternative practice structure has gained popularity in the sector as an inorganic growth strategy—offering a mutually beneficial partnership to middle-market companies seeking growth and financial sponsors looking to deepen penetration in an active market. This trend has been reflected by several other high-profile transactions announced in 2024, such as New Mountain Capital’s investment in Grant Thornton and Charlesbank’s investment in Aprio. Financial buyers, which account for nearly a third of all deal activity in the sector year-to-date, are capitalizing on the sector’s fragmentation, consistent revenue flow, and aging partnerships.

Erik Larson, Director within Capstone’s Business Services Group, commented, “In a very active marketplace for private equity investment in the Accounting Services sector, PKFOD’s transaction demonstrates the benefits of a successful partnership. A modernized compensation structure, technology advancements, and capital to fuel growth plans will reinforce PKFOD’s position in the market.” Head of Capstone’s Business Services Group Bob Balaban added, “PKFOD really stood out in a competitive process that resulted in a new high-water mark for valuations in the space.”

Looking forward, Capstone expects to see robust M&A opportunity continue in 2025—particularly with financial sponsors—for middle market businesses in the space as firms leverage their strengthened balance sheets to fund new initiatives and stay ahead of increasing competition.

Read more about the transaction here.

ABOUT PKF O’CONNOR DAVIES

PKF O’Connor Davies is a full-service public accounting and consulting firm headquartered in Harrison, New York. The firm provides services in the areas of audit, assurance, tax compliance, fund accounting, bankruptcy and restructuring, mergers and acquisitions advisory, valuations, litigation, forensic accounting, and risk management services. PKF O’Connor Davies primarily serves clients in the banking and financial services, healthcare, life sciences, construction, education, hospitality, real estate, consumer products and retail, and transportation industries. For more information, visit pkfod.com.

ABOUT INVESTCORP

Founded in 1982, Investcorp is a global investment manager specializing in alternative investments across four asset classes: Private Equity (Mid-Market Buyouts, Growth Investments, and GP Staking), Real Assets (Infrastructure and Real Estate), Credit (CLOs, Broadly Syndicated Loans & Structured Credit, and Middle-Market Direct Lending), and Liquid Strategies (Absolute Return Investments and Insurance Asset Management). Today, Investcorp manages $52 billion in assets, including assets managed by third party managers. Investcorp has 14 offices in the US, Europe, GCC and Asia, including, India, China, Japan and Singapore and employs approximately 500 people from 50 nationalities globally. For further information, visit investcorp.com.

ABOUT PSP INVESTMENTS

The Public Sector Pension Investment Board (PSP Investments) is one of Canada’s largest pension investors with $264.9 billion of net assets under management as of March 31, 2024. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources, and credit investments. Established in 1999, PSP Investments manages and invests amounts transferred to it by the Government of Canada for the pension plans of the federal public service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montréal and offices in New York, London and Hong Kong. For more information, visit investpsp.com.

ABOUT CAPSTONE PARTNERS

For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company’s lifecycle. Capstone’s services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions, and financial advisory services. Headquartered in Boston, the firm has 175+ professionals across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams. Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ: HBAN). For more information, visit www.capstonepartners.com.

FOR MORE INFORMATION CONTACT:

John Ferrara
Founder & President
617-619-3325
jferrara@capstonepartners.com

Bob Balaban
Head of Business Services
303-792-9400
bbalaban@capstonepartners.com

Chris Hastings
Head of Equity Capital Markets
917-399-3528
chastings@capstonepartners.com

Erik Larson
Director, Business Services
720-465-4444
elarson@capstonepartners.com

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