Over the last few years, accounting has quietly entered a new era: consolidation. Across the U.S., smaller CPA firms specifically are merging into larger regional or national organizations. Some deals are driven by the retirement of partners and stakeholders. Others are fueled by private equity (PE) capital, the need for new technology that comes with larger firms and the ever-growing complexity of serving modern clients.
But trading independence for scale isn’t without its effect on the profession as a whole. As more and more firms quietly fold into larger organizations, the profession should pause to reflect on the emerging landscape – what’s being lost, what’s being gained and what the future of accounting could look like if it continues.
First, let’s look at why this is happening in the first place. It’s interesting to note that accounting is still a somewhat fragmented profession. One Capstone Partners report noted that the Big Four generated only 18.3% of total 2023 U.S. sector revenue. This illustrates how much share remains in thousands of smaller firms…who are also prime candidates for roll-ups and platform expansion.
So what is causing them to disappear quicker than Pac-Man gobbling up pixel pellets? Here are four main reasons.
At the root of many decisions to merge is a crisis over succession planning. In many small and mid-sized firms, ownership is aging out faster than new owners are stepping in. Even when there are talented successors available to step in and manage, the financial and lifestyle trade-offs of becoming an owner are harder to justify than they were a generation ago. Buying in can mean taking on debt, accepting regulatory risk and inheriting client relationships that may still be highly dependent on a single founder-partner.
At the same time, the talent pipeline has been strained. In 2021-2022, the AICPA’s Trends reporting highlights that 47,067 students earned a bachelor’s degree in accounting, down 7.8% from the prior year, and master’s degrees in accounting fell 6.4% to 18,238. The slow shrinking of new accounting graduates had begun, in what has now led to an unofficial CPA shortage in the U.S. nearly five years later.
Now, there are a few promising signs. The Journal of Accountancy actually reported 266,506 students enrolled in two- and four-year accounting programs in spring 2025, up 12.4% year over year. But 4-5 years of slow attrition took toll in the industry, and recent enrollment doesn’t instantly solve partner buyouts, retention and the time it takes to develop future owners.
Private equity money is not the only reason consolidation is happening, but it has definitely accelerated it. PE-backed firms can move faster, pay more and build acquisition “machines.” This means many independent firms are competing with well-capitalized platforms. S&P Global Market Intelligence reported that the number of private equity deals in accounting/audit/tax and related professional services reached a three-year high and the largest transaction values in nearly 10 years.
And it’s not just smaller firms who are merging. There are plenty of large headliner deals too, like the Baker Tilly and Moss Adams merger of 2025 that was valued around $7 billion. Even outside private equity, the broader merger and acquisitions (M&A) environment has been surging with total M&A value around $4.6 trillion, a trend that has carried over into accounting and professional services.
Accounting is still a people business, but it’s become a technology business too. Firms now need secure cloud document management, client portals, workflow automation, e-signature tools, standardized tax/audit software and (increasingly) AI-enabled technology, in addition to cybersecurity controls. All the technology above must also be implemented, managed and continuously upgraded. This often requires Chief Information Officer (CIO)-type oversight, security expertise and processes smaller firms can’t afford.
Many smaller firms were built around compliance: tax returns, audits, bookkeeping, payroll and periodic reporting. But the marketplace is now signaling the desire for year-round advising, industry specialization and cross-functional expertise. Clients now want their CPA to help with things like cash-flow forecasting, growth decisions, payroll risk and technology decisions. Providing that depth takes time and often multiple specialists. Smaller firms often can’t justify the above and end up stretched thin or forced to refer work out.
Well, cleaner succession outcomes, for one. For owners nearing retirement, consolidation can protect clients and staff with an easier course than a sudden closure or chaotic handoff. Larger firms also come with technology upgrades and stronger operational infrastructure. Often times, consolidation also provides the ability to offer broader advisory and specialized services to clients. Bigger firms often offer clearer promotion ladders, better training programs, and more role variety – audit, tax, CAS, advisory and niche specialties.
Larger organizations can absorb a partner departure, a client loss or a regulatory shock more easily. They generally have stronger quality control, peer review readiness and operational redundancy, which makes it easier to roll with the punches.
One of the biggest strengths of smaller firms is high-touch trust: direct partner access, local knowledge and long-term relationships. As our daily lives become more automated, many clients still value and are turning towards the personal, relational touch of smaller firms. Post-merger, clients are ultimately handed off into a more layered service model, even if it doesn’t happen immediately. The experience can feel less personal and a lot less relational.
Many mergers don’t fail financially. They fail culturally. Different firms have different processes: how they price, how they staff, how they communicate with clients, how they handle busy season and how they treat work-life balance. PE-backed or growth-driven organizations also may face stronger pressure to increase margins. That can push firms toward higher aggressive offshoring and tighter utilization targets.
As firms consolidate, some very small businesses may find fewer “right-sized” providers – especially those who want a highly personal relationship at a modest fee. Platforms may prefer larger engagements or standardized offerings, leaving the smallest clients underserved. Not everyone wants to work with a Pricewaterhouse Cooper or Deloitte. Many people still want to work with a CPA on Main Street or whom they can attempt to have a personal relationship with.
Let’s camp out here for a second, because it’s not just the micro-clients who lose out when the industry shifts in favor of the larger conglomerates.
Think of how the consumer atmosphere changed in the era of Amazon, Walmart, Target and online shopping and how small businesses went out of business nearly overnight. The ones who did manage to put up online storefronts eventually couldn’t hold a candle to 2-day shipping, customer service and deeply discounted pricing.
The consumer lost out as well. (Ever try to speak to a live person at Amazon? Good luck. Want to go to a local bookstore? See if you can find one.) And if you don’t like it? You’d be hard-pressed to avoid doing business with any of the big three if you tried. When “masters of the universe,” as they are sometimes called, take over more than half an industry, they change the landscape of the industry forever, and usually in their favor.
OK, now for the question the accounting industry must ask at some point, “Is this really best for the profession?”
Consolidation does solve several problems: succession, technology investment and service depth, true, all of which are mentioned above. But the industry also has to ask whether the long-run trade-offs are acceptable. The profession risks losing one of its defining strengths: trusted, relationship-driven advisory that serves small businesses well. It risks pricing being controlled by firms with PE pressure and customer service being squeezed by that same pressure. The result is fewer independent voices, less market diversity and an industry where only very large platforms or ultra-niche firms thrive.
The middle, where many firms and customers may find themselves, will likely continue to shrink. A recent Inside Public Accounting podcast, The M&A Era, discussed this very trend. Consolidation is not a temporary cycle that firms can simply wait out. It is a structural shift driven by demographics, capital, technology and changing client expectations. That doesn’t mean every firm has to sell, but it does mean every firm must make an intentional choice.
The firms that struggle most in this environment are not necessarily small; they are undifferentiated. Generalist firms with aging ownership, thin margins, and limited technology investment are the most exposed. By contrast, firms that clearly define who they serve, how they deliver value, and how they invest in people and systems will retain far more strategic options.
For firms who want to remain independent, the path forward will require intentionality and some deliberate reinvention. That starts with narrowing focus: developing industry or service specialization that creates pricing power and reduces reliance on pure compliance volume. It also requires embracing technology and automation not as cost-cutting tools, but as time-savers that free senior talent to do higher-value work.
At the same time, independence doesn’t have to mean isolation. Strategic alliances, shared services models, offshore support and peer networks can allow firms to gain some of the benefits of scale, without giving up ownership. The firms that succeed on their own will increasingly look “small on the outside, sophisticated on the inside.”
For the profession as a whole, the challenge is balance. Scale can bring innovation, efficiency and broader services. But the industry must also preserve space for trusted, relationship-driven firms that serve small and mid-sized businesses with depth and care.
The most important question for firm leaders is no longer “Will consolidation affect us?” or “Will we be forced to consolidate one day?”
It’s: “What role do we want to play in the next version of this profession, and are we working toward it on purpose?”
Firms who slow down to consider the above reduce their risk of being swallowed up when upper management retires or are forced to retire without a clear succession plan. And in turn, preserve the integrity of the profession by offering diversity in the marketplace. The winners in this environment – whether consolidated or independent firms – will likely be the ones who do three things well: 1. build sustainable talent models, 2. invest intelligently in technology, and 3. preserve trust-based client experiences.
That’s where Southwestern Talent can help – we provide organizations of all shapes and sizes access to quality talent they need to fill in the gaps before emergencies happen. And for larger organizations looking to scale, we can help there too.
Whatever your needs, one quick call can help you decide whether we’re the right fit for your business.