Unpacking Private Equity's Strategy for Acquiring Accounting Firms | Accounting Resources - Video

Jason discusses why accounting firms have become a hot target for venture capital and private equity firms in this new Thriveal video. One reason is that accounting firms provide a specialized service that not many competitors can easily enter. With the technical proficiency and licensing requirements, there's a barrier to entry that appeals to VC and PE firms looking for strong business models with limited competition.

Another interesting point is that accounting firms are considered recession-proof. Unlike some other businesses that struggle during tough times, accounting firms have a constant demand from the small business market. So even if they are managed poorly, they still generate revenue and remain stable.

Jason also shares how private equity firms are acquiring smaller accounting firms and merging them into large, consolidated firms. This ultimately increases the value for potential buyers, who could be another private equity firm looking for a substantial revenue stream.

However, the question remains whether private equity firms can effectively manage and lead these technical firms, given their different nature and established practices.