Private equity is here: Your marketing can attract it or defend against it

Like it or not, private equity is quickly changing the landscape of the public accounting profession. In fact, some estimate that in five years, 20% of CPA firms will be PE-sponsored. That number is likely to increase quickly in a short amount of time, especially as PE firms target CPA firms from $10-$50 million in size.

Private equity sponsors expect lofty growth, so they will be fueling firms with cash to spend zealously on marketing, sales, and M&A. Therefore, even firms that don’t go the way of PE will be impacted by its presence in the marketplace as competition for ideal clients becomes even greater.

Whether your partner group is thinking about trying to attract private equity funding or you prefer to be PE-proof, marketing can help. Many of the same marketing strategies can help your firm either catch the eye of private equity or bolster your firm as you continue your partnership model in an increasingly competitive market. Private equity investment in CPA firms is just getting started, and marketing can help your firm prepare:

Efficiency is where it’s at

Finding efficiency within your firm doesn’t mean stretching your team to the max or cutting out the “nice-to-haves” like good coffee in the breakroom, firm outings, or summer Fridays. We’re talking about implementing tools and procedures that make the work easier and more consistent. PE firms want to see that you’re adopting new technology that streamlines work and makes it easier to collaborate, and that you’ve standardized processes that don’t need to be constantly reinvented. Of course, these same improvements benefit partner led firms as well. Your firm should have a cloud-based CRM that can dynamically manage your contacts and integrate with your website to automate recruiting, marketing, business development activities. This will provide the foundation for measurable, repeatable and easily accessible growth related activities, whatever your firm's goals may be.

Recruiting and retention

Recruiting and retention are critical for firms in 2023, regardless of ownership structure. Conducting a study on your firm’s career brand by speaking with your team and clients can help you synthesize and define what makes your workplace culture special and attractive. Collecting this data will help develop the language you need to accurately represent the feel, values and client-side perception of the firm, and steer you away from generalizations such as, “our people make the difference!”

If you’re not already using a web based CRM with sales tools such as HubSpot, now is the time. Simplify contact management and recruiting activities with your CRM’s automation tools. Not only will it make the recruiting process more data-driven and efficient, but you will be able to filter, sort, and target the professionals in your database. While maximizing the use and impact of your CRM for recruiting could be an entire article on its own, in short, it’s an essential tool for ensuring every employment candidate receives timely communication at every stage of the recruiting process and that your prospects are being nurtured.

Niches are a business imperative

Whether you want to attract PE or you want to survive the tidal wave, it’s time to niche. When your firm is highly specialized, serving a clearly defined ideal clientbase and offering sophisticated services to help companies achieve their goals, you’re well on your way to reaching your goals too. Even large firms that may be able to serve more than one ideal client type will still benefit from a clear identity and well articulated client journey. Having a niche is inherently efficient because your team’s time is being used in ways that will benefit many clients, and developing their knowledge and experience will only add to the value they provide, leading to increased fees and increased profits. From there, your marketing, business development and sales strategies have a clear and distinct focus that will bolster your brand.

Put advisory services front and center

CAS is the fastest growing area in accounting firms for good reasons. These services provide a great deal of value to the client, require specialized knowledge and command higher prices. When clients can turn to you to support their business holistically, your advisors become even more essential to their success. Offering strategically selected advisory services for your niche will help you stand out from the competition with a clear identity and target market. Marketing to your ideal client becomes easier and better referrals will come your way. Additionally, many business advisory services do not need to be done by a CPA, so your hiring pool increases as you expand the diversity of roles within the organization. Plus, your experienced advisors can’t be replaced by AI anytime soon. PE or not, there’s nothing to scoff at here.

Packages and pricing

As you streamline your processes, define your niches and develop services designed for your ideal clients, you will also need to update your pricing. Hourly billing has its limits and is not directly tied to the value you provide your clients. Subscription based pricing models, tiered packages, and pricing projects based on value can help improve profitability, reduce burnout, and indicate to clients, prospects and investors that you are not a commodity service provider. Clearly defined packages and project scopes are also tied to the efficiency that investors are looking for. Client work can be executed with greater ease when every client doesn’t have a unique engagement, the components of the project are transparent and team members have an easy way to upsell additional services if the client asks for something out of scope. This is all part of running efficiently and profitably as the firm grows.

In conclusion

It’s easy to see why accounting firms are a smart investment for private equity. Individuals and businesses rely on their accountants in good times and bad, clients are extremely loyal, and the breadth of services CPA firms can offer continues to grow. Whether you want to beat ‘em or join ‘em, forward looking CPA firms with clearly defined identities and modern sensibilities will be the survivors.

Alison Simons started in accounting marketing in 2004 as the head of marketing for a regional CPA firm. In 2013 she became an entrepreneur, and Simons Marketing was born. Simons Marketing develops and executes marketing strategies that help CPA firms reach their goals. Alison is a contributor and presenter with MassCPAs, ProVisors, Association for Accounting Marketing, Accounting Today, and is part of the BDO USA as a Business Resource Network member.