Key Takeaways
- • Eisner Advisory Group CEO Charles Weinstein says private equity is changing the ownership of professional services firms while AI is set to change how those firms deliver and price work, ending billing by the hour.
- • EisnerAmper, which took private equity capital from TowerBrook Capital Partners in 2021, has acquired 30 businesses in five years and grown its partnership from 200 members to 475.
- • Industry watchers estimate that in the US, about a third of the largest firms outside the Big Four have attracted PE investment or been acquired by PE investors over the past three years.
- • EisnerAmper's India operations, started in 2006, have grown from six people to about 1,100, a model that could draw several Indian professional services firms to pursue similar consolidation.
- • Weinstein expects a separation of audit and consulting at the largest firms to be inevitable, though he says the timeline is hard to predict, and notes EY's Project Everest failed.
Summary
Private equity is reshaping the ownership of professional services firms, and artificial intelligence is set to transform how those firms deliver and price their work, according to Charles Weinstein, CEO of Eisner Advisory Group LLC, the advisory arm of US professional services firm EisnerAmper. Speaking to The Economic Times, Weinstein said the twin shifts could drive consolidation in the sector and change the economics of professional services. "Private equity changed the ownership model of accounting firms and AI is going to change the business model," he said. He argued that firms will be forced to charge for outcomes rather than for hours, noting, "For how many years were professional services in accounting firms sold by rates and hours? Forever, but not anymore."
Industry watchers estimate that about a third of the largest US firms outside the Big Four have attracted PE investment or been acquired by such investors in the past three years, and Weinstein suggested the trend may also unfold in highly fragmented markets such as India. EisnerAmper raised capital from TowerBrook Capital Partners in 2021, becoming one of the first large US accounting firms to adopt the model. Since then, according to the article, it has acquired 30 businesses in five years and expanded its partnership from 200 members to 475. Weinstein argued that the profit motive of private equity does not inherently conflict with professional ethics: "There is no reason why you can't be profitable and ethical."
On India, EisnerAmper began operations in 2006 and has grown its team to about 1,100 people, supporting its global assurance, tax, advisory and outsourcing businesses. Weinstein said India offers a cost advantage but its greater value lies in talent availability and capacity to support growth, adding that tax is expected to become a bigger service line there. Consolidation in the US mid-market could serve as a blueprint for India, where the Big Six dominate major assignments and mid-sized firms struggle to scale.
Weinstein also said auditor independence, conflicts of interest and regulatory scrutiny are making a separation of audit and consulting at the largest firms inevitable, though he said the timing is difficult to predict. He noted that EY's Project Everest, an attempt to split its audit and consulting businesses, ultimately failed. "If one goes, they all go," he said, suggesting competitive pressures could make it hard for one firm to change structure while others keep their models.
Industry watchers estimate that about a third of the largest US firms outside the Big Four have attracted PE investment or been acquired by such investors in the past three years, and Weinstein suggested the trend may also unfold in highly fragmented markets such as India. EisnerAmper raised capital from TowerBrook Capital Partners in 2021, becoming one of the first large US accounting firms to adopt the model. Since then, according to the article, it has acquired 30 businesses in five years and expanded its partnership from 200 members to 475. Weinstein argued that the profit motive of private equity does not inherently conflict with professional ethics: "There is no reason why you can't be profitable and ethical."
On India, EisnerAmper began operations in 2006 and has grown its team to about 1,100 people, supporting its global assurance, tax, advisory and outsourcing businesses. Weinstein said India offers a cost advantage but its greater value lies in talent availability and capacity to support growth, adding that tax is expected to become a bigger service line there. Consolidation in the US mid-market could serve as a blueprint for India, where the Big Six dominate major assignments and mid-sized firms struggle to scale.
Weinstein also said auditor independence, conflicts of interest and regulatory scrutiny are making a separation of audit and consulting at the largest firms inevitable, though he said the timing is difficult to predict. He noted that EY's Project Everest, an attempt to split its audit and consulting businesses, ultimately failed. "If one goes, they all go," he said, suggesting competitive pressures could make it hard for one firm to change structure while others keep their models.
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