What Finance Needs to Know About Private Equity and Tax Strategy
Private equity’s expansion into CPA firms is reshaping tax talent markets. CFOs and other finance leaders face higher outsourcing risk, rising costs, and shrinking U.S. tax talent. Proactive in-house succession planning is now a financial imperative.
Private equity is no longer a distant force in professional services. It is actively reshaping CPA firms, tax advisory models, and global talent flows. This shift creates downstream risk that often goes unnoticed until it hits the P&L.
Why is private equity targeting CPA firms?
Private equity targets industries with predictable revenue, fragmented ownership, and underinvested infrastructure. CPA firms fit that profile well.
Many firms are owned by baby boomers or late-stage Gen X partners, with limited internal succession. PE offers liquidity, capital, and scale. In return, PE firms push for margin expansion and cost control, with labor as the largest lever.
How does PE-backed consolidation affect corporate tax strategy?
CFOs often experience the impact indirectly. As PE-backed firms scale:
- Offshoring accelerates
- Wage inflation follows, both offshore and onshore
- Continuity suffers as teams turn over
- Pricing becomes less predictable
- Relationship-based service erodes
Outsourced tax support may look cheaper initially but can become less stable and harder to control over time.
For finance leaders, these shifts change the risk profile of tax outsourcing itself. What was once a stable, relationship-driven model is becoming more transactional, with less predictability around staffing, pricing, and institutional knowledge. Over time, that volatility can create downstream exposure in compliance, audit readiness, and transaction execution.
Why is U.S. corporate tax talent becoming scarcer?
For more than a decade, firms have relied on global shared service centers to handle compliance work. PE-backed firms now compete aggressively for that same offshore talent, driving up costs.
If companies attempt to re-shore work, they may find the U.S. talent pool too thin to respond quickly without paying a premium. This is not theoretical. It is already happening in pockets of the market.
What does this mean for in-house tax succession?
Companies can no longer assume external talent will always be available on demand. Succession planning must shift inward.
That means:
- Identifying future tax leaders earlier
- Investing in development and cross-functional exposure
- Reducing dependency on any single external provider
- Building flexible staffing strategies that protect continuity
In many organizations, tax succession planning has historically been reactive. Leaders assumed that external firms or the broader market would fill gaps as they emerged. Private equity’s influence breaks that assumption. Talent availability, continuity, and cost are now tightly linked, and CFOs are increasingly accountable for all three.
Private equity is changing the economics of tax talent. Financial leaders who plan ahead by strengthening in-house leadership pipelines will be better positioned to manage cost, continuity, and control.
The organizations best positioned for this shift are those treating tax leadership as part of enterprise workforce planning, not a standalone function. Strategic workforce planning today reduces financial shocks tomorrow.
