Blog · 15 October 2026

Private Equity in Accounting Firms: How Alternative Practice Structures Work — Ownership Rules, Independence and What US CPA Firms Should Know

By Keshav Bansal, CA

Private equity capital is reshaping mid-market accounting firms, including several with deep New Jersey footprints. The legal path is usually an alternative practice structure (APS): a licensed CPA firm keeps the attest work under majority-CPA ownership, while a closely aligned advisory company houses tax, consulting and other nonattest services that can take outside investors. For US CPA firms—whether you are weighing a deal, competing with a PE-backed platform, or explaining a client’s new firm letterhead—the ownership rules, independence issues and tax-prep duties still matter more than the press release.

Why PE cannot simply buy the CPA firm

Attest work—audits, reviews and other assurance engagements—is a licensed activity. State accountancy laws and the AICPA’s Council Resolution concerning the Form of Organization and Name Rule (Appendix B) require that a majority of the ownership of a firm that performs those engagements, measured in both financial interests and voting rights, belong to CPAs. Non-CPA owners generally must be actively engaged in the firm or its affiliates. Passive ownership by investors or commercial enterprises that are not active members is prohibited under that resolution.

NASBA’s Private Equity Task Force white paper (October 24, 2025) restates the same point for boards of accountancy: most states require majority licensee ownership of CPA firms; Hawaii and the Commonwealth of the Northern Mariana Islands require 100% CPA ownership; and at least 44 jurisdictions require that any non-CPA owners be individuals actively engaged in the business. Those rules are why PE capital typically lands in a separate nonattest entity rather than on the attest firm’s equity ledger.

How an APS is built

In the AICPA Professional Ethics Division’s December 29, 2025 exposure draft on alternative practice structures, an APS is a form of organization in which an attest firm is closely aligned with another public or private entity—partly or wholly owned by an investor—that performs professional services other than attest services. “Closely aligned” in that draft means a substantial share of the attest firm’s revenues is paid to the nonattest entity for administrative services and the lease of employees, equipment, office space and other resources. Attest partners remain responsible for attest clients, quality, independence and risk; they may also be employees of the nonattest entity under an administrative services agreement.

That draft would replace the existing APS independence interpretation (ET sec. 1.220.020) and tighten how PE funds, upstream entities and portfolio companies interact with independence. It is proposed guidance with a comment deadline of April 30, 2026—not adopted law as of mid-October 2026. Firms still operate under the current Code, state statutes and, for issuers, SEC independence rules.

New Jersey examples in the news

Martin Daks’s October 12, 2026 NJBIZ report sketches how three regional platforms use the model:

• EisnerAmper / TowerBrook (2021). EisnerAmper’s August 2, 2021 press release announced a strategic investment by TowerBrook Capital Partners and the split into EisnerAmper LLP (licensed CPA firm for attest) and Eisner Advisory Group LLC (business advisory and nonattest services). At announcement, the combined entities had more than 200 partners and principals and 2,000-plus employees; deal terms were not disclosed. Speaking to NJBIZ in 2026, Vice Chair of Services Christopher Loiacono said the platform had grown from about 1,800 people to nearly 5,000, completed some 30 combinations since 2021, and reported revenue of about $1.3 billion.
• CohnReznick / Apax (2025). On February 26, 2025, CohnReznick announced a strategic growth investment from funds advised by Apax Partners LLP—its first institutional investment—aimed at talent, technology and acquisitions. NJBIZ reports the APS split as CohnReznick LLP for audit and attest and CohnReznick Advisory for tax, advisory and consulting.
• Sax / Cobepa (July 2025). Cobepa’s and SAX’s July 17, 2025 releases describe a minority investment and a restructure into Sax LLP (attest) and Sax Advisory Group (advisory, consulting and other professional services). Damiano told NJBIZ the firm grew from about $25 million when he took over in 2015 to $138 million in 2025 gross revenue, completed six add-on acquisitions within nine months after Cobepa, and was on pace to top $200 million in 2026.

NJBIZ also quotes independent firms—Grassi (partial ESOP) and Goldstein Lieberman & Co.—that have declined PE. Succession, technology spend and partner liquidity are real drivers; investor return targets and autonomy concerns are too. Those are business judgments, not substitutes for ownership and independence rules.

Independence still binds the whole platform

An APS does not let the advisory company ignore audit-client independence. Under the AICPA network-firm concept—and the 2025 exposure draft’s closer-alignment rules—the nonattest entity is generally treated like the attest firm for audit and review clients. If the investor has significant influence or control over the nonattest entity, attest work for certain upstream funds, advisers or portfolio companies may be impaired. Client acceptance should ask who owns the advisory affiliate and whether the prospect sits in that investor’s structure.

Tax prep, Circular 230 and §7216 do not change with the capital stack

Tax preparation is not a CPA monopoly, which is why it can sit in the investor-backed advisory company. That does not relax federal practice rules. Practitioners who prepare returns or practice before the IRS remain subject to Circular 230. IRC §7216 still restricts disclosure or use of tax return information without proper consent—see our guide to §7216 consent, Circular 230 and offshore AI workflows. Paid-preparer due diligence still attaches to the signing preparer and, in some cases, the firm. Platforms that handle customer financial information still need a written information security program under the FTC Safeguards Rule—see our WISP / FTC Safeguards overview.

Checklist for US CPA firms

• Map the entities. Which legal entity signs the audit report, the tax return and the advisory engagement letter? Disclose that split to clients, as the AICPA exposure draft’s Form of Organization revisions would reinforce.
• Confirm attest ownership. Majority CPA equity and voting control of the attest firm; no passive commercial ownership of that entity.
• Run independence against the investor tree. Funds, general partners, advisers and material portfolio companies—not only the named PE sponsor.
• Keep tax compliance files with the preparer. Circular 230, §7216 consents, due diligence worksheets and PTIN/EFIN controls travel with the work, not with who holds the advisory equity.
• Separate succession math from standards. Liquidity and growth capital are legitimate deal drivers; they do not override state board, AICPA or SEC independence requirements.

Where Tax Brew fits

Whether your firm stays independent or partners with a platform, tax and bookkeeping workflows still need clean books and documented workpapers. Tax Brew provides bookkeeping, cleanup and tax prep support for US CPA firms—your team keeps representation, attest sign-off and client relationships. See our services, or email info@taxbrewglobal.com.

Sources: Martin Daks, NJBIZ (Oct. 12, 2026); EisnerAmper / TowerBrook release (Aug. 2, 2021); CohnReznick / Apax release (Feb. 26, 2025); Cobepa / SAX releases (July 17, 2025); AICPA Council Resolution (Appendix B); NASBA PE Task Force white paper (Oct. 24, 2025); AICPA Ethics ED on APS (Dec. 29, 2025); Circular 230; IRC §7216. General information, not legal, ethics or tax advice. Confirm state board and SEC rules for your facts.