The audit partner still signs the opinion. The local audit partnership still exists legally. The firm still presents itself externally as a partnership of professionals operating under regulatory oversight, professional standards and independence requirements. In many jurisdictions, the structure still formally complies with rules requiring licensed CPAs or equivalent professionals to own and control the audit entity itself. On paper, much of the traditional model appears intact. But underneath the visible partnership, the economic structure of many professional-services firms is quietly becoming something very different. Technology platforms increasingly sit elsewhere. Shared-service organizations increasingly sit elsewhere. Delivery centers increasingly sit elsewhere. Large portions of employees increasingly sit elsewhere. Debt increasingly sits elsewhere. And increasingly, the economic logic shaping investment decisions, operating models and governance priorities also sits elsewhere.
This is one of the least understood consequences of private equity entering professional services. Public discussion still frames these transactions primarily around growth capital, consolidation and partner liquidity. Structurally, however, something more significant is happening underneath the surface. In parts of the industry, the traditional audit partnership increasingly risks becoming a regulated trust layer attached to a much larger capital-backed operating platform surrounding it. Transactions such as Grant Thornton US and New Mountain Capital or Baker Tilly’s strategic investment from Hellman & Friedman and Valeas Capital Partners were publicly framed around modernization, investment capacity and long-term growth. (Grant Thornton: Grant Thornton to Accelerate Business Strategy With Investment From New Mountain Capital, Baker Tilly: Baker Tilly Secures Strategic Investment Led by Hellman & Friedman and Valeas)
As further explored in Case Study 23: The Fragmentation of a Global Firm – How Private Equity Is Reshaping Grant Thornton and Case Study 27: Baker Tilly and Private Equity – When a Network Starts Becoming a Platform, these transactions also reflected the gradual emergence of centralized operating platforms surrounding regulated partnerships that still carry the professional accountability layer of the institution.
Valeas’ own description of the investment is particularly revealing because it explicitly distinguishes between the attest business and the broader operating platform surrounding it. Valeas states that it does not hold equity in Baker Tilly’s attest business, while investing into the broader advisory and operating structure around it. That distinction illustrates how private capital increasingly enters the economic platform surrounding regulated audit entities rather than the regulated trust layer itself. (Valeas: Baker Tilly)
That shift is not simply legal. It changes where power, economics and operational control increasingly sit inside the institution. For decades, the partnership itself largely represented the firm. Ownership, governance, economics and delivery remained closely connected. Increasingly, however, professional-services firms are becoming layered institutions where the regulated audit entity remains critically important but no longer necessarily represents the operational or economic center of gravity. The visible partnership still matters enormously because it carries the license, the trust and the regulatory accountability. But increasingly, the platform surrounding it may matter just as much.
Audit Was Built Around Trust, Not Platform Economics
For decades, audit partnerships operated under a relatively straightforward institutional model. The licensed professionals performing the work also governed the firm, shared the profits and controlled the client relationships. The structure was built around accountability, independence and professional judgment rather than scalability or capital efficiency. Audit firms were not designed primarily as financial platforms. They were designed as regulated trust institutions. That distinction mattered because the economics of the industry remained comparatively simple. The primary assets of the firm were people, expertise and client relationships. Technology existed, but it was not yet the defining economic driver of the institution.
Over time, however, the economics underneath the profession started changing. Large firms became increasingly globalized and operationally integrated. Shared-service organizations expanded into industrial-scale delivery engines. Enterprise technology systems became strategically critical. Cybersecurity, AI investment, integrated data environments and cloud infrastructure started requiring sustained capital investment at a scale many traditional partnerships struggled to finance comfortably through annual profit retention alone. Organizations such as EY Global Delivery Services, PwC Acceleration Centers, KPMG Delivery Network and Deloitte US-India Offices increasingly started operating less like support functions and more like industrial-scale execution platforms embedded directly into how professional-services firms deliver work globally. (EY Global Delivery Services, PwC Acceleration Centers, KPMG Delivery Network for Tax, Deloitte US-India Offices)
At the same time, the economics of audit itself became increasingly difficult. Regulatory pressure intensified. Litigation risk expanded. Independence requirements constrained cross-selling opportunities. First-year audit engagements often became economically unattractive due to transition costs and aggressive pricing dynamics. Winning a major audit client could still matter strategically because of prestige and relationship access, but the direct economics of audit increasingly looked less attractive relative to advisory, tax and consulting businesses operating around it. The result was a growing contradiction inside many firms. Audit remained critically important because it anchored trust, regulation and brand legitimacy. But economically, many of the faster-growing and more scalable parts of the organization increasingly sat outside audit itself. EY’s failed Project Everest separation attempt exposed this tension publicly. As further explored in Case Study 22: The Failed EY Split (‘Project Everest’), the proposed separation reflected the growing difficulty of housing slower-growing regulated audit structures and faster-scaling advisory businesses requiring significant technology and capital investment inside the same institutional model. (Financial Times: EY Break-Up Plan Collapses,Wall Street Journal: EY’s Breakup Plan Is Officially Dead)
How the Legal Structure Actually Works
One reason this transformation remains poorly understood is that private equity firms usually do not directly purchase the regulated audit partnership itself. In the United States, this is typically managed through an Alternative Practice Structure, or APS. The licensed CPA firm that performs attest work remains legally separate and continues to satisfy ownership, governance and professional-control requirements, while the surrounding non-attest business sits in a separate entity capable of accepting outside investment. The structure is usually built around two aligned but legally distinct organizations: the regulated CPA firm providing attest services, and a separate entity providing advisory, tax, consulting, technology and administrative services. (AICPA & CIMA: Alternative Practice Structures, NASBA: Alternative Practice Structures & Private Equity: Considerations and Questions for Boards of Accountancy)
Grant Thornton US provides one of the clearest public examples. Following the New Mountain Capital transaction, Grant Thornton LLP continued as the licensed CPA firm providing attest services, while Grant Thornton Advisors LLC provides business advisory and non-attest services. The non-attest entity may own or control substantial parts of the broader operating platform, including technology, HR, finance, procurement, data infrastructure, delivery centers and management services. The two organizations then operate through long-term service agreements designed to preserve regulatory separation while allowing the broader institution to function commercially as an integrated firm. Economically, however, the structure can become far more integrated than the legal diagrams initially suggest. Large portions of employees, technology functions and operational infrastructure may formally sit outside the regulated audit entity itself. (Grant Thornton: Grant Thornton to Accelerate Business Strategy With Investment From New Mountain Capital, New Mountain Capital: Grant Thornton Advisors)
This is where the institutional tension becomes much more significant than the legal structure itself. Legal ownership, operational control and economic participation no longer fully overlap. The audit firm may still formally control the attest work, sign the audit opinion and satisfy professional ownership requirements. But the surrounding platform may increasingly control the infrastructure on which the audit business depends: workflow systems, data environments, shared services, AI platforms, delivery centers and centralized management functions. This increasingly creates what might be described as a separation between the regulated trust layer and the broader economic operating platform surrounding it.
Regulators and professional bodies are therefore paying increasing attention to whether APS models create new governance, independence and oversight risks. The audit partnership remains indispensable because it carries the license, the opinion and the regulatory accountability. But increasingly, it may no longer represent the full institution operating around it. (Hunton Andrews Kurth: Forming an Accounting Firm Alternative Practice Structure, NASBA: Alternative Practice Structures & Private Equity)
The Financial Structure Beneath the Platform
The traditional partnership model was never built around leverage, EBITDA optimization or investor exits. Partners contributed capital, profits were distributed annually, and growth was largely financed through retained earnings and partner expansion. Private equity changes that logic fundamentally because the institution increasingly starts operating under financial structures designed around leverage, recurring cash flows and future monetization. In many modern APS models, the regulated audit partnership itself often remains relatively “clean” from a regulatory perspective, while debt and investor economics increasingly sit at the level of the surrounding operating platform. The advisory, tax, technology and shared-services entity surrounding the CPA firm becomes the primary vehicle through which external capital is introduced. Investors are therefore usually not underwriting the economics of audit alone. They are underwriting the broader platform surrounding it. (AICPA & CIMA: Alternative Practice Structures, NASBA: Alternative Practice Structures & Private Equity)
As further explored in The Exit Problem: Private Equity Has Found Ways Into Professional Services. Getting Out Is Harder, this increasingly pushes parts of the industry toward platform-style ownership cycles, sponsor-to-sponsor transactions and recapitalization logic more commonly associated with broader private-equity platform industries.
This is also where EBITDA becomes structurally important. Traditional partnerships historically focused more heavily on annual partner income than on institutional enterprise value. Private equity-backed structures instead optimize around EBITDA growth, operating leverage, integration efficiency and future valuation multiples. Shared-service consolidation, delivery-center expansion, centralized procurement, technology standardization and AI-enabled automation therefore become more than operational decisions. They increasingly become mechanisms designed to improve platform economics and increase future enterprise value.
The economics also explain why audit itself often becomes structurally less attractive inside these models. Audit remains essential because it anchors trust, regulation and client access. But audit margins are typically lower, litigation risk is higher, independence requirements constrain cross-selling opportunities, and pricing pressure remains intense. Advisory, tax, managed services and technology businesses often generate significantly more scalable EBITDA profiles. Increasingly, audit creates trust access while the surrounding platform captures scalable economics.
This dynamic also changes institutional time horizons. Traditional partnerships were often optimized around continuity across generations of partners. Private equity firms typically operate around investment cycles measured in years rather than decades. That naturally creates pressure around EBITDA expansion, operational integration and future exit optionality. Increasingly, parts of professional services are beginning to resemble broader sponsor-backed platform industries where exits may occur through secondary buyouts, recapitalizations or sponsor-to-sponsor transactions rather than perpetual partnership ownership.
The sale of Citrin Cooperman from New Mountain Capital to Blackstone reflected exactly this normalization of platform-style ownership transitions inside the profession itself. Over time, this creates a subtle but important institutional shift. The regulated partnership remains indispensable because it carries the license and professional accountability. But the surrounding operating platform increasingly starts behaving like a capital-backed infrastructure business optimized around scale, integration and future monetization. (Blackstone: Citrin Cooperman to Receive Significant Investment as Blackstone Acquires Stake From New Mountain Capital, Bloomberg Tax: Private Equity-Fueled Shakeup Coming for Accounting Industry)
The Economic Logic Starts Diverging
One of the deepest tensions inside these structures is that audit and capital-backed platform economics optimize for fundamentally different things. Audit operates around trust, independence, regulatory compliance and professional accountability. The system is intentionally designed to constrain certain economic incentives because the profession itself depends on perceived independence and credibility. Regulation exists precisely because audit cannot operate purely under unconstrained commercial logic. The integrity of the institution depends on maintaining trust even when commercial incentives might point elsewhere.
Private equity-backed operating platforms optimize differently. They focus on scalability, operating leverage, EBITDA expansion, integration efficiency and future monetization. That does not automatically imply lower quality or malicious intent. In many cases, centralized investment may significantly improve technology capabilities, operational efficiency and modernization. But structurally, the incentive systems are different. Once both systems begin operating inside the same broader institution, the organization increasingly starts balancing two competing forms of legitimacy simultaneously: regulatory trust on one side and capital-market efficiency on the other. Technology decisions, staffing models, AI investments, procurement structures and delivery-center expansion increasingly become influenced by platform-level optimization rather than purely audit-specific considerations.
This is one reason why many firms increasingly appear internally conflicted about what they actually are. Externally, they continue speaking the language of professional independence, partnership culture and trusted client relationships. Internally, however, parts of the organization increasingly operate through the logic of integrated capital-backed infrastructure platforms designed for scalability, margin expansion and future transactions. As explored in The Two-Speed Firm – Why Professional Services Firms Are Quietly Splitting Into Multiple Economic Systems Under One Brand, many professional-services firms increasingly appear to be operating as hybrid organizations containing two different operating realities simultaneously: a traditional partnership model built around trust, local relationships and professional autonomy, and a platform-coordinated model optimized around scale, infrastructure, operational integration and capital efficiency. The profession historically understood itself primarily as a collection of regulated partnerships. Increasingly, parts of it are starting to behave more like centralized operating systems wrapped around regulated trust entities.
The sale of a stake in Citrin Cooperman to Blackstone after earlier ownership by New Mountain Capital illustrated another important development: sponsor-to-sponsor transactions and platform-style ownership transitions are increasingly becoming normalized inside parts of the profession itself. The profession increasingly appears to be moving away from perpetual partnership ownership toward recurring ownership transitions around broader operating platforms. (Blackstone: Citrin Cooperman to Receive Significant Investment as Blackstone Acquires Stake From New Mountain Capital, Bloomberg Tax: Private Equity-Fueled Shakeup Coming for Accounting Industry)
The Liability Still Sits With the Trust Layer
One of the least discussed tensions inside these emerging structures is that the economic platform and the regulatory liability framework do not necessarily evolve at the same speed. Technology platforms, delivery centers, shared-service organizations and centralized operating structures may increasingly sit outside the regulated audit partnership itself. But when major audit failures occur, regulatory scrutiny, litigation exposure and reputational damage still tend to concentrate around the audit opinion and the regulated entity signing it. The trust layer remains the point where accountability ultimately lands.
Recent audit failures across the industry illustrate how significant this asymmetry can become. EY’s role in Wirecard, PwC’s audits of Evergrande, KPMG’s role in Carillion and Deloitte’s involvement in Hin Leong Trading all demonstrated how quickly audit failures can escalate into regulatory investigations, litigation exposure, political scrutiny and broad reputational damage extending far beyond the individual engagement itself. In each case, the institution carrying the professional accountability layer remained exposed to existential trust consequences, regardless of how operationally complex or globally distributed the broader organization around it had become. (Reuters – EY fined and banned over Wirecard scandal, Reuters – China suspends PwC’s China unit over Evergrande audit, FRC – Sanctions against KPMG over Carillion audits, Bloomberg – Deloitte sued over alleged role in Hin Leong collapse)
That creates an increasingly important governance question for the future of the profession. If the broader operating platform surrounding the audit firm increasingly controls technology environments, delivery infrastructure, AI systems, shared services and operational workflows, while the regulated partnership continues carrying the ultimate professional liability, accountability and operational control may gradually start diverging from one another. The more the institution industrializes operationally, the more boards and regulators may begin asking whether the entity carrying the regulatory accountability still fully controls the economic and operational system on which the audit process itself depends.
AI and Platform Economics Will Accelerate the Separation
The rise of AI may intensify this dynamic significantly over the next decade because AI economics naturally reward scale, centralization and integrated data environments. Large language models, audit automation, workflow orchestration, document intelligence and enterprise AI platforms all require substantial investment, centralized governance and large-scale infrastructure. Those economics naturally favor platform operating models rather than heavily decentralized partnerships. AI therefore does not introduce a completely new dynamic into the profession. Instead, it accelerates institutional pressures that were already building underneath the surface. As explored in The Professional Services AI Paradox – How the AI Platform Economy Is Colliding with the Partnership Model, AI increasingly strengthens the economic logic of centralized platforms because reusable intelligence depends on integrated data environments, standardized workflows, scalable infrastructure and enterprise-wide coordination rather than purely decentralized expertise and local autonomy.
In many ways, the profession has already been constructing the operational foundations for this transition through large-scale service delivery centers and global capability platforms. Organizations such as EY Global Delivery Services, PwC Acceleration Centers, Deloitte US-India Offices, KPMG Delivery Network and similar structures increasingly operate as industrialized execution environments embedded directly into how firms deliver work globally. Initially positioned around efficiency and scalability, these organizations are now becoming increasingly important as centralized environments for AI deployment, workflow standardization, automation and integrated delivery models. Centralized delivery environments are structurally easier to standardize, instrument and automate than fragmented local partnership structures. Data governance, model training environments, workflow orchestration and process integration all become easier once work already operates through centralized platforms. (EY Global Delivery Services, PwC Acceleration Centers, KPMG Delivery Network for Tax, Deloitte US-India Offices)
As further explored in The Silent Engine: How Global Delivery Centers Are Rewiring Professional Services Firms, these organizations increasingly function less like support environments and more like industrial-scale execution infrastructure embedded directly into how professional-services firms operate globally.
At the same time, audit itself remains constrained by regulation, independence requirements and trust expectations. Firms cannot simply apply unrestricted platform logic to regulated audit environments without creating governance and independence concerns. That tension may push the industry toward even more layered structures separating regulated trust functions from broader centralized operating systems. The result could be a profession where the visible audit partnership increasingly functions as a regulated interface attached to much larger technology-enabled platforms surrounding it. A decade ago, that possibility would have sounded radical. Today, parts of the industry are already moving in that direction.
Closing Thoughts
Private equity is not simply bringing external capital into professional services. It is accelerating the separation between regulated trust structures and the broader economic platforms increasingly operating around them. That separation remains partially hidden because the industry still presents itself externally through the language of partnerships, professional ownership and local accountability. In many cases, those elements still genuinely matter. But underneath the surface, the economic architecture of parts of the profession is becoming significantly more layered, centralized and platform-oriented than most public narratives currently acknowledge. Increasingly, the visible partnership and the economic operating platform surrounding it no longer fully represent the same institutional reality.
The key question is no longer whether audit partnerships continue existing. They almost certainly will. The more important question is whether they continue functioning as the actual economic center of the institution, or whether they increasingly become regulated trust layers embedded inside much larger capital-backed operating systems surrounding them. That distinction may ultimately define the next phase of transformation across the profession.
What This Means for Boards
Boards overseeing professional-services firms increasingly need to understand not only who legally owns the audit entity, but where the real economic and operational control of the institution actually sits. Technology ownership, data governance, shared-service structures, financing arrangements, AI investment and centralized operating functions may increasingly exist outside the traditional partnership itself. The visible legal structure may therefore no longer reflect the full economic structure of the organization. Increasingly, the institution clients experience externally may not fully match the institution that economically operates underneath the surface.
That creates new governance questions. Who controls the technology platform supporting the audit business? Where does debt sit? Who employs critical operational staff? How dependent is the regulated partnership on centralized operating entities surrounding it? What happens if investor priorities begin diverging from regulatory priorities? And how should boards think about independence once platform economics increasingly shape the broader institution? Governance frameworks originally designed for traditional partnerships may not fully address organizations where operational control, economics and regulation increasingly sit in different layers of the structure.
These questions become even more important as AI investment and delivery industrialization accelerate across the industry. The firms that navigate this transition successfully will likely be those that understand clearly that they are no longer simply managing partnerships. They are managing increasingly layered institutions balancing regulation, trust, technology, capital and platform economics simultaneously. Once the operating platform separates economically from the regulated partnership around it, the structure of the profession itself begins changing.
I work with boards and executive teams on independent perspectives related to professional-services transformation, governance, operating models, platform economics, and the changing economics of professional-services firms.
If your leadership team is working through similar questions around ownership structures, governance alignment, investment pressure, or operating-model evolution, you may find my Future of Professional Services board sessions and Transformation Reality Review valuable. Feel free to reach out.
Sources
Primary Sources
- Grant Thornton: Grant Thornton to Accelerate Business Strategy With Investment From New Mountain Capital
- New Mountain Capital: Grant Thornton Advisors
- Baker Tilly: Baker Tilly Secures Strategic Investment Led by Hellman & Friedman and Valeas
- Valeas: Baker Tilly
- AICPA & CIMA: Alternative Practice Structures
- NASBA: Alternative Practice Structures & Private Equity: Considerations and Questions for Boards of Accountancy
- Hunton Andrews Kurth: Forming an Accounting Firm Alternative Practice Structure
- EY Global Delivery Services
- PwC Acceleration Centers
- KPMG Delivery Network for Tax
- Deloitte US-India Offices
- Blackstone: Citrin Cooperman to Receive Significant Investment as Blackstone Acquires Stake From New Mountain Capital
- PwC: CD&R Reaches Agreement to Acquire PwC’s Global Mobility Tax and Immigration Services Business
- Vialto Partners Launch Announcement
Secondary Sources
- Financial Times: EY Break-Up Plan Collapses
- Wall Street Journal: EY’s Breakup Plan Is Officially Dead
- Bloomberg Tax: Private Equity-Fueled Shakeup Coming for Accounting Industry
- Reuters: Investment Firm CD&R to Buy PwC’s Mobility Unit
- Reuters: PwC Spin-Off Vialto to Restructure $1.5bn Debt After Cost Overruns
- Reuters – EY fined and banned over Wirecard scandal
- Reuters – China suspends PwC’s China unit over Evergrande audit
- FRC – Sanctions against KPMG over Carillion audits
- Bloomberg – Deloitte sued over alleged role in Hin Leong collapse)
- The Silent Engine: How Global Delivery Centers Are Rewiring Professional Services Firms
- The Exit Problem: Private Equity Has Found Ways Into Professional Services. Getting Out Is Harder
- Case Study 22: The Failed EY Split (‘Project Everest’)
- Case Study 23: The Fragmentation of a Global Firm — How Private Equity Is Reshaping Grant Thornton
- Case Study 27: Baker Tilly and Private Equity — When a Network Starts Becoming a Platform
- Case Study 32: PwC, Vialto and the Private Equity Constraint Shift in Professional Services