Growing private equity involvement in public accounting raises concerns: Trial balance

The trial balance is a weekly review of history, statistics, and events prepared by your CFO to help you prepare.

Part 1 — The Harris Administration’s Planned Unrealized Capital Gains Tax Could Boost PE

As private equity (PE) firms buy stakes in accounting firms, the results of the upcoming U.S. presidential election could increase their ability to inject money into the companies.

Baker Tilly CEO Jeff Ferro, who described his firm’s deal with private equity firm William Blair & Co. in an interview with Forbes, is one of several accounting industry leaders who have closed deals with private equity groups in recent years.

This increase, which some say is due to the fact that companies need money to develop technology, explore consulting products and even pay employees higher salaries, is significant because the quality of work performed by these companies, especially in the area of ​​auditing, is in many cases falling further and further below standards.

In light of the upcoming U.S. election, it’s worth noting recent comments from businessman and investor Mark Cuban. Cuban has been communicating with Harris’ campaign about her tax plan and is a supporter of her campaign. Earlier this month, he told CNBC that he believes that if Harris is elected and is able to implement her unrealized capital gains tax plan, “it will kill the stock market and be the ultimate private equity jobs plan.”

As Blake Oliver of Accounting Podcast notes, the influence of private equity on the role of equity partners in public accounting is significant.

Not only do equity partner roles vary significantly in terms of compensation, but given the growing number of people in public accounting equity, equity partner roles could become rarer and less lucrative if this trend continues, which would reduce the value of the non-equity partner position and further compound the growing talent shortage problem in the industry.

Part 2 – This Week

Here is a list of important market events scheduled for the coming week.

Monday, September 23

Tuesday, September 24

Wednesday, September 25

Thursday, September 26

Friday, September 27

Part 3 – Duke-Fed and Grant Thornton Data

This week’s content includes articles based on data from the quarterly survey of CFOs conducted by Duke University and the Federal Reserve Banks of Richmond and Atlanta, a survey of CFOs in the energy sector conducted by Grant Thornton, and the weekly CFOs On the Move column.