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Accounting Firms Hire Growth Leaders as Dealmaking Increases

An increasing number of accounting firms are hiring chief growth officers. This is happening  as small and midsize firms are attempting to remain competitive in the midst of fast-paced expansion and dealmaking, The Wall Street Journal reported.

Accelerated growth has not really been a priority for the smaller accounting firms. However, the Journal said that a series of  private equity ownership deals has many of them trying to find ways to increase revenue, potentially through acquisitions and expanding services they offer to existing clients. Others might be positioning themselves as a private equity target. A chief growth officer can assist in enhancing these strategies, the Journal said.

Forty-nine of the 100 biggest U.S. accounting firms hired at least one growth executive at the end of 2024, approximately double compared to 2019, stated employment-database company Live Data Technologies. Most of these hires in recent years happened outside of the top 20 firms, which, for the most part, have had these roles for years, the Journal said.

“Founders and managing partners are getting tired of waiting to be bought out or find an ideal successor, so they come to us and say their goal is to identify somebody who can make them visible in the right circles,” noted Ash Athawale, senior vice president at human resources company Robert Half.

Frazier & Deeter, an Atlanta-based accounting firm, in February 2024 promoted advisory partner John Hightower to serve as its first chief growth officer, a position focused on finding new opportunities to boost revenue. 

Roughly a year later, the firm is close to a structural revamp as it is in advanced talks to sell a stake to private equity firm General Atlantic, individuals familiar with the matter stated. The deal has not been finalized and another interested party could prevail. Frazier & Deeter and General Atlantic declined to comment on a possible deal.

According to the Journal, Frazier & Deeter is one of many midsize providers of audit, consulting and tax services that have tapped to private equity investors partly to raise more funds for technology and workforce purposes. Private equity investors, attracted by the steady recurring revenue of accounting firms, usually try to accelerate revenue growth by assisting their targets in purchasing smaller accounting practices.

Atlanta-based Smith + Howard last year appointed Marty Dauer in the newly created role of chief growth officer in part to help lead the firm’s acquisitions after a capital boost it received from private equity firm Broad Sky Partners in 2022. Previously, Dauer was a marketing and operations executive at Kroll, a provider of financial and risk advisory solutions.

Broad Sky’s investment has assisted Smith + Howard to better compete against other private equity-backed peers to negotiate M&A transactions, specifically on the returns it has been able to promise to deliver, Smith + Howard Chief Executive Sean Taylor noted.

Smith + Howard is projecting that it will book around $125 million in revenue in 2025, up from roughly $80 million last year, Taylor noted A little over half of the forecast $45 million increase will likely come from acquisitions, possibly two to three deals, he stated. The firm has made four acquisitions since January 2024, a mixture of audit and consulting firms, he said. 

For Frazier & Deeter, the chief growth officer role was part of a larger push to build out its international footprint and offerings. 

Hightower and other executives have weighed opportunities ranging from private equity ownership to an employee stock ownership plan, Chief Executive Seth McDaniel said McDaniel said. “We wouldn’t be doing the right thing if we weren’t constantly evaluating our capital structure and our investment needs,” he said.

Other firms do not have private equity in their sights. St. Louis-based Anders CPAs + Advisors added a chief growth officer in August 2023 to develop a strategy around increasing profit such as identifying service lines and industries where they can expand. Missy Kelley has also been assigned the task of evaluating acquisitions as well as other structural opportunities. 

Anders wants to stay independent, although is still examining its alternatives, stated Robert Minkler Jr., managing partner. “To this point we really haven’t been close to doing a deal such as that,” he stated, referring to a private equity transaction. 

KLR, a Boston-based firm that named a chief growth officer in November, is competing well for both new clients and acquisitions without needing to sell to private equity, Chief Executive Paul Oliveira noted. “For us, it isn’t appealing,” he added. 

Accounting-firm executives are finding out that they have to think similar to a private equity-backed firm even if they don’t accept money from those investors. 

“A [private equity] readiness mindset is becoming an industry standard,” stated Geremy Cepin, a principal at business management consulting firm Korn Ferry. “Even if firms aren’t considering a [private equity] investment, they’re being evaluated through a [private equity] lens, whether it’s by competitors or potential acquirers.”