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Accenture’s down 50% YTD. I think the market has a healthy fear of AI’s impact on consulting services.
I think it’s a good time to still be private and partner owned
Yes, but would you rather be in a low single digit environment with a pe sponsor or where you’re still splitting the (still impressive) profits among friends? I think this is ultimately what it comes down to. It still remains to be seen if the investment will be worth the debt they take on in the event that the consulting market does come back strong
No crystal ball but I wish we were still private and partner owned for what it’s worth. PE shouldn’t be touching our industry in my opinion but money talks and greed is real.
Don’t have a crystal ball that goes 5-10 years out but I do wonder where the realizations for PE will come from when they need to liquidate the PE funds that are making these investments. I’m sure capital will get returned over time with periodic distributions but is the model a roll up of a bunch of firms - PE firms realizing their investment by selling to another PE firm ….firms in #5 to say #25 get rolled up into a few larger ones? I don’t see those roll ups competing in the large public company audit space but perhaps lots of opportunity in the tax and advisory space.
Same thoughts - I am most curious about PE exit strategy and what that will do to the firm that had the investment. I could see some potential roll-up of mid sized firms, but PE would still need an exit strategy to unlock their return.
Also just noticed that Carr Riggs hired a non-partner CEO with no accounting experience. Sounds like PE management is getting a little tired of slow progress on their investments.
I think in 5-10 years we will see partners leaving the large firms to create the midsize firm once again. Everything is cyclical, so they say. At this point, midsize firms are rapidly becoming extinct because of the intense M&A activity occurring in our industry. Maybe after 1-2 turns with PE, younger partners will walk away to start their own firms because they want autonomy again, and in theory will have a decent chunk of money to do so.
I wish you’re correct but I have trouble making the argument. The operating costs and tech spend needed to keep up with innovation is why you’re seeing a lot of this consolidation. The move to offshoring and increased tech spend is no longer a luxury but a necessity to survive.
Keep an eye on Unity and a few other startups in the UK and see how their model evolves over the next decade. Warburg funded Unity with 300m and I suspect it will need additional capital before it finds solid footing.
That assumes they ever really get liquidity. A couple of the well run firms… maybe… but no way all of these do
I’m still concerned about the next sale and how that looks. I know RSM struggled when they purchased their firm back from H&R Block as there were several partners who didn’t want to be part of the buy back.
We’re going to keep holding out as now, because it’s a differentiator. It’s just impacting how you operate a little. It it’s nice not to have any debt and have the partners calling the shots.