The key to scaling with confidence? Partner with an infrastructure provider who truly understands accounting firms. They need to handle everything from tax season performance to CAS practice security to supporting thousands of applications.
Learn why firms need a unified platform that simplifies growth. The right partner handles infrastructure, security, and compliance. This allows leadership to focus on staying investor-ready and competitive.
Watch the full series to discover how to accelerate growth and scale with confidence.
Learn more about solutions for investor-backed and high-growth firms at https://www.rightworks.com/solutions/pe-backed-firms/
Speakers:
Derek Distin, VP of Community at Rightworks
Roman Kepczyk, CPA.CITP, CGMA, PAFM, Director of Firm Technology Strategy at Rightworks
Transcript
Derek: So Roman, I want to talk a little bit about what we’re seeing in the industry right now. We’re seeing large firms sort of developing through mergers and acquisitions at a pace that we’ve never seen before. Talk to me a little bit about what is going on in the industry as it relates to that?
Roman: Well, we’ve seen a massive influx in investment in the private equity firms to acquire as many firms as possible. While at the same time there’s been a massive influx in technology money to improve processes that our firms are using. So we see firms going through unprecedented volume of change and not actually having an understanding or the detail of exactly what’s happening out there or expertise in how to resolve those issues.
Derek: So you mentioned there that we’re seeing an influx of the PE money coming in. Is it true that every firm that is growing with this almost hyperscaling growth, are they all PE backed?
Roman: No. When we talk about PE backing, there are specific firms that are being targeted, but there’s a significant number of firms that want to remain independent. They like the culture of the firm, they like the way things work, but they got to be able to compete with the money that’s flowing in from those PE firms, not only for technology, but also for investments in talent.
Derek: So what is a challenge that these independent firms face as they try to scale?
Roman: Well, what we see is the independent firms now have to compete on a higher level of technology infrastructure and investment that they really haven’t seen in the last couple of decades. And what I mean by that is the PE firms are investing in standardization for improving processes, for providing learning opportunities at a much higher level than firms traditionally do. And so to compete effectively, independent firms are going to have to raise to that level of technology, staffing and innovation as well.
Derek: Because they don’t have the millions of dollars of backing as an independent firm, is it necessarily true that they have to work harder to achieve the same level of technology, staffing and investment?
Roman: Yeah, that’s kind of a tricky question because what happens is for firms to invest in technology themselves, I would agree that yes, it is harder because the technology that got that firm to where it is today isn’t what’s going to take it to the future. And what we see is the knowledge skills of the IT people internally just cannot keep up with the rapid change, not only for technology infrastructure and applications, but also the cybersecurity aspect. So in that regards, we found that a lot of firms that want to remain independent, they can partner with outsourced IT partners that focus specifically on the accounting profession, like Rightworks. And we take off that IT burden, the infrastructure, the indecisiveness, and we focus on the infrastructure and security for the firm so that the owners can focus on being competitive as an independent firm and really spending their time looking at the applications and talent issues that will help them to collaborate more effectively and work more effectively with their clients.
Derek: As we talk about PE firms and independent firms, large firms who are going through growth, really what they’re looking for is a partner who understands the industry, the applications, and the security requirements that are unique to this profession.
Roman: Absolutely. What we talk about is that when a standard MSP out there, a Microsoft Azure, AWS, something like that takes on accounting firms to support them, they don’t realize the breadth of applications that we have in place. They don’t realize the volume of updates and maintenance that happen close to tax deadlines, and they don’t understand the unique needs, for instance, of our client accounting services that might have weekly payrolls that have to be connected and updated. They might not understand the audit team is working remotely or having overseas employees. They don’t understand that tax updates are mission critical during weekends almost 24 hours a day for those last few deadlines. And so we see firms that go to generic MSPs get frustrated as well as the MSP being frustrated because they just don’t understand the uniqueness of the accounting profession.