How do small private investors benefit from creating accounting firms?

Geoff Bruskin

The Strategic Role of CPAs in Managing Wealth and Investments

In 2023 a CPA/accounting firm is at the center of a high-net-worth individual’s circle of trust. This is because as their accountant, you can answer two key questions:

How do I keep as much money as possible safe from Uncle Sam (tax savings)?
How do I organize, protect, and make sense of my most material asset: my wealth (Personal T&E, Holdings, CFO/Business Services)?

In our world, small investors are individuals and entities looking to sponsor between 6 and 7 figures in investments to cut themselves in on an accounting firm that will provide material returns based on their investment (dividends), but more importantly, can provide exponential value to both the accounting firm they are investing in AND other businesses in their portfolio.

Here are a few examples of other investments these individuals may have which justify their platform-style approach. In other words, which businesses do accounting firms add value back into, and vice-versa?

1. Wealth Management / Wealth Advisory

2. Insurance

3. Real Estate Brokerage or Management

4. Management Consulting

5. IT Solutions

6. Law

7. Lending

Some of these categories can pose challenges on the surface, such as state-specific barriers around owning equity in an accounting firm and a law firm, or the need to have financial licenses in order to share in a percentage of earnings in a wealth/advisory context. But smart investors understand how to navigate these organizational challenges, as they build microcosmic parallels to what large private equity institutions are doing with the acquisition of 8 and 9-figure public accounting firms to build octopus-like capabilities for thousands of their key customers.

And there’s another piece of this puzzle that is even more critical in the creation of small accounting platforms, and that is the talent who will drive the development of these platforms as the Partner-In-Charge or the CEO of such accounting organizations.

Here are 3 meaningful talent scenarios.
Do you fall into one of these categories?

You are a CPA, or soon-to-be CPA in your 20s or 30s with big dreams, and you are not sure that your current firm can give you the trajectory you want and deserve.
You are a 30s or 40s Senior Manager or Partner at an accounting firm, and you have seriously contemplated starting your own firm, acquiring a book of business, and/or becoming a retiring Owner’s successor.
You are a 50s or 60s Partner at an accounting firm who is not able to have the level of positive impact you desire, and you are interested in becoming the CEO of an investor-backed small platform accounting firm.

The high-supply lynchpin that makes all of this possible is the influx of firms who are selling. Industry analysts say that 40%-70% of the accounting firms in the US (most are between $150k-$3m in ARR) are either up for sale presently or will go up for sale in the next 3-7 years.

If this material resonates with you,