After a Private Equity Deal, Which Entity Is the CPA Firm?

After a private equity investment, the CPA firm is usually the attest entity that remains majority owned by CPAs and holds the state permit, while a second, investor owned company provides tax, advisory and the staff. Both typically keep the same brand. An AI answer that names "the firm" for an audit engagement should be naming the first one, and the brand's own website is often the only public place that says which company does what.

How the split works

The Journal of Accountancy reported in 2023 that notable deals "began to surface in August 2021, when TowerBrook Capital Partners announced its investment in EisnerAmper," followed by Citrin Cooperman and Cherry Bekaert. It explains why a split is needed: "audit firms must at least be majority-owned by CPAs, which disqualifies most would-be private-equity owners." Firms "may adopt an 'alternative practice structure,' which splits the firm into two organizations. Audit and attestation services remain with the original firm, which is owned by CPAs."

The AICPA's Code of Professional Conduct, at 1.810.050, describes the same arrangement: the majority of financial interests in the attest firm is owned by CPAs, and "all or substantially all of the revenues are paid to another entity in return for services and the lease of employees, equipment, and office space." Its stated focus is "that CPAs remain responsible, financially and otherwise, for a firm's attest work."

The Journal's own example shows how the names move: Michelle Thompson was managing partner of Cherry Bekaert LLP before the deal and "now is the CEO of Cherry Bekaert Advisory LLC." Same brand, two legal entities, and a senior title that now belongs to the second one.

Why one brand for two companies is allowed

Section 14(i) of the Uniform Accountancy Act says a common brand name "is not misleading if said firm is a Network Firm" under the AICPA Code and it complies with independence standards where they apply. The Act's Section 7 commentary is the other half: CPAs may deliver non-attest work through any entity, as long as that entity does not "call themselves a 'CPA firm' or use the term 'CPA' in association with the entity's name." So the advisory company can share the brand; it cannot claim the CPA firm's identity.

Where a machine reading the brand can go wrong

One about page for two entities. If the site says "we are a top 25 CPA firm" and never names the legal entities, every service is attached to the CPA firm, including work it no longer performs.
Leadership titles without the entity. A chief executive of the services company described as the head of "the firm" merges the two in a single sentence.
Press coverage with the investor's framing. Deal announcements talk about the platform and the investment; they rarely explain which company signs audit reports.

We have not measured how often AI answers conflate the entities. These are the conditions under which a careful reader would.

What a post-deal site should state

A structure page, in plain words

Name both legal entities. Say which one holds the CPA firm permit and in which states, which one provides tax and advisory services, and that the attest firm is owned by CPAs. Link it from the footer of every page.

Entity names in service pages

An audit and assurance page says the engagement is with the CPA firm by its legal name. A tax or advisory page names the entity that delivers it.

Titles with their entity

"Managing partner of the CPA firm" and "chief executive of the advisory company" are different sentences. Write them that way on bios and in releases.

Structured data can mirror this with separate Organization entries and a parent or sub organization relationship, but only after the visible page says it. For the related problem of acquired local firms, see what happens to an acquired firm's name, domain and Business Profile. The wider topic is on AI visibility for accounting firms.

Not legal or tax advice. This describes how AI systems read an accounting practice in public; your state board of accountancy, Circular 230 and your own counsel govern what you may publish.

Questions

What is an alternative practice structure in accounting?

An alternative practice structure splits an accounting firm into two organizations. Audit and attest work stays in a firm majority owned by CPAs, which holds the state permit, while tax, advisory and the firm's staff and offices sit in a separate company that outside investors such as private equity can own. The AICPA Code of Professional Conduct addresses it at interpretation 1.810.050.

Can two companies share one accounting firm brand?

Yes, within limits. The AICPA Code and the Uniform Accountancy Act allow a common brand name for network firms, and many private equity deals leave a CPA owned attest firm and an investor owned services company under one name. Only the entity that holds the state permit and meets the CPA ownership rule may present itself as the CPA firm.

After a private equity deal, which entity is the CPA firm an AI should name?