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Bean Counters? More Like Rainmakers 💸 💸 💸
Rolling up accounting firms and a massive exit by New Mountain
Roll-Up Playbook: Accountants
Source: The Finance Story
State of Play
In January 2025, Blackstone announced its acquisition of Citrin Cooperman, a top 20 U.S. accounting firm, for a staggering $2 billion (15x EBITDA) from New Mountain Capital. This exit marks a 4x+ return 💸 for New Mountain, which had acquired Citrin Cooperman for $500 million (11x EBITDA) in October 2021. Over the ~3-year holding period, Citrin Cooperman reportedly achieved a 2.5x revenue increase 📈, growing from $350 million to $850 million—largely driven by an aggressive roll-up strategy involving 15+ acquisitions.
Investment Thesis
Say what you will about accounting being "boring." For private equity firms, boring = good, and better yet: boring + cash machine + M&A = love at first sight 😍.
But jokes aside, there’s a lot to love about investing in accounting firms from a business model perspective:
🚧 1. Barriers to entry.
The industry has a natural moat, thanks to CPA licensing requirements. While there are ways around this (which private equity is exploiting—more on that in a moment), the regulatory hurdle adds significant protection.
🤝 2. Predictable, stable revenue.
Regulations require public companies to undergo audits, and many private companies follow suit for financing purposes or good corporate governance. Taxes? Everyone has to pay those. Once a client picks an accountant, the hassle of switching makes retention rates sky-high.
💵 3. High cash flow.
Aside from employee compensation, accounting firms have minimal capital expenditure requirements. Sure, tax and audit seasons might create temporary fluctuations in working capital, but with almost zero capex needs, EBITDA essentially equals cash flow in this business.
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