Private equity has become one of the most disruptive forces in professional services. What started with accounting firms has spread to law firms, wealth management practices, and other licensed professions, and the pace of consolidation is accelerating across all of them.
For owners of these firms, whether they’re weighing a sale, a growth partnership, or simply trying to understand what a competitor’s PE deal means for them, the landscape has shifted meaningfully in just the past few years.
A Wave That Started in Accounting
Accounting was an early target. According to a KPMG Professional Services Industry Update citing Financial Times reporting, roughly a third of the largest U.S. accounting firms (outside the Big Four) have either been acquired by or received investment from a private equity firm over the past three years. That activity has been enabled by the “alternative practice structure,” a model that lets outside capital hold a stake in the non-licensed side of an accounting business while CPAs retain the licensed side.
Wealth Management Has Moved Even Faster
Registered investment advisors have seen some of the most aggressive consolidation of any professional services segment. Berkshire Global Advisors reported 225 announced RIA transactions (each involving firms with at least $100 million in assets under management) through the first half of 2026, a 39% increase over the same period last year, with private equity-backed acquirers responsible for 85% of strategic acquisitions. Separate data from FINTRX put first-quarter 2026 RIA deal volume at 58 transactions totaling roughly $97.6 billion in acquired assets under management. Unlike accounting or law, RIAs generally aren’t subject to licensure rules that restrict who can own the business, which has made this sector an easier entry point for outside capital.
Law Firms Are the Newest Frontier, and the Hardest to Access
Law firms present the toughest structural challenge. For decades, professional conduct rules modeled on ABA Rule 5.4 have required that law firms be wholly owned by licensed attorneys, effectively locking outside investors out. Arizona broke that pattern first: in 2021, it eliminated its version of Rule 5.4 and created a licensing regime for nonlawyer-owned “alternative business structures,” or ABS entities. Utah, Washington, D.C., and Puerto Rico have since adopted narrower versions of the same idea, but most states still bar the practice outright, and several have moved to block even indirect access to it.
The workaround gaining traction is the management services organization, or MSO. In this structure, a separate, investor-owned company handles the business side of the firm (marketing, technology, administration, staffing) under a long-term services contract, while the licensed legal entity, still owned entirely by attorneys, provides the professional services and retains and bills all legal fees. In January 2026, Louisiana personal injury firm Dudley DeBosier became the first major law firm to enter a PE-backed MSO partnership, a deal widely viewed as a test case for the model.
The regulatory response has outpaced the deals themselves. California enacted AB 931 in October 2025, prohibiting California attorneys from sharing contingency fees with out-of-state ABS entities for contracts entered on or after January 1, 2026, though the law carves out properly structured MSO arrangements that use flat fees not tied to recoveries. Colorado went further in June 2026: its Legal Practice Integrity and Fee-Sharing Prohibition Act moves the fee-sharing ban out of the ethics rules and into statute, adds a private right of action and disgorgement as remedies, and reaches firms with any connection to Colorado, regardless of where they are based. Illinois followed in August 2026 with a law barring fee sharing with out-of-state ABS entities and placing new restrictions on MSOs. Texas has taken a narrower, guidance-based approach: a 2025 ethics opinion permits lawyers to hold equity in an MSO but bars any arrangement that pays the MSO a share of legal fee revenue. Tennessee, by contrast, is moving the other way, with its supreme court weighing whether to loosen its own ownership restrictions. As one law firm advisory put it, law firms remain one of the last major professional services segments without meaningful private equity penetration, precisely because the ownership rules are so much stricter, and now more actively enforced, than in accounting or wealth management.
The Risk That Today’s Deal Violates Tomorrow’s Law
This fast-moving, state-by-state patchwork creates a risk that owners and their counsel should not treat as theoretical: an MSO or ABS arrangement that is lawful when signed can become unlawful, or simply unenforceable, before the deal’s term ends. Colorado’s new statute applies to conduct occurring, and to contracts entered into or renewed, on or after its effective date, which means an MSO agreement signed earlier can still generate liability for payments made or services rendered afterward, and the statute reaches any firm with a connection to Colorado, not only firms domiciled there. California’s AB 931 raises a related problem from the other direction: it is due to sunset in 2030, and its central term, indirect fee-sharing, remains undefined, so no court has yet decided where a permissible management fee ends and prohibited fee-splitting begins. For firm owners, a lawfully structured deal today may not comply with legal requirements in the future. Deal documents should account for that possibility, whether through indemnification provisions, change-in-law termination or repricing rights, or an obligation to restructure compensation if a new state law reaches the arrangement.
Because MSO and ABS regulation is being rewritten state by state, and most state bars have not yet issued formal guidance on it, owners and their counsel should obtain a current legal opinion covering every state where the firm has offices, admitted attorneys, or a significant client base, not just the state where the deal is signed, and should plan to revisit that opinion as new legislation takes effect.
Why Now?
A few forces are driving this across all three professions at once:
- Succession gaps. The average managing partner in an accounting firm is now 55, and only about 41% of firms have a formal succession plan in place. Similar demographics are playing out in law and wealth management.
- Capital-intensive technology needs. Cybersecurity, AI tools, and client-facing technology are expensive to build internally, and outside capital offers a faster path than organic reinvestment.
- Scale economics. Larger platforms can spread compliance, technology, and marketing costs across more revenue, which shows up directly in valuation.
What This Means for Firm Owners
Whether you’re evaluating a sale of your own practice or advising a client through one, the deal mechanics are converging across professions: valuations increasingly hinge on recurring revenue and staff retention, not just historical earnings; earnouts and rollover equity are doing more of the work that used to be handled with cash at close; and restrictive covenants, non-competes, and indemnification provisions require careful review given how differently they can be enforced across state lines.