Strategic direction and the path forward:  Private equity and remaining independent

For CEOs and owners, the question isn’t whether capital and consolidation matter; it’s what you’re willing to trade to keep pace. Private equity can accelerate growth, fund technology, and professionalise operations, but it also changes governance, incentives, and culture. Before you take that call, understand the deal dynamics – and the achievable paths to growth – that centre independence.

PE promise vs reality

Private equity (PE) deals are often positioned as a partnership, but you’re selling to an optimiser with an exit clock, not a long-term growth partner. 

Ownership

Promise: Streamlined decision-making and improved agility to adjust to changing markets.

Reality: Loss of control. Rising leadership bears all risk. The new owners’ vision might not align with yours. 

Governance

Promise: The private equity group is smart, experienced, and savvy.

Reality: Key decisions are driven by a PE group with leaders who often think they’re qualified but are not. Because profitability is the goal, they can lose sight of what’s best for your company, people, and clients.

People and culture

Promise: The company will keep attracting and retaining top talent.

Reality: Culture can quickly erode. Long-term career development is not valued; the focus is on short-term gains. 

Clients

Promise: No service interruption or changes, and more capital to invest in technology and client experience.

Reality: The focus moves upstream to larger clients. Service quality and professional standards take a back seat to profits.

Capital

Promise: Risk tolerance shifts because the PE firm is taking on the risks, and leaders at the PE firm promise more access to capital.

Reality: Their pockets may not be as deep as they claim. With misaligned accountability and more risks, the company will have less flexibility, more leverage, and less resilience during economic downturns.

Growth

Promise: This is the PE firm’s main focus. 

Reality: Too big, too fast. When growth accelerates too rapidly without the proper infrastructure, people, and tech to support it, all business aspects are impacted – leading to diminished client service and increased employee turnover. 

Declare independence

It’s never been more important to be clear about where your company is headed. If staying independent is your goal, these are the core requirements.

• North Star vision: Carefully designed with full leadership alignment to inspire the next generation of leaders. 
• Strong leadership: Focus on building accountability, the right compensation program, and a solid internal communications strategy.
• Succession plan: Prioritise the long-term vision, reward commitment to the company’s future, and reduce financial pressures that make PE look appealing.
• Reinvestment: Consistent reinvestment in talent, technology, culture, and new service offerings will fuel growth, innovation, and resilience.

Evaluate your growth strategy

If you aren’t going to rely on PE to spark growth, what are you going to do instead? Here are a few things to consider.

• Build scalable services, not one-off solutions. Emphasise cross-selling and collaboration to scale specialised services.
• Compliance services look backward, advisory drives what comes next. Reframe conversations with clients to be around decision-making, not just deliverables.
• Automate routine tasks and analyse operations to bring insights and enhance outcomes. 

Talent plan: Recruitment and retention

For an independent professional services firm, talent is an essential growth strategy. The right people turn vision into outcomes, develop new leaders, and build scalability without sacrificing standards. 

Your talent recruitment should centre around attracting “A” players. People who have the desire to excel, persevere, and innovate. 

Recruiting requires an always-on approach from everyone in the company. Your best new hires often come from your employees’ networks, so encourage referrals with a rewards program. Also, PE activity in an industry can create a pipeline of talented people who are looking to you as an independent alternative.

Talent retention is the true key to long-term success. To ensure your team is happy and thriving, provide one-on-one coaching, set clear expectations, communicate transparently, and remove daily hassles. Help people play to their own strengths, recognise their efforts, and pay them what they’re worth.

Conclusion

Even if market dynamics force a transaction, building the fundamentals of independence puts you in a stronger position. You’ll have aligned leadership, as well as the people, processes, tech, and offerings required to scale. This will ultimately make any outcome a choice from strength, not necessity.

Private equity buys growth. Independence builds it on your terms and in service of your clients and people.

---

Jeffery L. Mowery, Managing Partner of M&S, and Global Vice Chair of GGI’s ITPG, specialises in solving tax and business issues for entrepreneurial businesses. His leadership, vision, passion, and influence have been widely recognised across industry publications as the co-founder of an IPA Top 150 Firm.