Governance is Your Growth Engine: Build Value and Outrun Private Equity

By Dan McMahon, CPA, CM&AA

"If you don’t like change, you’re going to like irrelevance even less." — General Eric Shinseki

The accounting profession is experiencing an undeniable shake-up. Private equity is here. Ownership demographics are aging. Younger professionals are questioning whether partnership is worth it. Talent is short and expectations are high. Yet in the face of all this change, most CPA firms are still clinging to outdated governance models and hoping the storm will pass. But to quote Mark Wahlberg’s character in the movie Deepwater Horizon, “Hope ain’t a tactic” — and neither is nostalgia.

The truth is this: the firms that survive and thrive in today’s market will do so because of strong governance, not because of their size, revenue or technical expertise. Governance is the engine that drives sustainable growth, staff retention, leadership succession, operational discipline and ultimately, firm value.

The Invisible Driver of Value: Governance

Many partners think of governance as committee meetings, internal politics or the verbiage contained in policy binders. In reality, governance is the system by which a firm creates clarity, drives accountability and ensures alignment - starting with leadership and extending through every level of the organization.

At our firm, we define governance as the sum of five practical concepts:

1. Alignment with mission, vision and values.
2. Clarity around roles and responsibilities
3. Defined policies and procedures.
4. Clear performance metrics and measurable goals.
5. Accountability mechanisms at every level.

How many of these five concepts would you say your firm follows well? If you didn’t say “yes” to at least four of the above, I urge you to read on.

Firms that lack governance often suffer from decision-making chaos, partner silos, inconsistent client service, and people not spending their time on the highest and best use of their skills. These are not just cultural problems; they are value killers for your firm.

The Grow, Build, Exchange Framework

To bridge governance theory with day-to-day firm management, we developed the Grow, Build, Exchange (GBX) model. It starts at the highest level - how the firm is structured to function - and moves down to how that structure gets executed across the firm’s operational pillars.

We advise breaking your business strategy into five manageable parts:

1. Owner Initiatives
2. Sales and Marketing
3. People and HR
4. Firm Administration
5. Client Service Delivery

Each domain is defined by a strategic objective, with tactics aligned and KPIs embedded. These are tracked in what we call a Trimester Outlook Report, a rolling strategic planning document reviewed every four months to create momentum, accountability and alignment.

This planning cadence replaces guesswork with governance and transforms intention into execution.

Private Equity: Not the Problem, But the Wake-Up Call

The influx of private equity (PE) into the profession is not the root cause of disruption - it’s the accelerant. PE firms are targeting accounting firms for good reason: sticky, recurring revenue, under-professionalized operations and leadership teams ripe for replacement. In other words, low-hanging fruit.

This isn’t new. In the early 2000s, H&R Block and American Express Tax & Business Services attempted roll-ups of CPA firms. Those efforts eventually unraveled. Why? Because independent CPA partners don’t want to be managed. They set their own agendas. Managing partners spend their time chasing their partners down, not leading firmwide outcomes.

Today’s PE-backed firms solve that differently: they install professional CEOs, not managing partners. PE CEOs are aligned to organizational performance and have authority over the firm’s growth levers - compensation, performance metrics, hiring/firing decisions (yes, even over partners). It’s a model built for speed, alignment and scalability.

If your firm isn’t operating this way, and isn’t willing to change, it may not survive the next decade.

Governance or Mergers and Acquisitions (M&A): Two Paths Forward

Beyond PE, traditional M&A is alive and well in our profession. But here’s what most firms that are looking to be acquired get wrong: they think buyers are chasing their book of business. What buyers really want are firms that function well without the owner/senior partners. In my experience, these tend to be firms that have clear roles for each employee, replicable processes, documented policies, and strong talent pipelines. In short: firms with governance maturity.

Without that, a buyer is just acquiring risk. That is, revenue tied to retiring partners, undocumented client relationships and zero operational consistency. These risks drive down firm valuation, deal terms and post-close success.

The harsh reality is that firms that cannot govern themselves will soon find themselves governed by others, either by private equity or a merger partner, or worse, by their own internal dysfunction. It shouldn’t be this way.

Professionalizing your firm through governance isn’t about becoming bureaucratic. It’s about taking control. It’s about aligning leadership, empowering managers and building value that can grow with or without you.

We’re entering an era where the best firms will be run like professional businesses, not like traditional siloed practices. If you're serious about staying independent, profitable and relevant, you must install a governance infrastructure that can withstand market change, internal transition and outside pressure.

A Practical Application of Firm Alignment

We were recently retained by a mid-sized firm that was struggling with inconsistent service, low morale and stagnant growth. By redefining the firm’s mission, vision and values - and by ensuring that every department understood its contribution - the firm saw increased engagement, productivity and client satisfaction. Just as a football team’s players rally behind a quarterback with great leadership and communication skills, accounting firm staff are more motivated, engaged and accountable when they have clear, consistent leadership at the top.

As any partner or manager has likely learned over their career, the categories listed above can challenge you at any given point of any given day. We think of the five categories of our Grow, Build, Exchange Framework as “competing priorities” and good governance helps you maintain your sanity when trying to manage them simultaneously. One of the best ways to ensure that good governance is followed and competing priorities are managed is to have every member of the firm focused on the “highest and best use” of their time and talents.  Then, ensure that leaders have the ability to pause periodically and measure progress. With strong governance and clear roles, chaos turns into clarity and firms get their momentum back.

Governance Readiness Checklist 

Use the following checklist to assess your firm's governance maturity. Answer each question honestly (on a scale of 1-3) to determine where your firm may need to improve.

For each question, give your firm:

• 3 points if the answer is: “Yes, consistently and confidently.”
• 2 points if the answer is: “Partially, or inconsistently applied.”
• 1 point if the answer is: “No, or very limited evidence.”

Source: Integrated Growth Advisors, LLC 2025

What your scores mean

Next Steps by Tier

Governance-Driven Firm (25-30):

• Formalize your CEO function and succession plan
• Consider benchmarking against PE or large regional governance models
• Begin developing emerging leaders using your current structure

Operational but Vulnerable (18-24):

• Choose one pillar (People, Admin, Sales, etc.) to tighten immediately
• Embed KPIs into your Trimester Outlook Report
• Assign someone to own execution and reporting for each strategic domain

Partner-Dependent Practice (10-17):

• Clarify roles and responsibilities for all partners
• Document key policies and internal procedures
• Establish a four-month strategic review cadence to begin building discipline

Why Strong Governance Will Define Tomorrow’s Leading Firms

The future doesn’t belong to the biggest firms. It belongs to the best-governed ones. Contact me any time if you would like to discuss your governance readiness scores in more detail.

About the Author: Daniel J. McMahon is the Founder & Managing Partner of Integrated Growth Advisors (IGA), a value creation and growth advisory firm focused on empowering business leaders to systematically enhance their revenues, profitability, sustainability and value.

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