MichaelHooverandthePrivateEquityEra:HowCapitalis ReshapingtheAdvisoryProfession&Family-Owned Businesses
By Guest deadline February2,202612:10pm
Formostofmodernhistory theadvisoryprofessionhasbeende nedmorebyrelationshipsthanbycapital Accounting rms law rms registeredinvestmentadvisers andmulti-disciplinarypracticesexpandedslowly from onegenerationtothenext
Theownershipstructurere ectedthepartnershipmodel withownershipbypartnersandmanagingdirectors The decision-makingprocessre ectedprofessionalexpertise,relationshipbuilding,andanunderstandingthatthework wouldbecarriedoutoverseveralyears,sometimesdecades
MichaelHooverhasexperiencedtheprivateequityeraandtransformation rst-handwithinhiscurrentroleat RockefellerCapitalManagement,whichbroughtinVikingGlobalInvestorsin2018andrecentlywentthrougha recapitalizationinOctober2025 AsaCPAandFamilyO ceCounseloratRockefellerCapitalManagement,Hoover overseesateamofcounselorsandadvisesfamilieswhosewealthandbalancesheetisaresultofentrepreneurship businessexits investmentsand/orgenerationalwealth
Privateequity(PE)hasenteredtheadvisorysectorinabigway andthewaycompaniesareowned grown and controlledisbeingcompletelyreshaped Sincethemid-2010s,therehavebeenhundredsofaccountingpractices andregisteredinvestadvisors(RIAs)acquiredbyprivateequity- nancedplatforms Bytheendof2025,nearlyhalf ofthetop30publicaccounting rmshadapartialownershipbyprivateequitywitharecord-setting83transactions occurringintheaccountingsectoralonein2025 “Theadviceindustryischangingveryrapidlyandwhatmatters mostismaintainingatailoredclient- rstandadvisorymindset”Hooverstates
WhyPrivateEquityCameKnocking
Itisnotrandom andcertainlynotspeculative thatprivateequityhasbeendrawntoadvisory rms Thereisaclear alignmentbetweenthebusinessmodelsofregisteredinvestmentadvisorsandaccountingpracticesthathasmade themattractivetooutsidecapital Recurringrevenuestreams,longlastingclientrelationships,andopportunitiesfor consolidationallcreateacompellingargument
Demographicforceshavefurtheracceleratedthisinterest Many rmfoundersareapproachingretirementwithout clearinternalsuccessionplans Inthesecircumstances,atransactionwithaprivate-equity-backedplatformcan provideliquidity operationalexpertise andcontinuityforclientswhenthoughtfullystructured “Privateequityhas broughtprofessionalismtocertainareasoftheindustrythatneededit notesoneindustryo cial Theresno doubtthatcapitalhasdrivene ciencyandgrowth
PrivateEquityIsn’tJustImpactingProfessionalServicesFirms
Whileincreasedprivateequityactivityhasreceivedsigni cantattentionintheadvisoryindustry similarownership andsuccessiondynamicshavebeenunfoldingacrossawiderangeofindustries Family-ownedand multigenerationalbusinesses manyofwhichwerefoundedwithlong-termhorizonsandnointentionofsale are facingdemographicandoperationalchallenges
Withthe‘greatwealthtransfer inplay DeloittesFamilyBusinessInsightsrevealedthatafamilybusinessownership shake-upisunderwayas26percentoffamilybusinessesplantobringinoutsideinvestment/privateequity 19 percentexpecttoincreaseownershipamongnon-familymanagementsownership 12percentplantogopublic and3percentaimtoselltheirbusiness Inmanycases,thedriversofthesetransactionsareconsistent:founder retirement,balance-sheetconcentration,andtheneedforprofessionalizedinfrastructure Intheseinstances, privateequityhasoftenenterednottoreplaceexistingoperators,buttofacilitateownershiptransitionsand provideresourcesforcontinuedoperations
Family-OwnedandMulti-GenerationalBusinesses
Family-ownedbusinessesrepresentasubstantialsegmentoftheglobaleconomy AccordingtotheUnitedNations ConferenceonTradeandDevelopment(UNCTAD),family-ownedbusinesses contributetoover70percentofglobal GDPandabout60percentofglobalemployment However,theyoftenencountercriticalchallengesduring generationaltransitions,suchasleadershipgaps, nancialconstraints,andcon ictingvisionsamongfamily membersand/orotherstakeholders Privateequity rmscanbeonealternativethatfamiliesconsider,whichcanbe instrumentalinaddressingthesechallengesandfacilitatingsuccessfulsuccessionplanning Itisimportantto recognizethatfamiliesconsideringthesealternativesarenotsimplychoosingbetweensellingthecompanyand retainingcontrol
Privateinvestmentsmayhelpwithsystems management andstrategicdevelopmentthatwouldotherwisebe di culttoorganicallyfund Multipleacademicstudieshavefoundthatprivateequity-ownedcompaniesoutperform theirpeers notonlybydeliveringbetter nancialreturnsbutalsobymakingtransformativeoperational
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improvements Onaveragethecompaniesprivateequity rmsinvestinachieveproductivitygainsof8to12percent inthe rsttwoyearsaftertheiracquisition faroutpacingthe2to4percentgainsthatfamily-ownedbusinesses and/orpubliccompaniestypicallysee
Typically withinmanyprivateequityinfusions adegreeoffamilyownership representation orcleargovernance rightscanbepreservedforthefamilyregardingtheirculturewhileallowingthem exibilitywith nances Thebest resultsareoftentheproductofaclearstrategy Thosefamilieswhohavede nedtheirowngoalsofatransaction control,culture,joblegacy,andcommunityimpact arebestservedtostructureatransactiononthoseterms Wheneveryoneisalignedupfront,aprivateequity–backedtransactioncanmaintaincontinuityratherthanforce change
ParallelsWiththeAdvisoryProfession
Theprivateequityinvestmentexperienceinthefamily-ownedbusinessindustryseemstohaveacloseparallelwith whatisoccurringintheadvisoryprofession Botharerelationshipbusinesses Botharebasedontrust,continuity, andtheworkextendingoveraperiodofyearsratherthanquarters Complexityhasincreasedonmultiplefronts regulation technology andoperations andtheremaycomeapointwhenscalebeginstomatter Thisiswhere privateequityfundingappearstosolvenotnecessarilyadi erentapproachtothework,buthelpswithissuesof sizeandsuccession
ThisconvergenceappearsinMichaelHooversdealingwithhisclientele AnumberofthefamiliesandclientsHoover advisesarebusinessownersand/orstakeholdersandhaveengagedinprivateequitytransactions “Tosecurefuture success,manybusinessownersandfamiliesareembracingstrategicinvestmentandtransitionplanningtobuildon theirexistinglegacy”Hooverasserts
CapitalinServiceofContinuity
Privateequityisthemoste ectiveasatoolratherthanathesisbecauseitaddsstructureand exibility Private equitymayprovideoptionswherenoneexisted However privateequitydoesnotsubstitutepurpose governance andcommunication
Injectionofthird-partycapitalwillnecessarilybringsomeissuestotheforefront Planningwillbecomealotmore important,di erentviewsacrossgenerationswillbecomedi culttododge,andoveralltransparencywillnolonger beachoice
Thepresenceofcapitaldoesntdiminishtheplaceofjudgmentorvalues Itenhancesit Thesourceofcapitalisless signi cantthanthefunctionitismeanttoperform andwhatvaluesthepossessorsseektosafeguardwhile performingthefunction
StewardshipinaPeriodofTransaction
Todaysprivateequitylandscapeisshapedbydemographicchanges,economicuncertainty,risingcomplexity,and growingsuccessionneeds Ownershipstructuresevolve,oftensuddenly Theambitionsthatunderliethesechanges remainremarkablyconstant Familiesandentrepreneursarenotfocusedongrowthalone Theyarebuilding somethingthatlastsbutalsocontinuestomoveforward
MichaelHoovera rms,“ThismindsetisattheheartofwhatIdo fromservingfamiliespreorposttransactionto workingwiththemonissuesofwealthplanning governance legacy andsuccession Theaimisnotgrowthora lackofchangeforitsownsake butastrategicalignmentbetweencapitalandpurpose
Asownershipstructuresevolve,thetakeawayswillcometothosewhosetouttousecapitalwithpurpose Private equityisjustoneoftheseveraltoolsavailabletopreservewhatisimportantwhileplanningforthefuture
