How accounting firms can capitalize on the private markets

The private markets, which encompass venture capital and private equity, control more than a quarter of the U.S. economy by capital and 98 percent by number of companies. They also have the potential to be a significant source of revenue for accounting firms.

Here’s how.

The opportunity

In the private markets, fast-growing companies that aren’t publicly traded give professional investors equity in exchange for the funding and mentoring they need to grow. These investors include venture capital firms, which invest in young companies (startups), and private equity firms, which invest in more established companies.

These private companies regularly undergo mergers, make acquisitions, and navigate other complex organizational changes (restructuring, office moves, etc.)—all events that indicate a need for accounting or business consulting services.

With a detailed understanding of these private market activities, accounting firms can unlock a powerful, efficient way to discover and win new business.

Private markets landscape

As capital flows through the private markets, it moves from entity to entity through a series of financial transactions. Every time capital changes hands, professional service providers advise on or execute the transaction.

Key business development drivers

In 2018 alone, more than 40,000 deals involving VC or PE financing, mergers or acquisitions took place in the United States.

Accounting firms won—and will continue to win—that business through these proven strategies:

	Building relationships with VC and PE firms so they return every time their portfolio companies need accounting services.
	Following VC and PE firms to see when they’re fundraising, investing and exiting so it’s easy to tell when they’ll need accounting services.
	Tracking when companies get funding, because that’s when they’re growing, have capital to spend and need accounting services as they expand.
	Getting in early with promising startups and working with them at every stage of their growth.
	Connecting with other advisors who work on the same kinds of deals to learn about new opportunities before other firms.
	Getting the information they need when consulting on a deal, including precedent transactions and series terms.

If you’d like to learn more about the private markets and how your firm could benefit from pursuing new clients in the space, download our private markets guide.