The $7 Billion CPA Consolidation: Why Baker Tilly and Moss Adams’ Merger Signals a New Era for Advisory Firms

The merger of Baker Tilly and Moss Adams, announced on April 21, 2025, marks a pivotal moment in the accounting and advisory sector. With a combined valuation of $7 billion, the deal creates the sixth-largest CPA firm in the U.S. by revenue, positioning it as a formidable player in the $150 billion professional services market. The strategic union aims to capitalize on synergies in geographic reach, industry expertise, and private equity-backed expansion—trends that could redefine how middle-market businesses access financial and advisory services.

The Financial Case for Consolidation

The merger’s financial terms underscore its ambition. Combined annual revenue is projected to exceed $3 billion, consolidating Baker Tilly’s $1.8 billion and Moss Adams’ $1.26 billion in recent fiscal year revenues. This scale not only amplifies their market influence but also signals a shift toward larger, PE-backed firms in an industry traditionally dominated by smaller, independent practices.

The $7 billion valuation—nearly double their combined revenue—reflects investor confidence in their ability to command higher fees for specialized services. Middle-market clients, which now account for 60% of U.S. GDP growth, are increasingly seeking integrated advisory solutions. By merging, the firms aim to leverage their complementary strengths: Baker Tilly’s global network and Moss Adams’ tech-sector expertise, for instance, could unlock cross-selling opportunities.

The Role of Private Equity

Behind the merger lies significant PE backing. Hellman & Friedman (H&F) and Valeas Capital Partners, already minority investors in both firms, have increased their stakes. H&F’s “meaningful additional strategic investment” highlights their bet on the accounting sector’s growth. For PE firms, consolidating smaller players into larger entities has proven lucrative: H&F’s 2019 investment in RSM US, for example, yielded a 2.5x return when the firm was sold to Clayton, Dubilier & Rice in 2022.

The deal’s structure also reflects PE priorities. By separating audit operations (Baker Tilly US, LLP) from advisory services (Baker Tilly Advisory Group, LP), the firms can navigate regulatory scrutiny while accelerating growth in higher-margin advisory segments. This bifurcated approach mirrors the strategy of EY, which spun off its consulting division in 2020 to focus on advisory services—a move that boosted its EBITDA margins by 15%.

Leadership and Integration Challenges

The leadership transition underscores the merger’s long-term vision. Jeff Ferro, Baker Tilly’s CEO, will step down by January 2026, ceding control to Eric Miles of Moss Adams. This staggered timeline aims to minimize disruption, but the cultural integration of 7,000+ partners and staff across both firms remains a hurdle.

A key metric to watch: retention rates of top talent. In the 2023 merger of KPMG’s U.S. arm with PwC, 12% of senior partners left within the first year, denting revenue projections. For Baker Tilly and Moss Adams, their partnership structures—retaining local autonomy while centralizing back-office functions—could mitigate this risk.

Market Implications and Risks

The merger’s success hinges on two factors: geographic and sector diversification. Together, the firms now operate in all 50 U.S. states and 140 countries, reducing reliance on any single market. Their combined tech, healthcare, and energy sector expertise also aligns with industries projected to grow at 8-10% annually through 2030.

However, regulatory risks loom. The SEC’s crackdown on audit quality—exemplified by its 2024 penalties totaling $2.3 billion against Big Four firms—could pressure the new entity to invest in compliance systems, eating into margins. Meanwhile, competition from cloud-based accounting platforms like QuickBooks and Xero continues to erode traditional fee structures.

Conclusion: A Strategic Bet with Upside

The Baker Tilly-Moss Adams merger is a calculated play to dominate the middle-market advisory space. With $3 billion in combined revenue, a $7 billion valuation, and PE backing to fuel acquisitions, the firm is well-positioned to outpace smaller rivals and challenge the Big Four’s dominance.

The numbers tell the story: the combined entity’s valuation is 3.9x its revenue, in line with peers such as Deloitte (3.7x) and Grant Thornton (4.1x), suggesting investors see it as a credible competitor. The leadership transition’s phased approach and focus on high-margin advisory services—already 40% of Moss Adams’ revenue—add further confidence.

Yet risks remain. Retention of top talent, regulatory compliance costs, and competition from tech-driven rivals could test the merger’s success. For investors, this is a long-term bet on consolidation in a sector where scale increasingly matters. If executed well, the deal could redefine the advisory landscape—making it a must-watch for anyone following professional services.