FinanceFinance in Professional ServicesProfessional Services

CohnReznick's Aldrich deal turns on 48 partner paychecks, not $108 million in revenue

CohnReznick's purchase of Aldrich adds more than $108 million of revenue. Most of the deal's value sits in figures the announcement does not give: partner pay after the deal, WIP that has to become cash, and an independence review whose rules the AICPA is still rewriting.

Turing LedgerFinance & Strategy AnalystOctober 14, 2026

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Key takeaways

Build a partner table listing every partner's book size, age, current pay, post-scrape pay and covenant length before signing an LOI.
Push the value tied to partners whose departure would hurt EBITDA into the earnout or holdback, not the headline price.
Age WIP partner by partner and compare it with actual write-downs over the past three years to find inflated revenue.
Value a wealth or RIA business separately on assets under advisement, fee rate and client consent, not on an accounting multiple.
Check every audit client against the investors' portfolios and the wealth clients for independence conflicts before close.

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Host:MBA Training. Today: CohnReznick's Aldrich deal turns on 48 partner paychecks, not $108 million in revenue. Revenue is the most overrated number in an accounting firm acquisition, and I'm told you'd sign that in blood.

Expert:In blood, in triplicate, with a partner co-signing. Revenue is the part the seller is proudest of and the buyer should care about least.

Host:Oh, come on. Revenue is the business.

Expert:In a partnership? Revenue walks out the door at six o'clock and decides whether to come back.

Host:Make it concrete. This week, CohnReznick announced it's buying the Aldrich group out of Lake Oswego, Oregon.

Expert:Perfect specimen. Before anyone has even opened the data room, the target already has three different revenue figures in public. Accounting Today has one, INSIDE Public Accounting has another, and CohnReznick's own press release has a third.

Host:Three numbers. Like a suspect with three alibis.

Expert:And all of them are roughly true, which is the annoying part. Gross, net, which legal entity, whether wealth management is in or out. Nobody's lying. Nobody's reconciling either.

Host:Set the scene for people who don't live in this world. Who's actually buying?

Expert:CohnReznick is private-equity backed now. Apax and a co-investor own a majority of the non-audit side. That's an alternative practice structure, an APS: one licensed CPA firm, meaning certified public accountants, does the audits, and a separate advisory company that isn't a CPA firm does tax and consulting. The investors can only own the second one.

Host:Which is why Aldrich's boss is joining as CEO of the advisory entity, not the audit firm.

Expert:Exactly. The org chart is a legal document wearing a tie.

Host:Quick aside, because it rhymes. Andreessen Horowitz, a16z, published an essay last week called "You Need a New CFO."

Expert:Saw it. Very confident title.

Host:Their argument is that AI is reshaping the finance function. One product they describe, CFO.ai, builds and maintains real-time financial models for you.

Expert:Fine, and worth taking seriously. But keep in mind that's a venture firm describing the market it invests in. And a real-time model of this deal would still be a beautifully refreshed spreadsheet of assumptions about whether a bunch of partners stay. The model doesn't know who's polishing their résumé.

Host:So the robot can't read the room.

Expert:It can't read the partner lounge. Different room, worse coffee.

Host:Back to the room, then. What's actually being bought?

Expert:People. The deal brings in 48 partners. In a CPA firm, the client relationship belongs to the human, not the letterhead. Lose a handful in year one and your investment case starts limping.

Host:Hang on, say the uncomfortable part.

Expert:Buyers pay for the firm, but the asset has legs and a non-compete with an expiry date.

Host:What are you seeing go wrong in the field right now?

Expert:Buyers underwrite the book without mapping it. The good operators build a table: every partner, their book of business, their age, their pay, and how long their non-solicit lasts, meaning the clause that stops them taking clients. Take two partners with identical books. One is locked in for years and loves the work. The other retires soon and is counting the days. Those are completely different assets.

Host:And the sloppy ones?

Expert:Average it. "Partners generate X each." Averages are where diligence goes to nap.

Host:Now the word everyone whispers. The scrape.

Expert:Right. A partnership has no natural EBITDA, which is earnings before interest, taxes, depreciation and amortization, basically operating profit, because the profit goes out the door as partner pay. The buyer creates EBITDA by cutting that pay. That cut is the scrape.

Host:How deep?

Expert:The Pennsylvania CPA society describes small cuts for newer partners and much deeper ones for founders and senior partners. Then the buyer puts a multiple on the result.

Host:Which turns a pay cut into price.

Expert:Allan Koltin, a deal adviser who advised both Apax and CohnReznick, so not exactly neutral, talks about seven to eleven times the scraped number.

Host:Wait, what? So every dollar you shave off a partner's paycheck is worth...

Expert:...several dollars of purchase price. That's why the scrape is the most negotiated line in the deal. It's also the line most likely to fall apart.

Host:Because the partner who took the cut leaves.

Expert:In year two, usually. And the EBITDA leaves with them, but the buyer already paid the multiple on it. You bought a racehorse and it moved to a competitor's stable with its saddle.

Host:That's grim, because behind every line of that spreadsheet is somebody who built a practice for decades and just got told their pay is now an "optimization lever."

Expert:Yeah. That bit doesn't sit well with me either. Some of those people took the deal to fund a retirement, and then discover they've signed up to work harder for less. Then they leave, and everybody calls it "attrition" like it's the weather.

Host:Let me push back. The dilution here is real. Aldrich partners bring in about a third less revenue each than CohnReznick's. But they're getting a big wealth platform, Aldrich Wealth, plus national service lines to sell into construction and agribusiness clients. Cross-selling closes that gap.

Expert:Maybe. Cross-selling is the most promised and least delivered synergy in professional services.

Host:That's cynical.

Expert:That's experience. Every integration deck has a cross-sell slide. Few have a cross-sell owner.

Host:Geographic deals often start dilutive and pay off later. That's literally the playbook.

Expert:Sure, and sometimes it works. My point is that only two things close the gap. Either revenue per Aldrich partner rises toward CohnReznick's level, or their pay drops toward Aldrich's economics. If the first is slow, the second gets ugly.

Host:I still think you're underpricing the wealth arm.

Expert:I'm pricing it separately, which is different. Value a wealth or RIA business, meaning a registered investment adviser, on assets under advisement, fee rate and whether clients consent to the change. Don't slap an accounting multiple on it. Aldrich itself sold its benefits business to Alliant a while back. The market already treats these as separate animals.

Host:Agree to disagree on how fast the cross-sell shows up.

Expert:Agree to check in after a year and see who buys lunch.

Host:Third test. WIP.

Expert:Work in progress: hours worked but not yet billed. It sits on the balance sheet looking like money. Sometimes it is money. Sometimes it's an old construction audit nobody will ever pay for in full.

Host:And firms carry it at full value right up to closing.

Expert:Of course they do. Write-downs only show up when you bill, so the pretty number survives until the deal closes. Same trick with utilization, which is the share of hours that are billable. Change the denominator from standard hours to hours actually worked and your star senior suddenly looks a lot less starry.

Host:Why does timing matter here?

Expert:Mid-December close, right before busy season. Year-end and tax work start piling up WIP fast. So you need clear answers on who owns pre-close WIP billed after close, how it was valued, and what the working-capital peg is, meaning the agreed level of working capital the firm must hand over.

Host:What separates the good buyers on that?

Expert:They age WIP partner by partner and line it up against actual write-downs over the past three years. If a partner's work consistently collects below the firm average, that partner is inflating the revenue you're paying for. Politely, but inflating.

Host:And the test that can kill the whole thing?

Expert:Independence. Aldrich's audit clients move into a firm tied to an advisory company that's majority investor-owned. The AICPA, the American Institute of CPAs, has an ethics committee that proposed treating those linked entities as one network under identical independence rules. It's talking about a second draft right now.

Host:Rules being rewritten while the deal closes.

Expert:Building the plane, pricing the plane, auditing the plane. PwC's comment letter even warned that parts of the draft diverge from the SEC, the Securities and Exchange Commission. So check every audit client against the Apax portfolio, the co-investor's holdings and the wealth clients before close. If you fail here, you don't get a price adjustment. You lose clients, or the deal.

Host:So when does CohnReznick find out if this worked?

Expert:December 2027. Count the Aldrich partners still there, and look at what they're paid.

Host:Not the three revenue alibis.

Expert:The alibis will be reconciled by then, just in time to stop mattering.

Host:One thing a listener should do on Monday before signing a letter of intent, the LOI.

Expert:Build the partner table. Every partner: book size, age, current pay, post-scrape pay, covenant length. Flag anyone whose departure would hurt EBITDA badly, and push their slice of value into the earnout or holdback, not the headline price. Pay up front only for profit that's still there when the partners have the option to leave.

Host:Pay for the people who stay, not the number on the press release.

Expert:Whichever of the three numbers it is.

Host:Sources: CPA Practice Advisor, Accounting Today and Insidepublicaccounting. Every link is in the show notes. That's it. The CFO decision tools are live at mba-training.com.

On 13 October 2026, CohnReznick said it would acquire the Aldrich group of Lake Oswego, Oregon. The group includes INSIDE Public Accounting top 100 firm Aldrich CPAs + Advisors and Aldrich Wealth, in a deal expected to close in mid-December. Before anyone has opened a data room, the target already has three revenue figures. Accounting Today reports the deal adding over $108 million in revenue. INSIDE Public Accounting gives Aldrich CPAs + Advisors FY25 net revenue of $103.3 million. CohnReznick's own press release says ($100M+ revenues). Financial terms of the transaction weren't disclosed.

This article argues one point. When a PE-backed buyer rolls up an accounting firm, headline revenue tells you the least. What CohnReznick is paying for, and what any CFO pricing a CPA firm should underwrite, is EBITDA that survives four things: partners leaving, the reset of partner pay, the conversion of WIP into cash, and an independence review under rules the AICPA is rewriting while this deal closes. The revenue is the easy part.

How CohnReznick structured the Aldrich acquisition

The buyer has looked different since February 2025. Under the Apax deal, the funds advised by Apax, alongside with an independent co-investor, will collectively own a 51% stake in the non-attest business. The firm now runs as an alternative practice structure (APS): CohnReznick LLP, a licensed CPA firm, will provide attest services, and CohnReznick Advisory LLC (which will not be a licensed CPA firm) will provide tax, advisory, and other nonattest services. Governance follows the same split. Both Apax and CohnReznick representatives will be on the board of the advisory entity, but only CohnReznick partners will be on the board of the attest business. That is why David Kessler announced Aldrich as CEO of CohnReznick Advisory, not of the CPA firm.

Aldrich is the latest step in a steady buying programme. This is CohnReznick's third M&A deal in 2026. The New York City-based firm acquired Minneapolis-based CPA firm Smith Schafer & Associates in January and added Houston-based CPA firm Ham, Langston & Brezina in July. Aldrich is the largest of the three. The acquisition adds over 500 employees and 48 partners, with offices in Oregon, Washington, California, Utah and Colorado. Aldrich Wealth, which has more than $8 billion in assets under advisement as of Aug. 26, 2026, will serve as the platform for CohnReznick's wealth management business.

The target's own history matters too. In January 2024, Aldrich Benefits LP has been acquired by Alliant Insurance Services, Inc. That business dated back to 2003, so any revenue trend running through 2023 includes a line that no longer exists. The largest deal in the sector this year handled a similar unit the same way. When Grant Thornton Advisors agreed to buy CBIZ for $5 billion, it said that after the transaction closes, Grant Thornton plans to separate CBIZ's Benefits and Insurance Services business into an independent company backed by New Mountain Capital. Buyers keep carving out the businesses that do not fit an accounting-firm multiple.

How much of Aldrich's $108 million will CohnReznick keep?

Nobody outside the deal knows yet. Price, earnout and retention terms are private, and the deal has not closed. What the public numbers do show is the gap CohnReznick has to close.

CohnReznick reported $1.14 billion in revenue, with 344 partners and over 3,860 employees across 35 offices. Some simple arithmetic on the disclosed figures:

CohnReznick's revenue per partner is about $3.31 million ($1.14 billion ÷ 344). Aldrich's is about $2.25 million ($108 million ÷ 48), or $2.15 million on the $103.3 million IPA net figure.
Staff per partner is close: about 11.2 at CohnReznick and about 10.4 at Aldrich (500 ÷ 48, and "500-plus" is a floor). If the two firms have similar pyramids, the revenue-per-partner gap probably comes from rates, realization or service mix, not from how much staff each partner manages.
The deal adds about 9.5% to revenue ($108 million ÷ $1.14 billion) and about 14% to the partner count (48 ÷ 344). Combined revenue per partner falls to roughly $3.18 million ($1.248 billion ÷ 392).

On day one, then, the deal dilutes revenue per partner. That is not a verdict on the deal. Geographic deals often start out dilutive and pay off through cross-selling. Here that means the $8 billion wealth platform and CohnReznick's national service lines sold into Aldrich's construction and agribusiness clients. But it tells you where the value-creation plan has to deliver. Either Aldrich partners' revenue moves toward CohnReznick's level, or their pay moves toward Aldrich's economics. The second option is called the scrape.

What transfers to your next accounting-firm acquisition

Here is the rule to put on the whiteboard.Pay only for EBITDA that passes four tests: the partners stay, the scrape sticks, the WIP turns into cash, and the independence review clears. Any EBITDA that fails a test goes into the earnout or holdback, not the headline price.

Test one: partner-backed revenue that stays after the deal

In a CPA firm, client relationships belong to people. With 48 partners and about $2.25 million of revenue each, losing even three or four partners in the year after the deal changes the investment case. Map revenue to originating and relationship partners. Then match the size of each book to that partner's age and to the length of their non-solicit. A partner with a $4 million book and a two-year restriction is a different asset from one with the same book and five years to retirement.

Test two: EBITDA that survives the scrape

A partnership has no natural EBITDA, because profits go out as partner pay. The buyer creates EBITDA by cutting that pay. The Pennsylvania Institute of CPAs describes this plainly: one of the first things the PE investor typically does to reduce costs and increase EBITDA is to reduce partner compensation. Reductions vary, but they often range from 10% for younger/newer partners to 50% or greater for founders and senior partners. The process of reducing partner comp post transaction is referred to as "the scrape." The New Jersey Society of CPAs sets an entry threshold of EBITDA ≥ 15% of revenue after partner scrape.

The multiple turns the scrape into price. Allan Koltin, whose firm advised both Apax and CohnReznick in 2025 and so speaks as a deal adviser rather than a neutral observer, describes PE buyers applying "a multiple of 7x to 11x" to the scraped number. Hypothetical, arithmetic only: each $1 million of permanent scrape is worth $7 million to $11 million of price. Across 48 partners, $1 million is about $21,000 per head. This explains why the scrape is the line most heavily negotiated and also the one most likely to unwind. If partners who took a 30% cut leave in year two, the EBITDA goes with them, but the buyer has already paid the multiple on it.

Diligence has to test the scrape in both directions. Auxo Capital Advisors, an M&A adviser to CPA firms, notes that if partner compensation is below market relative to the actual roles performed, buyers may reduce EBITDA to reflect replacement labor. If partner compensation is above market because owners are sweeping profits through compensation, buyers may add back a portion. Ask the target for a pay bridge for each partner, splitting the market wage for their role from the return on their ownership. You need to see that split before you can trust the EBITDA, and before you can see howWIP and partner compensation turn profit into distributions once the partners no longer own the residual profit.

Test three: WIP that turns into cash

Partnerships report utilization and realization in whatever way flatters the year. Utilization depends on the denominator. Hypothetical: a senior who records 1,500 chargeable hours is 83% utilized against an 1,800-hour standard, but 68% utilized against 2,200 hours actually worked. Realization measured against standard rates can hide write-downs that are booked only when WIP is billed. A firm can carry old construction-audit WIP at full value right up until the deal closes.

The closing date makes this sharper for Aldrich. A mid-December close falls just before busy season, when WIP from year-end and January-to-April tax work builds quickly. Three questions matter. Who owns pre-close WIP that is billed after close? How was it valued? What working-capital peg protects the buyer? The NJCPA lists working capital requirements (e.g., three months' cash left in the firm versus more) among the main deal terms. Test WIP by aging bucket against the write-downs actually recorded over the past three years, partner by partner. Any partner whose WIP regularly realizes below the firm average is inflating the revenue figure you are paying for.

Test four: independence that survives the new code

This test can block a closing outright. Aldrich's audit clients move into CohnReznick LLP, which is linked to an advisory entity that is 51% investor-owned. The rules covering that link are changing. In December 2025, the AICPA's Professional Ethics Executive Committee proposed rules that would treat attest firms and their affiliated nonattest entities as "network firms" subject to identical independence requirements. Under the proposal, nonattest entity board members with authority over individual attest partner compensation are automatically considered "covered members" subject to independence rules. After the comment period, PEEC agreed to continue discussions at an interim October meeting on issuing a second exposure draft. PwC's comment letter warned that parts of the draft appear to diverge from SEC staff, who have said "it would be a high hurdle for the accounting firm to be in compliance with" certain arrangements.

In practice, check every Aldrich attest client against the Apax portfolio, the co-investor's holdings, and Aldrich Wealth's advisory relationships. Do this before close, not after. A deeper look atindependence conflicts that can sink a deal helps here, because the cost of failure is not a price adjustment. It is losing audit clients, or the deal itself.

Where your context differs

If you are merging two traditional partnerships, there is no scrape and no investor-owned entity. Tests two and four shrink. Test one grows, and a new item appears: unfunded retired-partner obligations. PICPA notes that many firms offered their partners pension or deferred compensation arrangements that resulted in a partner continuing to be paid by the firm after retirement. On a merger, that liability comes with the firm. If you are buying a wealth or RIA arm alongside the CPA practice, value it on its own: on AUA, fee rate and client consent, not on an accounting-firm multiple. Aldrich's own sale of its benefits business to Alliant in 2024 shows the market already prices these units separately.

What to do on Monday before signing an LOI

Ask for the target's revenue on one definition (gross, net of pass-throughs, by legal entity), reconciled to every figure published about it. If three numbers are public, you need the bridge between them.
Build a partner-by-partner table showing book size, age, current pay, proposed post-scrape pay and length of restrictive covenant. Flag every partner whose departure would cut EBITDA by more than 5%.
Re-run utilization on hours actually worked and realization on billed-and-collected. Compare both with the figures the target reported.
Age WIP by partner and service line, set the past three years of write-downs against it, and set the working-capital peg on the adjusted figure.
Run an independence conflict check of every attest client against your investor's portfolio and any wealth-management relationships. Plan for the tighter version of the PEEC proposal, not the looser one.

CohnReznick's real test comes in December 2027, a year after closing. The question then is how many of the 48 Aldrich partners are still there, and at what pay. Write your earnout so that it pays out on that figure.

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Frequently asked questions

What is the partner compensation scrape in an accounting firm acquisition?

The scrape is the cut to equity partners' pay that a private equity buyer makes to create EBITDA in a firm that used to distribute all its profit. The Pennsylvania Institute of CPAs says cuts often run from 10% for newer partners to 50% or more for founders and senior partners. Advisers say buyers then apply multiples of roughly 7x to 11x to the scraped figure.

Why do accounting firms use an alternative practice structure when private equity invests?

Non-CPAs cannot own a firm that provides audits and other attest services. The firm therefore splits in two: a licensed CPA firm keeps attest work, and a separate entity, part-owned by the investor, provides tax and advisory services. CohnReznick has worked this way since the 2025 Apax deal, with Apax and a co-investor holding 51% of the non-attest business.

How should a buyer test WIP when acquiring a CPA firm?

A buyer should age WIP by partner and service line and compare it with three years of write-downs actually recorded, rather than accepting book value. A firm can carry old engagement WIP at full value until closing. A deal closing in mid-December, like CohnReznick and Aldrich, also needs clear rules on who owns pre-close WIP that is billed during busy season.

How are AICPA independence rules for private equity-backed accounting firms changing?

The AICPA's Professional Ethics Executive Committee proposed in December 2025 to treat attest firms and their investor-backed affiliates as network firms subject to the same independence requirements. Under the proposal, board members of the non-attest entity who control attest partners' pay would count as covered members. The committee planned an interim meeting in October 2026 to discuss a second exposure draft.

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