“we’ve got a real problem. and no easy fix.”
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accounting influencers
with rob brown
the accounting profession is undergoing a seismic shift—and not all of it bodes well for those who value independence, innovation, or client service. in this episode of accounting influencers, veteran tech strategist randy johnston, shareholder at k2 enterprises, reveals the hard truths behind the changing operational and technological landscape of accounting firms.
johnston, who has advised thousands of firms across four decades, shares what he’s hearing behind closed doors at events like aicpa engage. from ai hysteria to private equity overreach, the most alarming trend is clear: “we’re seeing the erosion of what made accounting firms trusted advisors in the first place.”
according to johnston, the most disturbing trend is the hollowing out of accounting technology products. as private equity and public companies consolidate the market, product quality is dropping, support is slower, and innovation is stagnating.
“2023 was one of the worst years for tech functionality i’ve seen,” johnston says. “legacy systems were breaking. support was understaffed. and developers didn’t even understand the code they were supposed to fix.”
he describes a culture of rushing minimally viable products to market—software that, in some cases, still lacks basic features a decade after launch. “firms are being sold sizzle—not steak,” he warns.
johnston doesn’t mince words when it comes to private equity’s growing presence in u.s. accounting firms: “i don’t think it’s in the profession’s best interest. or the clients’. or even the firms’.”
he notes that more than 100 cpa firms could be under private equity control within a year. the promise of big payouts and easier exits lures partners in, but johnston believes many underestimate the long-term tradeoffs: less control, more pressure to cut costs, and declining service quality.
“partners don’t realize they’re putting handcuffs on themselves,” he says. “and often, the clients—who should come first—fall to the bottom of the list.”
perhaps the most damning revelation: many so-called independent consultants and influencers in the accounting space are taking hidden referral fees and backdoor payments from tech vendors. johnston refers to it bluntly as “payola.”
“too many consultants are masquerading as impartial when they’re pushing products tied to personal gain,” he says. “it violates trust, it skews decision-making, and it puts firms at risk.”
to help firm leaders navigate these treacherous waters, johnston offers two practical checklists—one for technology purchases, and one for private equity deals.
before buying technology:
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what’s the vendor’s 5–10 year plan?
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does the product offer open api integration?
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how robust are the support and implementation teams?
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when was the software last rewritten?
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are you buying sizzle—or actual functionality?
before accepting a pe offer:
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how much control will you retain over time?
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how will this impact your team and clients?
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are you comfortable reporting to external stakeholders?
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what legacy do you want to leave?
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will your operational input still matter?
“every stakeholder—clients, staff, partners—has different needs,” johnston says. “the best leaders figure out how to serve all three without compromising integrity.”
the firms that will thrive are those that stay true to their mission—and ask the right questions before making game-changing decisions.
“i’m usually an upbeat guy,” johnston muses. “but right now? we’ve got a real problem. and no easy fix.”
10 key takeaways
- many firms are accepting pe investments for partner exits, but the tradeoff is diminished control, reduced service quality, and misaligned priorities.the client often falls to the bottom of the agenda.
- the rush to maximize profits post-acquisition is leading to reduced support, inexperienced dev teams, and software that no longer works as intended. some legacy tools have regressed since their acquisition.
- johnston says many advisors are accepting undisclosed referral fees—jeopardizing their independence and the firms that trust them.
- growing evidence shows vendors are instructing salespeople to intentionally misrepresent product capabilities—a betrayal of trust that makes smart purchasing difficult.
- whether it’s a tech investment or a pe deal, firms need to ask hard questions about control, compatibility, integration, and alignment with firm culture and client care.
- johnston recommends asking vendors about their five-year roadmap, integration methods (ideally open apis), platform rewrites, and support quality—while avoiding “minimally viable” products that never mature.
- the industry is shifting from flat-rate or per-user pricing to per-engagement billing and pay-to-access apis—potentially hurting firm margins.
- as more firms become pe-owned, independent firms will face increased competition from players who operate under very different financial and ethical models.
- with key players refusing to integrate with others or renew apis (e.g., sureprep vs. cch), firms are at risk of being trapped in isolated systems with fewer options.
- johnston acknowledges the complexity and offers no silver bullet, but urges firm leaders to ask better questions, prioritize clients and teams, and beware of the hidden agendas shaping their decisions.
one response to “johnston: private equity, shady vendors, and broken software | accounting influencers”
frank stitely
brilliant insights! a must watch.