TWR Podcast Episode 104: Bench, Business, and Better Decisions

Despite being busy with the holidays and preparing for the annual company offsite meeting, Joe Woodard and Heather Satterley found time to cover a lot of the latest happenings in the accounting world.

They include the Bench saga, exploring the broader implications of private equity (PE) and venture capitalist (VC) involvement, the challenges of balancing profitability with client-centric values, and the transformative potential of artificial intelligence (AI)

Welcome to the latest edition of The Woodard Report Podcast with Joe Woodard and Heather Satterley.

A sudden turn of events

The timeline for Bench’s closure was nothing short of dramatic.

In November 2024, Bench’s CEO, appointed by its VC owner, quietly resigned. By late December, the firm posted a brief closure notice on its website, leaving its 35,000 users in disarray. Within 48 hours, Bench was acquired by Employer.com, under the leadership of Jesse Tinsley.

Bench’s sudden shutdown raised eyebrows. The company’s inability to foresee its cash burn rate or secure adequate funding for a slower exit ramp highlights the risks inherent in VC-backed firms.

This situation led to broader speculation: Were PE and VC firms prioritizing profit over client welfare? This is a critical concern, especially when thousands of businesses rely on these firms for essential services.

The broader implications of PE in accounting

Bench’s case reflects a larger trend of PE and VC firms targeting the accounting industry.

These investors see opportunities to disrupt traditional practices through mergers, acquisitions and automation powered by artificial intelligence (AI). This influx of capital aims to consolidate and scale operations, often promising increased efficiency and innovation.

Joe and Heather highlighted both the risks and potential benefits of this trend.

On one hand, PE involvement could bring much-needed capital to accounting firms struggling with succession planning amid a wave of retirements. For firm owners nearing retirement, selling to a PE-backed buyer could offer a lucrative exit strategy.

On the other hand, the aggressive pursuit of EBITDA and cost-efficiency by PE firms may jeopardize the long-term sustainability and client-centric values that form the bedrock of the accounting profession.

The tension between scale and stewardship

The accounting profession’s foundation lies in trust and stewardship. Clients expect their advisors to prioritize their best interests, a principle that may conflict with the profit-driven motives of PE and VC investors. As Heather noted, “We need to ensure we’re partnering with firms that will continue to safeguard our clients’ interests.”

A key concern is whether the shift toward a subscription-based model, akin to those seen in the tech industry, can deliver the same level of personalized service.

While automation and AI have the potential to streamline operations, they cannot replace the human touch needed to provide nuanced advice and foster client relationships. For instance, a business owner using an automated platform may manage compliance effectively but miss out on strategic guidance that only an experienced advisor can offer.

Learning from other industries

Joe compared the accounting industry’s transformation to that of travel agencies.

Once a thriving industry with brick-and-mortar locations, travel agencies largely transitioned online, with platforms like Orbitz and Expedia dominating the market. Yet, for complex trips, travelers still seek the expertise of boutique agencies.

Similarly, in accounting, smaller firms may continue to thrive by offering specialized, high-touch services, even as larger players move toward automation and scalability.

A cautionary tale and a call for purpose

The lesson from Bench’s shutdown is clear: PE and VC firms must align their strategies with the long-term goals of the accounting profession. Without a clear purpose beyond profitability, such investments risk causing more harm than good.

As Joe pointed out, “A man with no purpose devises only mischief.” A purposeful approach, centered on client outcomes and sustainable practices, could transform the industry positively.

Continuous improvement over delayed perfection

In the wake of these changes, continuous improvement emerges as a guiding principle for accounting firms navigating this new landscape. As one social media post aptly noted, “Continuous improvement is better than delayed perfection.” Firms must adapt and evolve while remaining true to their core values.

The rise of PE and VC in the accounting space represents both a challenge and an opportunity. Firms must carefully vet potential buyers, prioritize client outcomes, and embrace innovation without compromising their fiduciary responsibilities.

As the industry evolves, the key to success will be striking a balance between technological advancements and the timeless principles of trust and stewardship.