Growing Role of Private Capital: What it Means for Accountants’ Skills?

Private capital is assuming an increasing role in today’s business environments.   More companies, large and small, new and old, are choosing to stay private.

“The trend of companies staying private longer is driven by a combination of financial privacy, control over company direction, ample access to venture capital, regulatory burdens, and the availability of secondary markets.” Why are Companies Staying Private Longer: Expert Analysis on This Growing Trend, Darin Soat, Jun 17, 2024

This is a huge change for financial and accounting skills.  It has always been assumed that going public was the ultimate prize, and being able to prepare a company to comply and sustain those requirements was a highly valuable skill.  The pendulum is swinging in a new direction.   A direction that will place a premium on value creating skills, not external financial reporting skills, and on the quality and insightfulness of internal decision support information and advice, not knowledge of external financial reporting rules and regulations.

There are many articles showing that an increasing quantity of innovations are coming from private companies that can look longer term and are not weighed down by requirements and public scrutiny associated with legal external reporting requirements and the unwarranted significance investors and the investment community place on short term metrics.

I hope venture capitalists and the management of companies choosing to stay private will begin to recognize that the skill set associated with creating financial information targeted toward internal decision support is unique and different.  PACE is really the leader in promoting the principles, knowledge, and skills needed to be a value creation-oriented management accountant with its focus on the long-term strategy and execution across revenue management, managerial costing, and tangible and intangible investment in productive capabilities. 

I'd love to hear your perspective on this view. Will my "hope" be realized?

Larry White, CMA, CSCA, CFM