Value Drivers
Investments in human talent and technology have never been as important for organizations as they are today. In his recent book, “Source Code: My Beginnings,” Bill Gates compares the current era of cloud computing and AI to the PC revolution. In the latter, Gates describes the move from expensive mainframes to PC’s equated to computing becoming “free.” In our current state, Gates notes, “intelligence” is becoming free.
The ability to harness this “free” intelligence requires organizations to upgrade legacy systems with modern, integrated platforms which leverage advanced analytics and AI to extract actionable insights from customer and operational data. Unfortunately, many of the skills required to utilize these tools are new to the workforce and upskilling has been difficult. Combine this with today’s volatile market (which has become even more disruptive than last year), it’s no wonder companies continue to innovate in order to adapt and succeed.
Welcome to the second annual Citrin Cooperman Private Company Performance Report. Citrin Cooperman has been serving and advising middle-market, private companies for over 40 years, and created this survey to discuss what is top of mind for business leaders across the country. This survey covers a multitude of topics and aggregated responses across a wide array of industries with revenue size of under $10 million to over $1 billion. We have also included insights and commentary from some of our industry and service leaders.
Harnessing the power of “free” intelligence requires businesses to upskill and innovate.
Executive Summary
Are we at an inflection point? Revenue and profit growth have slowed across many industries, not because of macroeconomic forces alone. The acceleration of the digital and AI age have created a profound cultural shift.
A Talent Gap:
There is a growing dissonance between the skills employees currently have and the capabilities needed to leverage new technologies effectively.
While tariffs, inflation, and interest rates have created significant headwinds, future-focused CEOs look beyond to two deeper, longer-term challenges.
The Technology Debt:
Many organizations are still operating with outdated systems that limit innovation, working in silos and hindering the customer experience. We are in the midst of a significant transitional phase, where revenue and profit growth may plateau or even worsen. Those who prioritize investing in people and platforms now will be positioned to lead in efficiency, innovation, and customer value in the future.
Driving Present and Future Value Today
Spanning financial performance, business intelligence, technology advancements, cyber and risk management, workforce upskilling, and future outlooks, private company leaders report on the actions, investments, and challenges they face to drive present and future value.
6% Revenue & EBITDA growth declined from last year
1 in 5
Almost 1 in 5 companies experienced significant increases in payroll and direct costs
80% of respondents believe their business systems are well-integrated while only 25% are completely confident in their data accuracy and security
95% 71% have upgraded their ERP systems in the past 5 years say AI has been the most impactful technology enhancement in the past 3 years
Tomorrow
76% believe economic growth will improve in the next 12 months
#2 Upskilling employees ranks #2 in planned investments for the next 2 years
95% In hindsight, almost 95% would have executed their last technology initiative differently
60% #1 upgraded to better leverage technology for growth and value creation
Increased productivity from technology investments is the #1 key to future success
FINANCIAL PERFORMANCE
Growth gains are positive, but are they sustainable?
Revenue Growth
2024 revenue growth looked sound in a vacuum compared to the top line in 2023 but dropped roughly 5% from 2023’s big picture growth numbers. Eighty-six percent of respondents report growth in revenue compared to the previous year. Just under 1 in 3, or 30%, of companies polled say revenue grew significantly. However, these revenue growth numbers were at 92% and 35% last year.
EBITDA Growth
Earnings growth mirrored revenue growth. Eighty-three percent of respondents report some/modest or significant growth in EBITDA (earnings before interest, taxes, depreciation, and amortization). Thirty-one percent say EBITDA grew significantly. The year-to-year revenue and EBITDA performance is good, but not as positive as in last year’s numbers.
Direct and Payroll Costs
The complete revenue and earning stories unfold, in part, with rising costs. Moderate or significant net increases in payroll costs were 76%. Seventy-three percent of respondents say direct costs increased moderately or significantly. At the bottom line, as is often the case, the pressure to grow the top line is compounded by the pressures to manage rising costs.
Focus on Real Estate
The real estate market has been hurting substantially due primarily to the major shifts in demand, interest rates, skyrocketing insurance, and the overall inflationary environment we find ourselves in. Even though gross revenues in certain cases have increased, the effect on the bottom line has fluctuated substantially.
The outcome has been a major bifurcation of supply and demand and in results depending on which side of the equation property owners found themselves on. For example, looking at 2023 versus 2024 overall was on a downward trend, however results couldn’t have been more mixed depending on what sector you are in. As the office sector continued to get inundated, the industrial sector still saw modest gains. Residential real estate saw some modest increases in topline, but bottom lines have struggled due to the economic conditions.
Supply and demand for real estate has always been split as the need for real estate is perpetual, it just shifts substantially based on the related economic conditions and trends. This did not change over the past few years and in turn has driven the fundamentals of each of the subsectors. For instance, as the shift to online shopping trended, retail had a lull, giving rise to the industrial boom. Similarly, as office work style has shifted, so have certain demands for space, including urban versus suburban space, and the ability to work from home. Lastly, demand for housing has also shifted as the need for affordable housing (or lack thereof) has grown.
Looking into the remainder of 2025, as we predict continuing to see major fluctuations, the challenge will be landing on the right side of the equation from a property standpoint, and taking advantage of opportunities that arise as a result of the last several years of a hectic market.
Focus on Restaurants and Hospitality
The restaurant and hospitality industry calmed down a bit from thriving throughout 2022 and 2023’s post-pandemic demand. We’re seeing very mixed results as far as top and bottom-line fluctuations when comparing 2024 to 2023. This variation has been dependent on geography, sub-industry, and customer base. We have major cities in the U.S. like Chicago and Dallas that saw guest counts increasing 14-17%, cities like New York and Los Angeles that were flat, and cities like Miami and Baltimore that were down 6-8%. The industry is heavily impacted by consumer confidence, which has been waving back and forth for more than a year, and we expect that this volatility to continue as a new political administration settles in.
When picking apart the survey results, we noticed that 50% of the larger restaurant and hospitality groups (annual revenue over $500 million) claimed to experience “significant growth”, while only
19% of the smaller groups (annual revenue less than $50 million) claimed similar results. This indicates that the larger groups have done a better job entering thriving markets, capitalizing on 2024’s wave of chain restaurant bankruptcies, and scaling their digital marketing and reservation systems. We also noticed that while 50% of the larger groups saw significant growth in revenue, only 36% of large groups saw significant growth in earnings, which indicates that many respondents generated significant growth in revenue only to maintain their growing operating expenses. We predict this trend will continue, especially as the industry navigates legislative hurdles such as increases to minimum wage, tariffs that will most notably impact products like coffee and wine, workplace safety that can be viewed as impractical, and scattered state and local initiatives related to plastic reduction. Larger groups have the resources to tackle these matters at an early stage and invest in solutions, whereas smaller groups will have to
work a little harder to keep up with compliance while maintaining profitability. Nonetheless, big or small, this industry is comprised of persevering creators who fought for their livelihood 5 short years ago during the COVID-19 pandemic, so while they face some headwinds, innovative and/ or convenient hospitality offerings will continue to drive them forward.
In the second half of 2025, Citrin Cooperman will be releasing its annual restaurant benchmarking study diving into multiple levels of financial performance, margins, and profitability. See last year’s study here and check back later in the year for our 2025 study.
Applied business intelligence tools are progressing.
Top 3 80% reasons for using data analytics are efficiency, profitability improvements, and understanding customer behavior.
feel their business systems are well-integrated and make decisionmaking easy, although financial services respondents disagree, with 33% reporting their systems operate in too many silos or are inaccurate and less actionable. only 25% 56% have complete confidence in the accuracy and security of the critical business data. actively use predesigned business intelligence (BI) data. 63% can generate ad-hoc BI data without IT support. 40% need IT support or manipulation in Excel to access this critical data. The
Intelligent uses of data analytics are progressing for most. However, many are still learning to apply the news tools in smarter ways.
For what reasons are you currently using data analytics?
To improve efficiency (cost and/or timing) of product or service sourcing
To improve the profitability of our products and services
To better understand customer behavior of our products and services
Data Analytics: Current Usage.
The top three current uses of data analytics among respondents are to improve efficiency of product or service sourcing (63%), improve profitability of products (62%), and to better understand buyer behavior (59%). 63% 62% 59% improve efficiency of product or service sourcing improve profitability of products to better understand buyer behavior
Respondents were able to make multiple selections.
Intelligent applications in action.
The level of sophistication in applying business intelligence for forecasting, KPI tracking, product profitability, and more ranges from advanced to somewhat elementary. The good news is that 56% of respondents are actively using pre-designed business intelligence reports and 63% have dynamic ad hoc reports/visualizations with the capability to present data in multiple dimensions, allowing leadership to address changing business demands without IT assistance. While 4 in 10 need to request IT or vendor assistance for new data insights, just as many use the old school practice of downloading data into Excel.
Which of the following statements are true about your C-suite’s use of business intelligence (forecasting, KPIs, product profitability, etc.)
We have dynamic ad-hoc reports/ visualizations with the capability to present the data in multiple dimensions as needed.
We have predesigned static business intelligence (BI) reports/visualizations.
We have developed a series of standard reports from our enterprise resource planning (ERP) system that we run as needed.
We download data to Excel and have our data specialists prepare spreadsheets, pivot tables, and other displays as needed.
We need to request support fom our IT team or service provider each time we have a new insight to be explored.
Nearly 40% of respondents indicate they are either using Excel or need the help of IT for reporting and 54% are still relying on ERP to generate business intelligence, leaving opportunity gaps for many in efficiency, accuracy, and agility.
To close this gap, we are seeing strong interest in FP&A tools like Vena and operational intelligence tools like Power BI/Fabric that are empowering executives to be more autonomous in BI generation, now aided by AI.
FINDINGS TECH IMPROVEMENTS AND INVESTMENTS
While
upgrading archaic systems, the promise of new technology - especially AI- is gaining traction. 95%
have upgraded their ERP systems in the last 5 years.
Only7% report mature AI adoption in their businesses. 94% have invested in CRM technology in the past 12 months, with Salesforce being the most common (39%). 63%
AI Barriers:
the main obstacles to AI/ ML adoption are integration challenges and data quality. 71% say AI has been the most impactful technology on business operations in the last three years.
60% say ERP upgrades are driven by the goal of business growth and value creation.
say if they had a do over, they wish they had invested more in planning, training, and user engagement surrounding tech initiatives.
Technology initiatives with impact: AI leads the field.
Seventy-one percent of respondents say AI related technologies and initiatives had the most business impact over the past three years, followed by cyber/data security initiative (61%) and business intelligence initiatives (58%).
Which technologies/initiatives have had the most impact on your business in the past three years?
Respondents were able to make multiple selections.
CRM updates.Respondents are all in.
In the last 12 months, 94% of private company leaders polled have invested in CRM technology. Nearly 4 in 10 invested in Salesforce, making it the most common platform, 29% invested in Dynamics, and 26% in other CRM systems. Clearly, enhanced customer interactions, improved customer experience, and better business outcomes are priority drivers of business value for private companies.
No, we lack the technology to support these
Have you invested in or implemented CRM technology in the last 12 months?
Yes, I’ve invested in Salesforce
Yes, I’ve invested in Microsoft Dynamics CRM 26% Yes, I’ve invested in another CRM technology 94% of private companies polled have invested in CRM technology
ERP updates. The why and how of how things turned out.
Why are ERP updates being made? Sixty percent of respondents say the primary driver of their most recent ERP upgrades are to more fully leverage technology to achieve business growth and value creation objectives. Eighteen percent say the driver was reducing administrative and technology related costs, and 17% looked to eliminate the risk of aging legacy technology.
What was the primary driver for your most recent ERP system upgrade?
ERP upgrades are driven most by wanting business growth/value creation.
To eliminate risk of aging legacy technology.
I have not had an ERP system upgrade in over 5 years.
To more fully leverage technology to achieve business growth/value creation objectives.
and
Use of Artificial Intelligence
Applying AI tools for business advantage is a work in progress for most, and a learning process for all. Adoptions rates vary, yet strides are being made. While only 2% of respondents do not use AI in their business at all, only a very small percentage consider what they have done to date as “mature adoption.”
Here are the details on the adoption continuum:
actively use Git Hub/Chat GPT (or equivalent) to help prepare business documents, do general research, engage in marketing activities, or to enhance customer communications.
Values
have emerging organizational adoption of AI powered assistants, such as Microsoft Copilot, and are in a learning phase of “what’s possible.”
have organizational adoption of AI powered assistants, like Microsoft Copilot and are actively using it to aggregate business communications data across email, Word, Excel, and PowerPoint files.
have mature AI adoption that includes ERP business data along with all the above uses.
Top Barriers for AI & ML Adoption and Use
Mirroring last year’s study findings, the four most common barriers to AI and ML (machine learning) implementation are:
Integration with existing systems
Quality of data in our systems
Understanding of cost/benefit
Need for experienced employees in AI or ML
It appears that some leaders are stuck in old school ways since 30% say that leadership buy-in is a top barrier to AI or ML implementation.
The significant drop from 30% last year to 5% this year in respondents who have not had an ERP upgrade in the past five years suggests an increased urgency and prioritization of ERP modernization. Several factors could be driving this shift:
AI & Business Intelligence (BI) Requirements – Companies increasingly rely on AI-driven insights and BI tools, which require modern ERP systems capable of integrating realtime analytics, predictive forecasting, and automation.
Digital Transformation
Acceleration – Many organizations are moving toward cloud-based ERP solutions to improve scalability, flexibility, and remote accessibility, a trend accelerated by evolving business needs and competitive pressures.
Eliminating Legacy System
Risks – The need to de-risk outdated systems, which may lack security updates and integration capabilities, has likely influenced more companies to invest in ERP modernization.
Focus on Growth & Value
Creation – Organizations are recognizing the strategic advantage of leveraging ERP systems for operational efficiency, automation, and strategic decision-making.
Regulatory Compliance & Cybersecurity – Increased scrutiny around data protection, compliance mandates, and cybersecurity risks may have forced organizations to upgrade to more secure and compliant ERP platforms.
Focus on Professional Service Organizations Tech Progress
A strong professional services organization can help mitigate risks, improve planning, enhance training, and ensure leadership accountability, all of which are critical factors identified in the survey. Investing in professional services for an ERP implementation can significantly improve outcomes, reduce rework, and drive higher adoption rates.
Need for Better Upfront Planning (63%) – A significant majority feel that investing more in planning would have led to a better outcome. This highlights the importance of structured project management and strategic planning, which professional services organizations excel at.
Importance of Training & EndUser Participation (61%) – A strong implementation partner ensures proper user adoption through training and engagement, reinforcing the value of professional services in ERP rollouts.
Need for a Dedicated Leader to Ensure Objectives Are Met (56%) –Many respondents recognize the importance of leadership and accountability, which professional services teams provide through experienced consultants and project managers.
Few Would Do Nothing Differently (6%) – Only a small percentage are completely satisfied with their implementation, suggesting that most organizations see room for improvement and would benefit from external expertise.
Focus on Manufacturing and Distribution Tech Progress
Manufacturing and distribution companies continue to predict that their most significant investments will come in new technologies, artificial intelligence, and ERP systems (58% of respondents in this year’s survey). This is no surprise as they are also projecting that the most important driving factor in their company’s success in the next 12 months will be these new investments, with stabilizing supply chains and hiring new talent as the next critical factors. We see these factors all being tied together as businesses are facing
retirements from baby boomers (at both skilled and unskilled levels) and rapidly evolving supply chains existing within an everchanging tariff landscape. All these factors are forcing companies to invest in new technology in their manufacturing, operational and finance functions.
New ERP systems are allowing companies more flexibility in supply chains in real time, along with increased visibility and forecasting. AI and predictive analytics can analyze past data, market trends, and external factors to predict future demand more accurately. This is helping businesses plan production schedules and inventory levels more effectively. Adding the unpredictability of tariffs into the mix, we are seeing more and more companies evaluate their supplier relationships and renegotiate key terms and costs. These ERP systems can allow for better data sharing and communication across the supply chain, both for internal forecasting and with their suppliers and customers. Whether businesses are considering changing sourcing of products from Mexico, China, or other sources, the need for real time
information that is flexible will enable faster decision-making and more responsive supply chain operations.
In thinking about what supply chains will look like in the future, we expect AI will play a larger role in helping manufacturers manage costs strategically. Both in simplifying basic tasks through the adoption of Microsoft Copilot and Chat GPT throughout administrative functions, to much more significant AI adoption that will help industrial businesses rapidly think, create prototypes, make process improvements, and analyze narrowly defined problems rapidly, all of which will help with minimizing labor and managing costs.
Overall technological investments in digitizing warehouses and factories are being made to provide automated real-time alerts and analytics for production, and for shop floor and warehouse performance, all of which can help manufacturers pivot in the face of those workforce challenges. Data analytics that feed dashboards with set key performance
indicators can enable management to be more flexible. Management teams that aren’t equipped with real-time dashboards and KPIs will be left behind as things are evolving quickly. Those with the best and most useful information will be able to adapt the fastest and thrive.
Focus on Law Firms Tech Progress
Law firms are at the forefront of adopting AI agents for several compelling reasons. The legal industry, traditionally known for its cautious approach to technology, is now embracing AI to enhance efficiency, accuracy, and client service. Here are some key factors driving this trend:
Efficiency and Productivity
AI agents significantly boost productivity by automating routine tasks such as document drafting, legal research, and case management. These tasks, which typically consume a substantial amount of time, can now be completed faster and with greater precision. This automation enables lawyers to focus on more complex and strategic aspects of their work, thereby enhancing overall productivity.
Enhanced Accuracy and Consistency
Legal work demands high levels of accuracy and consistency. AI agents excel in these areas by leveraging vast databases and sophisticated
algorithms to ensure that legal documents and research are error-free and comprehensive. This reduces the risk of human error and ensures that legal outputs are consistent and reliable.
Cost-Effectiveness
The adoption of AI agents can lead to significant cost savings for law firms. By automating routine tasks, firms can reduce the need for large teams of junior associates and paralegals, thereby lowering operational costs. Additionally, AI agents can handle tasks at scale, making it possible for firms to take on more cases without proportionally increasing their workforce. This scalability is particularly beneficial for smaller firms looking to compete with larger, more established firms.
Competitive Advantage
Early adopters of AI technology in the legal sector gain a competitive edge over their peers. By integrating AI agents into their operations, these firms can offer faster, more accurate, and cost-effective services, attracting more clients and retaining existing ones. The ability to leverage cutting-edge technology also positions these firms as industry leaders, enhancing their reputation and marketability.
Adaptation to Change
As AI technology continues to evolve, law firms that invest in AI agents are better positioned to adapt to future changes in the legal landscape. The integration of AI agents prepares firms for the increasing demand for tech-savvy legal services and ensures they remain relevant in a rapidly changing industry. This forwardthinking approach is crucial for long-term success and sustainability.
Law firms are leading the use of AI agents due to the numerous benefits they offer, including enhanced efficiency, accuracy, cost-effectiveness, competitive advantage, and adaptability to change. Law firms will need to continuously monitor and evaluate the performance of AI tools to ensure they meet the desired standards of accuracy, reliability, and security. This involves regular feedback and updates to AI systems based on evolving legal requirements and technological advancements. By implementing these precautions, law firms can responsibly harness the power of AI while safeguarding client interests and maintaining high ethical standards.
Sources:
AI-Powered Law: LexisNexis CTO Reveals Why Waiting Is Not An Option
Overcoming Barriers to AI Adoption in Law Firms: Strategies for a Smooth Transition - nimbusnext
Generative AI in Legal Services: Key Considerations and Adoption Approaches - Integreon
.
FINDINGS CYBER AND RISK READINESS
How private companies are staying a step ahead of technology-based business risks.
70% acquire and evaluate cloud application providers’ SOC reports regularly to protect client data and ensure other security controls are in place.
86% accept payment cards and go through rigorous compliance processes annually. 54% feel that they have strong abilities to respond and recover from a cybersecurity incident. 53% report having moderate or weak business vulnerability efforts.
Cloud Application Provider System and Organizational Control Checks
Most respondents are ensuring the effectiveness of internal controls for financial reporting, security, and privacy with System and Organization Controls (SOC) reports. Beyond compliance, commitments to quality and security can be a competitive advantage. Nearly a third have more work to do in this area.
Robustness of Business Vulnerability Efforts
Half say their vulnerability managements efforts are strong. They conduct regular social engineering (i.e., phishing) simulations as well as periodic penetration/vulnerability testing. The other half say the robustness of these effort are moderate with occasional or informal efforts. This leaves a significant portion of private companies more vulnerable to cyber risk threats than their peers.
Have you evaluated the security of your cloud application providers?
47%
Strong - we conduct regular social engineering (i.e., phishing) simulations as well as periodic penetration/vulnerability testing 49%
Moderate - we conduct occasional or informal social engineering (i.e., phishing) simulations and penetration/ vulnerability testing
4% 26% 70%
How robust are your businesses’ vulnerability management efforts?
70%
26%
While we acquire SOC reports, we do not evaluate the complementary user entity controls
We acquire and evaluate System and Organization Controls (SOC) reports on an annual basis and address the complementary user entity controls 4%
We do not acquire SOC reports for our cloud application providers
3%
Weak - we do not conduct social engineering (i.e., phishing) simulations or penetration/vulner ability testing
Law Firm Industry
Relying solely on informal and infrequent social phishing simulations can be dangerous for law firms because they leave employees unprepared for increasingly sophisticated and frequent cyberattacks. Without regular, structured social engineering simulation campaigns, staff may fail to recognize malicious emails or websites, exposing sensitive client information and legal data to theft or compromise. Moreover, infrequent simulations don’t allow firms to keep up with evolving phishing tactics that are being enhanced by artificial intelligence, creating gaps in security awareness that hackers can exploit. Regular, formal simulations are necessary for law firms to convert their team into a virtual human firewall and ensure consistent vigilance and mitigate potential risks.
Data Security and Payment Cards
The vast majority of respondents go through a rigorous compliance process on an annual basis to meet payment card industry security standards. A small percentage, 12%, say they have not met industry data security standards or are unsure or not familiar with the requirements. This leaves them exposed to risks.
Strong - we have tested DR/BC/ IR (Disaster Recovery/Business Continuity/Incident Response) plans, backups that are tested for viability and have a robust cyber insurance policy
Moderate - while we have response plans, insurance, and backups in place, they are not fully documented or formally evaluated
No, we have not met the requirements related to PCI DSS 86%
Yes, we go through a rigorous compliance process on an annual basis
If your business accepts payment cards, have you met the requirements related to the Payment Card Industry Data Security Standard (PCI DSS)? 8%
How strong is your ability to respond and recover from a cybersecurity incident?
Cybersecurity Incident Readiness
More than half of respondents say their company’s ability to respond to and recover from a cybersecurity incident is strong. They have tested recovery/ continuity/incident response plans, have backups tested for viability, and have a robust cyber insurance policy. They feel ready for cyber risk. This leaves the other half judging their cyber risk readiness as moderate or weak with room for readiness improvement.
Not having formally documented and evaluated incident response plans, cyber insurance, and backups exposes a business to significant risks during a cyberattack or data breach. Without a clear incident response plan, the organization may struggle to react quickly and efficiently, intensifying the potential impact while extending the costly recovery process. The absence of cyber insurance could lead to devastating financial losses, such as recovery costs, legal fees, forensics, and fines may not be covered. Additionally, lacking reliable backups can result in the permanent loss of critical data, crippling operations and harming the firm’s reputation. Formal documentation and regular evaluations ensure preparedness and mitigate the impacts of a cyber event.
FINDINGS WORKFORCE CHALLENGES
The
hard work of closing the workforce digital skills gap continues. 34%
report significant progress in establishing upskilling programs that develop technical and digital skills.
63%
report some or very little progress in establishing upskilling programs that develop technical and digital skills. 65% of companies still offer hybrid or remote work to enhance employee satisfaction, productivity, and retention.
55+%
rely on training and continuous learning as the top internal skills gap solution.
Nearly 1 in 5 or 17% expect to resolve the lions’ share of the skills gap from hiring outside the organization.
Sourcing upskilling solutions outside the organization
Eight in ten private companies (83%) believe hiring from outside the organization can resolve up to half of the skills gap challenge. The remaining 17% say they expect more than half of the problem to be solved with outside hiring.
What percentage of the skills gap in your organization do you expect to resolve from hiring outside the organization?
Closing the skills gap with outsourcing. The survey shows companies that invest in a more mature finance and accounting function tend to have a greater focus on upskilling digital and technical skills. As technology and AI continue to play a larger role in today’s work environment, more rote tasks are being automated and the emphasis shifts to more value-add and higher-level responsibilities. Upskilling can be achieved through internal training or augmenting the existing backoffice with internal outsourced support, who often have a higher level of technical skill.
Industries that have more technical expertise in their back office, like manufacturing and distribution factors including cost accounting, product segmentation, and gross margin analysis, will be more inclined to focus on upskilling. Industries that are more transactional in nature, like real estate, will likely focus more on automation.
There continues to be a growing trend in outsourcing as companies see the value of utilizing fractional support. Not only does outsourcing provide companies with more flexibility in today’s uncertain economic
environment, it provides a high level of technical expertise, opportunities to upskill in-house employees, and provide stability in an area (finance and accounting) that is prone to turnover. Larger companies with more mature finance and accounting functions have already been using outsourcing as an option and have the luxury of investing more in technology and automation. Closely held and mid-size companies are now turning to outsourcing support at a greater rate to support growth and improve their back-office function.
With the increase in interest rates, private equity has often turned to smaller deals, with a less sophisticated back-office. Post-close, there is then a need to stand up the acquired companies onto the existing platform, usually a more complex ERP, and other post transaction support (purchase price allocation, opening balance sheet, audit support, establish a timely month-end close, etc). Private equity is turning to outsourced solutions to support these posttransaction responsibilities.
FINDINGS FUTURE OUTLOOK
Driving future value presently: actions and plans with an eye on the economy
59% launched new products or services to create value in the past three years.
of businesses indicate the potential sale of their business in the next 3 years. 58% expect to invest in technology including smart infrastructure, cloud computing, edge computing and AI in the next two years. 67% of businesses expect economic improvement over the next 12 months. 44% say tech investments are most critical to company success in the next two years.
Top ways to maximize company value
for a potential sale include the ability to report profitability by product/service (34%) and organization structure/talent (32%).
Value creation through innovation: past actions, future intentions
The top two actions private companies have taken in the past three years to create value are the launching of new products and services (59%) and the extension of operations to new territories (52%). Other actions of note with high response rates are the forming of strategic alliances, engaging in mergers and acquisitions, and outsourcing of functions to third parties.
Which of the following actions have you taken in the past 3 years to create value?
The most common future value creation investments foreseen in the next two years involve technology and, as we saw earlier in our report, the workforce’s upskilling efforts that go hand in hand with technological advancements.
What type of investments do you plan on making in the next 2 years?
Economic outlook and success drivers
Seventy-five percent of respondents expect economic conditions to improve over the next 12 months. Importantly, some of the drivers are things leaders can affect, like productivity through technological investments. Others are out of their control, like the regulatory environment.
75% of businesses expect economic conditions to improve over the next 12 months
Do you believe economic growth in your industry will improve, stay the same, or decline over the next 12 months?
Which factors are critical to your company’s success in the next 2 years?
Mergers & Acquisitions and Maximizing Company Value for a Transaction
With half of our private company respondents saying they are definitely or probably considering the sale of their business, it is interesting to note what they believe will drive company value for a potential sale. Whether or not they are considering a sale, leaders say these areas require upgrading to maximize value. upgrades in organizational structure/talent
34% upgrades in ability to report profitability by product and/or service
30% upgrades in financial reporting
Focus on Value Creation
Value creation is about increasing the overall value of a product, service, or business through the use of technology, innovation, alliances, improved processes, new product or service offerings, and/or mergers and acquisitions.
Working with our clients who are building their businesses and looking to create value, whether to sell their business, position themselves to buy a business or increase the overall value of their investments gives us a unique perspective on how this value is created. Value creation is an investment that can have major returns if executed well.
Historically, we have seen our clients invest in growing new territories as a growth strategy, especially for smaller companies, whereas larger corporations have relied on mergers and acquisitions to create synergistic value.
With the shortage of financial operating professionals – post pandemic, outsourcing of the finance function for many industries has led to improved value, especially in the financial services, real estate, and technology sectors. For the manufacturers and distributors, introducing new products to attract and retain customers has been critical to sustain and create value.
Looking to the future clients are focusing on leveraging technology in an even more intentional way than ever before to create and grow value for their businesses, employees, customers, and clients.
Our largest clients are still very focused on mergers and acquisitions but intend to use technology, including AI solutions, to improve and create value for their shareholders and investors. Whereas using mergers and acquisitions to create value is less of a strategy for lower/middle-market firms. Technology efficiencies and tools are the single largest investment trend for middle-market and small companies. This is across all industries and geographies. Improving talent and personnel skillsets is also a focus of our clients to create more value by leveraging their human capital more effectively.
FINDINGS FULL METHODOLOGY AND DEMOGRAPHICS
Method & Demographics
This survey was conducted online in conjunction with the research arm of FINN Partners in February 2025. Respondents had to be senior leaders (C-level, owners, etc.) of privately held or private equity owned companies generating $10M in annual revenue or more. A total of 1,000 respondents took the survey across a wide array of industries.
ABOUT OUR CONTRIBUTORS
Thomas Porricelli. Tom is a partner with over a decade of specialized experience providing accounting and advisory services to technology and media companies. As coleader of Citrin Cooperman’s Technology Industry Practice, he leverages his deep expertise to deliver highly tailored, strategic solutions that address the unique challenges of clients in this dynamic sector.
Kevin Ricci. Kevin is a partner and co-leader of the firm’s Internal Audit, IT Audit, and Cybersecurity Practice. He has over 30 years of extensive experience in providing technology and cybersecurity services including consulting, security assessments, cybersecurity awareness training, fractional CISO, project management, data analysis, and compliance services including PCI DSS, for which he is a Qualified Security Assessor (QSA).
Mandeep Trivedi. Mandeep is the firm’s managing partner for the Valuation and Forensic Services Practice. As the leader of the VFS team, she brings more than 23 years of experience to complex business valuations and financial analysis. She works with clients in a diverse range of industry verticals, including hedge funds and other alternative investment vehicles, technology, software development and licensing, entertainment, construction, staffing, hospitality and restaurants, and medical and dental practices, as well as a broad variety of service, manufacturing, and wholesale distribution companies.
Jory Weissman. Jory is a partner and an experienced professional with over 25 years in the technology industry, consulting, designing, selling, supporting, and implementing solutions across a variety of technology platforms and applications. His thirst for learning and his practical industry experience have given him an insider’s perspective into thousands of businesses, including manufacturers and distributors, the industrial, food and beverage, and CPG sectors, financial services firms, and countless other niche businesses and processes.
Michael Zyborowicz. Mike is the managing partner of the firm’s Business Process Outsourcing Practice and has over twenty years of accounting and business consulting experience. The Business Process Outsourcing (BPO) Practice provides backoffice services that improve decision-making, enhance control, and offer a cost-efficient solution to private, lower to middle-market companies. BPO clients receive in-depth and comprehensive consulting services that include timely and accurate periodend closes, profitability/margin analysis, business planning strategies, and decision support tools to enable management to navigate uncertain times and make informed decisions. During a time when skilled labor is at a premium and technology is changing faster than ever, the BPO group provides a seamless integration of talented professionals.
“Citrin Cooperman” is the brand under which Citrin Cooperman & Company, LLP, a licensed independent CPA firm, and Citrin Cooperman Advisors LLC serve clients’ business needs. The two firms operate as separate legal entities in an alternative practice structure. The entities of Citrin Cooperman & Company, LLP and Citrin Cooperman Advisors LLC are independent member firms of the Moore North America, Inc. (MNA) Association, which is itself a regional member of Moore Global Network Limited (MGNL). All the firms associated with MNA are independently owned and managed entities. Their membership in, or association with, MNA should not be construed as constituting or implying any partnership between them. Published 2025.
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