A Louisville-based tech startup whose mission is to empower CPA firms with AI-based tools recently was acquired by a large portfolio company.
On July 31, it was announced that Sentient Solutions for Accounting had been acquired by Ascend, a Washington-D.C.-area-based portfolio company for Alpine Investors, which has approximately $8 billion in assets under management.
Terms of the deal, which was finalized on July 26, were not disclosed. It was initially signed earlier in the month.
Sentient has approximately 60 CPA client firms nationwide, typically consisting of 40 to 150 employees.
Before the merger went through, Sentient had approximately 160 employees spread across the U.S., Mexico and India, the latter of which has the majority at approximately 105. The company maintains its 2,500-square-foot headquarters at W. 401 Main St. in Downtown Louisville — and has three employees living in the Louisville metro area, including founder and CEO Venkat Sharma.
Other plans, then boom
As is the case in many M&A narratives, Venkat Sharma, the founder and CEO of Sentient was not looking for a buyer when he was initially approached by Ascend back in October 2022.
In fact, he told me in a recent interview that after starting a friends and family round when the Sentient began in 2019, he was considering an "institutional round" with venture capital firms that would raise $4-5 million.
But there was a shared vision with Ascend, he said, one in which AI-powered tools can help service smaller CPA firms leverage the latest technology in the same way that the top largest accounting firms in the U.S. did.
“The Big Four’ CPA firms [ have access to all kinds of technology and they’ve got a huge presence offshore,” Sharma told me, referencing Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG. “They can really leverage all these advantages as an asset. But once you go below the Big Four and actually below the Big 10, I’d say, they … are technology adverse. They are stuck in the old ways of doing things.”
David Wurtzbacher, Ascend’s founder and CEO, said that his company was drawn to the collective happiness of Sentient’s customer base, when it was doing its due diligence.
“From the beginning, we have promised that we will provide the resources of a large CPA firm to the entrepreneurial, independent local firm,” Wurtzbacher said in a news release. “This acquisition squarely delivers on that promise.”
The release also referred to Sentient as being an “offshore resource for the high-growth partner firms that have joined Ascend’s platform.”
Sentient becomes the fourth partner firm to join Ascend in the last seven months following the acquisitions of Opsahl Dawson of Vancouver, Washington in January; ATKG of San Antonio in May and LMC of New York City in June.
“The company is concurrently making investments in leadership development, talent acquisition, technology and AI, advanced billing methods, and client accounting services,” per the news release.
SaaS product on the rise
For about eight months, Sentient has been selling a Software-as-a-Service (SaaS) called PAM, which is an acronym for “proof and math,” a common term in the CPA world. The platform, which was first developed for internal use as a product for Sentient’s outsourcing, uses AI functionalities to automate the process of reviewing financial statements for audits — without having the traditional strenuous chain of command, going from the junior associate all the way up to a managing partner.
“This one particular product is quite popular now, and we’re essentially focusing on perfecting that,” said Sharma, who added that his company went from zero to 50 buyers of PAM in the last eight months.
Sentient also is working on a related product that will help CPA firms with employee benefit audits by year’s end, he said.
The company has approximately 60 CPA client firms spanning nationwide, typically consisting of 40 to 150 employees.
Sharma, who has called Louisville home for 15 years, founded Sentient in 2019 — six years after founding Advantum Health, named one of our Best Places to Work for 2023, in 2013. He still serves on Advantum’s board.
When Sharma founded Sentient, he did so initially with bookkeeping services as its main focus, before shifting its attention to addressing ongoing convergence issues in the CPA industry caused by rapid improvements in technology.
Although Sentient has been acquired by Ascend, the company will maintain its name and Sharma will remain as CEO. He will, though, take on an additional executive leadership role for Ascend.
