Act I · Chapter 12
Appendix: evidence by lever, glossary, every source
Act I · Chapter 12 of 12Appendix8 min
A. Evidence by lever, Act I
The grade is the best evidence for the mechanism, not for any number. "Firm's own" means no external range is used and the card says so. "Carried" means the source was opened and checked for the software edition in September 2026 and the same mechanism applies.
| ID | Lever | Grade | Anchor evidence | Status before publication |
|---|---|---|---|---|
| P1 | Work decomposition audit | Weak (investor-reported) / Strong (method) | TechCrunch Sept 2025: GC 30–50% target; Titan pilot 38% | Opened |
| P2 | Revenue quality and pricing structure | Medium (sector) / Strong (firm's invoices) | Ignition 2025 (fixed 54%, hourly <4%; n=219 vendor clients); FOCUS Q2 2026 index; Lincoln Q2 2026 private series (11.9x EV/EBITDA); Fortune June 2025 | Ignition opened via Going Concern; Lincoln opened; FOCUS PDF to open |
| P3 | Relationship and key-person map | Weak (no sector data) | FAR056, May 12 2026 (study in progress, opened); AlixPartners via Stanton Chase (links a PDF, report unnamed) | AlixPartners PDF to open |
| P4 | Client contract and data-rights review | Medium (tooling, carried) | Harvey/Bridgewater; Hebbia | Carried |
| P5 | Regulatory and licensing constraints | Strong (statutes) | State CPA ownership rules; ABA Model Rule 5.4 and state equivalents; Arizona ABS; Utah sandbox | Cite rule text per jurisdiction |
| P6 | Platform-fit assessment | Weak (no outcomes) / Strong (method) | SurgeONE/MGL 2025; Fortreum/Kovr.AI 2026 | Press releases to open |
| P7 | Conversion underwriting | Strong (adoption) / Weak (outcomes) | KPMG Mar 2026; Bain/StepStone Mar 2026; Caritas map | Carried; Caritas opened |
| P8 | The hundred-day foundation | Strong (mechanism, carried) | Software edition P7 | Carried |
| P9 | Pricing conversion at close | Medium (sector) | Ignition 2025 (opened via Going Concern); FT/PwC Mar 2026 | FT original to open |
| R1 | Pricing model conversion | Medium (sector) | Ignition; FT/PwC; Reinvention Academy 2026 | As above |
| R2 | Platform-delivered service line | Weak (no outcomes) | Eudia/Johnson Hana; SurgeONE/MGL | Press releases |
| R3 | Scope expansion | Weak (analogue) | Software edition R4 (Vista) | Carried |
| R4 | Book retention | Strong (targeting rule) / Weak (sector) | Ascarza 2018; FAR grant | Carried; opened |
| R5 | Throughput as revenue | Weak / Medium (E) | Premier Inc. survey, 516 hospitals, 54.3% of private-payer denials overturned (via Becker's) | Opened via Becker's; Premier PDF to open |
| R6 | Down-market entry | Weak (argued) | Sequoia, Bek, Mar 5 2026 (market sizing; ratio and TAMs are the essay's own, unsourced) | Opened |
| R7 | New-client acquisition | Strong (headwind) / Weak (fix), carried | Ahrefs Feb 2026; SEL June 2026 | Carried |
| R8 | Episodic to continuous | Medium (direction) / Weak (outcomes) | FT/PwC; SurgeONE | As above |
| R9 | Cross-sell across the roll-up | Weak (argued); Strong cautionary comp | Bending Spoons 6-K Aug 2026 | Opened |
| R10 | Data and benchmark products | Weak | Argued | None |
| R11 | Premium human tier | Weak (argued) | Going Concern editorial note on fixed fees with hour metrics | Opened |
| D1 | Work-unit automation | Medium (named vendor cases) | Thomson Reuters Nov 2025 (CLH; Oberlander); Eudia client claims | Opened |
| D2 | Delivery pyramid reshape | Medium (independent survey) | Citi/Hildebrandt Dec 11 2025 press release (200-firm database; anticipates senior leverage shift) + Law360 for percentages | Press release opened; full advisory to open |
| D3 | Review and QA | Strong (regulator, negative finding) | GAO-26-109116 (opened: "few independent studies"; vendor 95% accuracy claim flagged as vendor); MGMA Oct 2026; court sanctions tracker | Tracker to cite |
| D4 | Knowledge capture | Weak (argued) / Strong (precondition) | Eudia strategy statements | Opened |
| D5 | Subcontractor elimination | Firm's own | — | — |
| D6 | Rework reduction | Firm's own / Medium (E) | Experian/Eskenazi 38% | Case page to open |
| D7 | Platform and inference cost | Strong (price trend) / Medium (practice), carried | Epoch AI; operator practice | Carried |
| D8 | Utilization to throughput | Medium (mechanism) | Fortune June 2025; Going Concern | Opened |
| O1 | BD and proposals | Weak / Medium (analogue) | Software edition O4 | Carried |
| O2 | Marketing production | Medium, carried | Software edition O5 | Carried |
| O3 | Recruiting reshaped | Medium, carried | Software edition O10 | Carried |
| O4 | Finance | Strong (benchmark) / Medium, carried | Software edition O6 | Carried |
| O5 | Legal and contracting | Strong (trial) / Medium, carried | Software edition O8 | Carried |
| O6 | Systems consolidation | Strong (waste) / Medium, carried | Software edition O12 | Carried |
| O7 | Partner compensation | Weak (outcomes) / Strong (mechanism) | Fortune; Whitman PE Summit 2025 | Opened; deck snippet |
| O8 | Shared services | Weak; Strong cautionary comp | Bending Spoons 6-K | Opened |
| O9 | Executive operating system | Strong (mechanism), carried | FTI June 2026; Gartner June 2025 | Carried |
| O10 | G&A benchmark closure | Strong, carried | Hackett July 2026 | Carried |
| C1 | WIP and unbilled | Firm's own | — | — |
| C2 | Collections and DSO | Strong (benchmark), carried | APQC | Carried |
| C3 | Subscription in advance | Medium (direction) / Firm's own | Ignition (31% deposit, 13% full) | Report to open |
| X1 | Professional liability | Strong (hazard) / Weak (cost) | GAO (opened); court sanctions | Tracker to cite |
| X2 | Licensed sign-off | Strong (rules) | As P5; IESBA workstream launched Mar 26 2026 after Staff Alert Jul 31 2025 | IESBA opened |
| X3 | Data governance | Strong (standards), carried | Software edition X3 | Carried |
| X4 | Security posture | Medium, carried | Software edition X1 | Carried |
| X5 | Key-person retention | Weak (no sector data) | FAR grant; AlixPartners via Stanton Chase | As P3 |
| X6 | Exit readiness | Strong (comps) / Weak (premium) | Fortune comps; FOCUS; Siblis; Antagor/Caritas | Siblis to open; comps to re-verify |
| B1 | Target sourcing | Medium (market data) | FOCUS deal counts; IFAC via Going Concern; Antagor | IFAC to open |
| B2 | Integration playbook | Weak (no data) | Practitioner commentary | — |
| B3 | Platform standardization | Weak (argued) / Strong (precondition) | — | — |
| B4 | Continuous diligence | Weak, carried | Software edition X5 | Carried |
| B5 | Pacing and kill criteria | Strong (one return study) | BCG/HHL 2016 via CapitalPad | BCG PDF to open |
Count: 9 + 11 + 8 + 10 + 3 + 6 + 5 = 52 rows above the P, R, D, O, C, X and B headers. Count them again before the total is quoted.
B. Glossary
Act I / Act II. The conversion of a services firm (Act I, 52 levers) and the running of the software company it becomes (Act II, the software edition's 48 levers, prefixed II-).
Alternative practice structure (APS). The arrangement, forced by CPA-ownership rules, in which attest work sits in a CPA-owned firm and other services in a separately owned company.
Codifiable / judgment / reserved. P1's three tags for a unit of work: deliverable by the platform with review; dependent on experience not yet written down; required by law or accreditation to be performed or signed by a licensed human.
Conversion ceiling. The codifiable share of delivery cost; the bound on every D-group lever.
Conversion scorecard. The ten metrics a board and a sponsor run the thesis on; defined in the hub.
Deploy / Convert / Compound. Act I's horizons. Deploy: tooling under existing people, raising margin on today's work. Convert: the delivery model rebuilt. Compound: the platform as growth engine. Act II keeps the software edition's Deploy / Reshape / Invent.
Episodic / continuous. Work sold as an engagement with a start and an end (an annual assessment) versus work delivered as an always-on service (monitoring) with the engagement's output as a by-product.
Evidence grades. Strong: independent study, regulator, statute, primary filing or primary press release with method. Medium: named-customer vendor case, or independent figure via a secondary outlet. Weak: unnamed vendor claim, or argued mechanism. Firm's own: no external range used.
Kill criterion / kill date. The number and the date at which a lever stops if it has not moved its line.
Lever. An intervention an owner can make that moves a specific line by a mechanism stated in a sentence and checked in a quarter.
Realization / utilization. Billed as a share of recorded hours; billable as a share of available hours. The two metrics a services firm manages to, retired by D8.
Register. One line per lever from model to exit; the board pack.
Re-rating. The exit multiple moving from a services basis toward a software basis; modelled as a separate bet (P7) and argued, not assumed (X6).
Span of review. Units reviewed per reviewer per period; the ratio that replaces leverage in a platform-delivered firm.
Unit (of work). The smallest piece of a service that can be specified, delivered, reviewed and counted; the denominator of D1, D3, D6 and D7.
C. Every source opened for Act I (November 2026)
Opened and read: Axial/FOCUS Q2 2026 (https://www.axial.net/?p=71762) · TechCrunch, Loizos, 2025-09-28 (https://techcrunch.com/2025/09/28/the-ai-services-transformation-may-be-harder-than-vcs-think/) · Caritas Ventures market map (https://caritas.ventures/ai-rollup-market-map/) · Antagor Capital, "What is an AI rollup?" (https://www.antagorcapital.com/insights/what-is-an-ai-rollup) · Fortune, Benaich and Mrkšić, 2025-06-27 (https://fortune.com/2025/06/27/ai-rollup-investment-strategy/) · Thomson Reuters press release, 2025-11-05 · Law360 Pulse on Citi/Hildebrandt, 2025-12-15 · MGMA Stat, 2026-10-20 · CapitalPad buy-and-build statistics (BCG/HHL) · Star Tribune on Renovo, 2025-11-14 · Bending Spoons Q2 2026 6-K exhibit (SEC) · Gibson Dunn on Long Lake notes, 2026-07-13.
Seen in search results only, to be opened before publication: Lincoln International Q2 2026 PDF · Siblis Research multiples · Ignition 2025 benchmark (via Going Concern and Insightful Accountant) · The Logic on FT/PwC, 2026-03-19 · Sequoia, "Services: The New Software" · IFAC PE data (via Going Concern) · Jupid on PE in accounting (KPMG CF) · CPA Trendlines on SuperReturn/IESBA · University of Amsterdam FAR grant · Stanton Chase white paper (AlixPartners) · Whitman PE Summit 2025 deck · Experian/Eskenazi case · Eudia and Johnson Hana releases; Law Society Gazette · SurgeONE/MGL (Mergr; PR) · Fortreum/Kovr.AI · Reinvention Academy fees survey · CNBC 2026-06-08 · Capital & Clarity and AI-Native CFO newsletters (framing only; not cited for figures).
Carried from the software edition (opened September 2026): Meritech Software Pulse 2026-04-09 · Humlum and Vestergaard NBER 33777 · FTI 2026 Value Creation Index · Bain/StepStone 2026 · McKinsey 2026-06-23 · Hackett 2026-07-27 · KPMG Mar 2026 · Harvey; Hebbia · Ascarza 2018 · Ahrefs; Search Engine Land · Vista portfolio data · Epoch AI · APQC · Brex/Numeric · Schwarcz et al.; Ironclad; CLOC · Zylo; Forrester TEI of Zip · Paradox · Jasper/WalkMe · Gartner 2025-06-25.
Opened 2026-11-09 (second pass): GAO-26-109116 · Lincoln Q2 2026 PDF · Sequoia essay · Ignition 2025 (via Going Concern; n=219) · FAR056 page · Stanton Chase white paper · Citi/Hildebrandt press release (BusinessWire, Dec 11 2025) · CBIZ/Grant Thornton Advisors release (GlobeNewswire, Jul 29 2026: $5B EV, $55/share, 54% premium to 30-day VWAP, close expected Q4 2026) · Premier Inc. denial survey (via Becker's; 516 hospitals; 54.3% overturned) · Thrive Holdings raise (NYT first, TechCrunch confirmed, Aug 12 2026) · HBR workslop (Sept 22 2025; 1,150 US desk workers; ~40% received; 1h56m per instance; $186/month; self-reported time) · IESBA workstream (Mar 26 2026) and Staff Alert (Jul 31 2025).
Still to open before publication: BCG/HHL "The Power of Buy and Build" (2016) PDF · FOCUS Q2 2026 PDF · the full Citi/Hildebrandt advisory (for the exact percentages) · FT on PwC subscriptions · IFAC PE report · KPMG Corporate Finance on PE in accounting · The CPA Journal, April 2026 · AlixPartners CEO-turnover PDF · Humlum and Vestergaard March 2026 revision · Premier Inc. report PDF · Damien Charlotin's AI-hallucination case tracker · state CPA ownership rules and ABA Model Rule 5.4 texts · Crete/Current Reuters primary · Experian/Eskenazi case page · Pierson Ferdinand's own statements.
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