By Christian Koch Members What private equity buying up accounting firms means for the industry and employees 7 Apr 2026 Increasing numbers of accountancy practices are considering selling to private equity, so we assess the pros and cons for firms. In recent years, UK accountancy firms have been prime targets for private equity (PE) firms. In fact, nearly nine out of 10 UK accountancy firms (86% of respondents) have been approached by PE houses, according to a survey from law firm Kingsley Napley last year. The buying frenzy has driven up valuations across the industry. PE can be an attractive option for smaller firms. AI and Making Tax Digital (MTD) are forcing many to think about upgrading their tech systems, and private equity offers something of a lifeline by providing enough capital to upgrade without the need for bank loans or partner contributions. Perhaps it isn’t surprising nearly half (46%) of accounting firms surveyed by Kingsley Napley said they’re “open to” PE investment. Historically, PE investment was concentrated in industries such as tech or healthcare. By 2022 the trend was taking off in accounting. It’s a global phenomenon too: over 1,000 accounting firms worldwide have been impacted by PE investments according to the International Federation of Accountants. However, not every deal succeeds. In February, the sale of UK accounting firm Xeinadin collapsed after it failed to get bids for its £1bn-plus asking price. “The market has certainly matured since last summer,” says Julie Matheson, a partner in Kingsley Napley’s regulatory team. “Investor appetite remains robust [but] the emphasis seems to be less on indiscriminate buying and pure growth, and more on acquiring quality targets with demonstrable revenue streams.” Which major accounting firms have private equity backing? Azets Since 2016, Azets has grown rapidly, acquiring over 100 smaller firms. The expansion was partly funded by PE firms PAI Partners and Hg, each holding co-controlling stakes. Grant Thornton PE firm Cinven bought a majority 60% stake in the accounting firm in April last year. It was the largest external equity investment in a UK professional services firm, reportedly boosting Grant Thornton’s valuation to the tune of £1.5bn. Cooper Parry Cooper Parry is one of the UK’s fastest-growing accountancy firms – something made possible thanks to investment from Waterland in 2022, then US-based Lee Equity Partners two years later. Their turnover quadrupled to £250m in just a few years. Moore Kingston Smith Waterland was also behind the backing of the top 10 accounting firm in 2023. Dains Accountants The 100-year-old Birmingham-based firm has expanded into London and south-east England thanks to PE investment from IK Partners in 2024. Why are small practices attractive to private equity? Put simply, it’s because they think accounting firms are undervalued-but-profitable ventures. PE usually works by investing in overlooked businesses, injecting them with enough capital to help strengthen their balance sheets, before selling the firm for a profit. Matheson has identified several characteristics which make small practices appealing to PE investors: Strong recurring revenue: investors prefer firms with healthy cashflows. Owner-managed firms: making it easier to implement operational changes. Diverse high-quality clients: investors favour firms with clients in strong, growing sectors. Tech-readiness: firms using cloud software are easier to modernise and integrate with AI tools. Well-run operations: think practices with clear processes and a clean regulatory record. How does private equity benefit accountancy firms? Practices can use the funds to invest in new tech Modernising tech infrastructure is a priority for many accounting firms due to AI and MTD. However, many smaller practices lack the capital to make these upgrades, because many pay out most of their annual profits to partners. Says Matheson, “Capital injection for smaller firms allows them to undertake technology transformation that would otherwise take years to self-fund. Whether this is implementing cloud-based practice management systems, improving cybersecurity infrastructure, or rolling out AI tools, PE-backed firms can afford significant upgrades to their systems that smaller practices simply can’t justify.” Operational know-how “PE firms also bring professional management expertise,” says Matheson. “Acquisition of talent is often easier and can be led by strategy rather than simply organic growth.” They can attract bigger clients (and charge higher fees) High-profile, high-paying organisations have traditionally turned to the big four for their accounts and audits. However, PE investment gives smaller firms the resources to challenge larger players. As a result, this also means they can command higher fees. A nice, comfortable exit strategy Kingsley Napley’s research found that older partnerships were most likely to be swayed by PE investment. Matheson believes this could be down to succession planning. “Senior partners approaching retirement don’t often have the internal successors with enough capital to buy them out,” she says. “However, PE investment offers immediate liquidity. Older partners may therefore prefer guaranteed exit proceeds over uncertain future partnership profits. The administrative burden of managing a practice might also become less appealing near retirement.” What are the risks and challenges of private equity investment? Investors might want quick short-term gains PE firms often seek rapid returns on their investments in a matter of years, or even months. They may also set high-bar performance targets for the practice, such as annual revenue growth and EBITDA margin improvement. This pressure for fast growth can take a toll on staff stress levels. Client relationships might suffer As with any acquisition, partners may leave, taking clients with them. When this has happened in other industries, such as veterinary practices or care homes, reports have suggested PE investment caused a drop customer service. “Investor pressure for returns might influence client management,” says Matheson. “Clients might notice an increased focus on fee recovery, more structured engagement letters, or less tolerance for scope creep. The risk is perhaps greater for the long-standing, lower-margin clients, who might face fee hikes or service reductions in order to improve portfolio profitability for investors.” Matheson also notes “clients could also experience improved and more efficient service through better technology and operating systems.” Governance changes “One of the first things to change [post-acquisition] is governance structure,” says Matheson. “Traditional partnership decision-making by consensus under the limited liability partnership (LLP) model is likely to give way to formal board structures with independent directors and clear reporting lines. While the regulatory regime still requires audit-qualified accountants to retain control, ownership or voting rights of audit firms, there will inevitably be changes to economic rights and the degree of oversight that a PE firm might have over the partnership (if it still exists).” Some partners could even end up with ‘employee’ status or become minority shareholders, says Matheson. “This obviously has implications for the power and control dynamic.” Cultural adjustment “Firms can find cultural adjustment to be a significant challenge,” says Matheson. “Smaller firms – where partners might be more accustomed to autonomy – may especially struggle with new, more formalized corporate governance and accountability structures.” How does private equity investment affect employees and trainees? Fuelled by fresh investment, PE-backed accounting firms have been wooing senior talent with generous packages. As such, executive-level talent is in demand. Last year, Grant Thornton hired more than 100 new partners and directors as part of its plans to expand following its investment from Cinven. Employees at PE-supported businesses can expect increased funding for training, less admin (thanks to new tech investments) and more sophisticated HR, according to Matheson. However, staff may also feel pressure to hit new performance metrics set by PE firms. Redundancies are another risk, especially when roles are duplicated across firms post-acquisition. The route to the top for trainees may look different, too. “Historically there may have been a clear pathway from trainee to partner, whereas this is fundamentally altered in the corporate hierarchy/salaried model that PE firms usually bring in,” says Matheson. Due diligence checklist If your firm is approached a PE firm, Matheson suggests asking the following questions: What is the investor’s track record in professional services? How have their previous accountancy investments performed? What is their typical hold period and exit strategy? How much operational control will they exert? What are the proposed governance structures and decision-making processes? What are their growth expectations, and are they realistic given your market position? Are you ready for the cultural shift that PE management brings? Christian Koch is an award-winning journalist/editor who has written for the Evening Standard, Sunday Times, Guardian, Telegraph, The Independent, Q, The Face and Metro. He's also written about business for Accounting Technician, 20 and Director, where he is contributing editor.