In recent years, private equity (PE) firms have been quietly but decisively shifting their focus toward professional services. With an estimated $2.62 trillion in investor funds to spend and many existing deals reaching maturity, firms are on the hunt for fresh opportunities – and the UK’s professional services sector is firmly in their sights.
Armed with record-high levels of dry powder, PE firms are ready to deploy capital at scale. This shift is already reshaping the traditional culture of industries like accountancy, law, and consultancy, with high-profile acquisitions and large-money deals now making headlines. We’ve seen it firsthand, with several of our accountancy clients now owned by private equity firms, and the trend shows no signs of slowing.
But why this sudden interest in professional services? What makes these firms so attractive to investors? And, most importantly, what does it mean for the people working within them? Let’s take a closer look at the forces driving this transformation — and what lies ahead for the sector.
Recent Notable Acquisitions
There have been several significant PE-backed acquisitions that are reshaping the professional services landscape as businesses look to grow and diversify their offerings.
- Evelyn Partners sold its professional services arm to Apax for £700 million, reviving the Smith and Williamson brand and acquiring one of our own insolvency clients in the process – ReSolve Advisory.
- Grant Thornton set to sell a majority stake to buy out group Cinven, potentially valuing the firm at over £1.5 billion, making it a landmark deal for the UK accounting industry.
- Azets, backed by Hg Capital, has grown through a series of mergers across the UK and Europe.
- This year, accounting firm Moore UK merged with specialist hospitality firm WMT and has been officially rebranded as Moore Kingston Smith.
- Meanwhile, the private equity-backed accountancy group Cooper Parry is looking to make its 11th acquisition in two years.
But why is this happening, and what does it mean for the future of professional services?
Why Are Professional Services on PE’s Radar?
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Predictable Revenue Streams
The last decade has been a turbulent time, to say the least, with both economic and political factors making the world of finance a very uncertain place. What makes professional services firms so attractive to investors is their reliability. They have stable, recurring revenue models.
Services like accounting, law, and insolvency advisory are less susceptible to economic swings and better prepared to weather the storm as people need these services no matter what. This makes them a great buy for risk-averse investors and private equity firms looking for safe bets for their investors.
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A Fragmented Market
Many mid-sized accountancy and advisory firms operate in a fragmented space, presenting opportunities for PE firms to consolidate multiple smaller players under a single, more powerful brand. Azets, for example, has executed this strategy masterfully through mergers in the UK and Europe, making it one of Britain’s fastest-growing accountancy firms. This ‘buy-and-build’ approach is what makes professional services so attractive to investors.
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Scalability and Cross-Selling Opportunities
Professional services firms are ripe for scalability, especially tech-forward firms. The surge in uptake of AI and automation technologies has enabled firms to streamline operations, reduce costs, and expand their service offerings. This is where PE firms see serious potential for growth.
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Exit Potential
For private equity investors, it’s all about the exit strategy. With a record number of companies in their portfolios and investor cash, PE firms are now facing a growing backlog of businesses they need to offload. Consolidated, tech-enabled firms with strong, recurring revenue streams are highly sought-after exit candidates.
These firms are well-positioned for future sales to larger PE firms, institutional investors, or even IPOs. As a result, PE-backed firms are aggressively acquiring smaller practices to build out their capabilities, expand their global reach, and increase their valuation for a potential sale, which has been the catalyst for much of the M&A activity in the professional services sector.
However, it’s not all smooth sailing. Regulatory hurdles, particularly in the audit space, present a significant challenge. Restrictions around the separation of audit and advisory services add complexity to deal structuring and compliance.
Grant Thornton’s recent carve-out of its non-audit unit illustrates how regulations can force PE firms to think more creatively about their investment strategies. But it’s not just the complexity of the deal that is changing, with the influx of private equity investors moving in, what effect will this have on business?
The Cultural Shift
We have previously spoken about the importance of cultural fit for lawyers when seeking a new legal role. However, on a more macro scale, how will this shift affect accounting firms and other professional services in terms of their culture? Here are our predictions.
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A Push for Performance
PE investors typically demand high performance and rapid growth, which can create pressure on teams to meet strict targets. While this drive often results in career progression opportunities, it may also lead to burnout and mass staff exodus if not managed correctly.
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Change in Workplace Cultures
Historically, accountancy and professional services have been defined by hierarchical and traditional workplace cultures. The influx of private equity often brings a more corporate, ROI-driven ethos. Firms like Cooper Parry, however, have shown that it’s possible to balance growth ambitions with a vibrant, people-first culture.
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Talent Retention and Recruitment
As firms scale, attracting and retaining talent becomes paramount. Evelyn Partners’ strategic acquisitions, for instance, not only expanded their service offerings but also enhanced their brand as a destination for top-tier talent.
With P.E ownership, remuneration structures can often be flexed during a growth phase which naturally attracts hard to acquire talent. The risk though, is if company performance levels drop and budgets are missed, restructures and role cuts are likely to occur. Timing when to join a P.E backed practice is key.
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Career Advancement
As PE firms continue to acquire and integrate professional services firms, there’s an increasing need for professionals skilled in managing complex transactions and restructurings. The expansion and consolidation of firms will lead to many new roles and career opportunities, especially for those adept at navigating more complex, high-pressure environments.
What’s Next for the Professional Services Sector?
The private equity interest in professional services is far from cooling. We anticipate continued consolidation well into 2025 as firms like Azets and Moore Kingston Smith further solidify their foothold. However, the ultimate success of these ventures will depend on their ability to balance financial objectives with the needs of their people and clients.
These professional services trends provide significant opportunities for career growth and innovation. But it also underscores the need to remain agile and adaptable in a rapidly changing employment landscape.
At Gambit Search, we always keep a close eye on the latest professional services trends and developments, ensuring our clients and candidates are positioned to thrive in this ever-evolving market.
Private equity’s growing influence within the professional services sector is undoubtedly reshaping the industry in a myriad of ways, as we have just discussed. But with it comes both opportunities and challenges.
For professionals in the space, this is an excellent moment to take a step back, assess your career path, and plan how to evolve with the changing market dynamics. Whether this trend is for the better depends on how firms balance growth with cultural integrity, innovation with tradition, and shareholder value with employee satisfaction.
What’s clear is that this is an exciting time for the professional services sector, which holds incredible career opportunities for those who are ready to embrace the change. We are already seeing many amazing opportunities for professionals within the sectors we recruit, as many of our clients are attracting new investment – and it seems to only just be getting started.
Explore New Career Opportunities with Gambit Search
At Gambit Search, we specialise in connecting talented professionals with their dream roles in M&A, insolvency and restructuring, and corporate law. Whether you’re looking to capitalise on the evolving landscape, explore new opportunities, or find a role that better aligns with your career ambitions, we’re here to help.
If you are ready for your next big career move in 2025, then get in touch here or browse our latest job openings.
