Is private equity’s vacuuming of accountancy firms risking sector implosion?

This is the question I was asked when interviewed for a recent article published in Raconteur. It follows a spate of high-profile private equity (PE) acquisitions in recent years that not only grabbed the headlines but also prompted many observers and commentators to consider the wider implications for the accountancy profession should this trend – referred to as an “accountancy binge” – continue.

Perhaps the highest profile example is that of Grant Thornton – the UK’s sixth largest accountancy firm. It was acquired in a deal worth £1.5 billion, and this is not an isolated case. According to a report, a quarter (27%) of the top 60 accountancy firms in the UK are already recipients of PE funding, whilst almost half (46%) are said to be open to PE investment (Kingsley Napley survey). 

For PE firms, the appeal of these accountancy practices is clear: most are well-established with a loyal client base that ensures regular revenue streams, they have good reputations that make them a magnet for new customers, and they tend to have high operational leverage allowing profits to rise significantly faster with sales once their fixed liabilities are covered.

However, there is a balance that needs to be achieved between satisfying the profit-first imperative of the private equity firms and the ethical and cultural needs of both the firm and the way in which clients perceive the accountancy sector as a whole. I explained to Raconteur:

“Sell to private equity and suddenly senior partners get a huge payday. What comes after is a very different game – one that often reshapes the firm’s priorities, incentives and culture.”

When firms are leveraged and under pressure to meet aggressive financial targets with the aim of achieving fast growth, even faster returns, and fully maximised profits, the focus can shift dangerously away from client service and audit quality. This inevitably leads to corners being cut – all of which could “[compromise] internal culture and quality of work.”

Talent drain and weakened succession planning

My fear, as I explained in the article, is that this “could lead to a market crash in the next five to 10 years as staff and clients depart.” Indeed, PE firms frequently implement aggressive restructuring plans to reduce expenditure. 

PE firms also assume control of a significant proportion of the accountancy firm’s existing equity. That’s a problem for the long-term health of the practice: Speaking to Raconteur, I argued that if “[there is] no longer a partnership track in the traditional sense, how do you attract and retain top talent when the carrot disappears?”

Accountancy is a people-first industry and when staff costs are targeted, firms risk haemorrhaging the experienced individuals whose knowledge critically underpins both client relationships and compliance quality. Maintaining a compliant and high-performing workforce becomes significantly more challenging when the internal culture shifts from one adhering to a partnership ethos to one of corporate ownership driven by commercial-only outcomes. “At the end of the day, they [PE firms] are there to make money,” I told Raconteur.

Not left unchecked

The UK regulators are keeping a careful eye on the increasing ‘financialisation’ of the industry. One such body is the Financial Reporting Council (FRC). In a letter published in late 2024, the FRC stated:

“The FRC’s role is to protect the public interest and support growth. We are primarily concerned with outcomes and behaviours by audit firms such as delivering high quality audits, upholding high standards of ethical conduct, and fostering a culture towards always acting with the public interest in mind.”

If the pursuit of profit among PE-backed firms is perceived to compromise professional standards, regulatory intervention will become unavoidable – and rightly so. Ultimately, the so-called ‘accountancy binge’ driven by private equity firms is testing the foundational pillars of the profession to the limit. Although this route does deliver significant capital and operational discipline, the short-term focus clashes fundamentally with the long-term, trust-based relationships that define the accountancy profession. 

The challenge, therefore, is to figure out a way to balance investor demands with professional integrity. Getting this balance wrong risks an implosion that could damage the reputation of the entire sector.

Gerald Edelman is among the top 60 accountancy firms in the UK. It is also a certified B Corporation – a business that, in the words of our CEO, Carl Lundberg, is “committed to changing how business operates” and places “positive impact beyond profit.”