As the first half of 2025 draws to a close, we can certainly confirm that, in terms of announcements and deal activity, it was a record-breaking half year. On the back of a very busy 2024, it is safe to say 2025 has not shown any slow down in transactions in all areas of the accountancy practice market with announcements of Goldman Sachs‘ acquisition of AAB recently, to firms like Farnell Clarke joining forces with TC Group, through to one or two partner firms being acquired and, of course, MHA publicly listing on AIM.
Market Movement
Whilst the same drivers for the activity remain in talent attraction/retention, lack of internal succession options, increase of regulatory admin, burnout or exhaustion of Partners running a firm and wishing to relinquish some of the heavy lifting. More frequently we are hearing from Partners citing the worry of keeping apace with the evolution of tech and AI within the profession as a reason to join a larger infrastructure – this topic has certainly risen up the rankings in terms of reasons for wishing to look at options in 2025.
In addition to the above, valuations have certainly peaked which has no doubt influenced decision making. The valuations currently on offer are an allure to look at realising value built within your practice, either on full or partial sale.
Many firms within the £3 to £15 million bracket are already acquired now, being acquired or acquiring themselves. There are just a small number of £10m+ independent firms left, and at this stage they would have been approached or courted by every consolidator in the land and PE houses that are still looking to enter the market. However, we are seeing the two camps of pro-private equity or pro-independence becoming more polarised than ever, with those that fall on either side of the equation holding stronger stances and feelings; this positioning is palatable when speaking with potential selling parties or more generally in the market.
Many firms within the £3 to £15 million bracket are already acquired, are being acquired, or are acquiring themselves.
The Modern Firm Launch
Private Equity: Still Dominating The Conversation, But Not The Market
Due to the impact and frenzy of PE activity in the market, naturally the focus of most conversations is with PE, the models, the opportunities – but for me, the same opportunities that exist for PE backed platforms in terms of growth via acquisition, exist for the independent firms as well. If you are an independent looking to grow, there are more opportunities than ever before to acquire the local firm down the road that would have never have sold over the last 5,10, 15 years – or the most closest competitor in your area open to selling to a like-minded, similar cultured firm. All of the dynamics driving the activity in the market are relevant from sole practitioner to Top 20.
Having said the above many independent firms are worried if they would be able to compete for talent, within tech and AI and on valuations for acquisition with limited cash pools to invest vs that of private equity. This is still meaning that this year, more than any other year leadership teams are wishing for us to meet with them or join partner meetings to talk through the various options in the market so that they are fully equipped and armed with the right information to make the correct decision for the future of their practice.
All of the dynamics driving the activity in the market are relevant from sole practitioner to Top 20.
One such option that is growing in popularity due to the ‘divisiveness’ of PE vs Independent is the shared equity model, where the leaders of the firm keep 49% of the business – but enjoy the support both financially and resource wise from a larger group or network, whilst keeping a degree of independence and autonomy. This can be seen by some as a ‘hybrid’ option.
The fight for acquiring firms amongst the consolidators, or investment backed practices, is fiercer than ever. Many firms within the £3-£20 million bracket have already being acquired or acquiring themselves, the ‘pool’ of opportunities is reducing rapidly. This simple “supply and demand” dynamic has led to an up-lift in multiples for certain firms as well the fact that many of the PE backed platforms are approaching the end of their cycles and will be hungrier than ever to hit certain markers of growth to ensure they are in the shape they wished to be when looking at the next PE sponsors – or as we are aware, of sale conversation to another consolidator or US firm.
It has been, and will be very interesting to see the jostling and manoeuvring between the consolidators and platform practices as they set sights on each other in the coming years. Who will be the first to acquire another buy and build platform?
The fight for acquiring firms amongst the consolidators, or investment backed practices, is fiercer than ever.
ICAS Practice Conference 2025
M&A Outlook
Whenever I speak at conferences, I do always say with a smile that now is a really exciting time for practice owners. There is such a vast range of options available to both acquirers, sellers or those wishing to merge or embark on the ‘next chapter’ of their business or personal and professional life. From a personal point of view as a M&A consultancy, the ability to be commercial and really negotiate and tailor a structure around the requirements of the parties involved is evermore so achievable now- with the shackles of the traditional a third, a third, a third and 1x GRF model no longer the go to playbook.
Whenever I speak at conferences, I do always say with a smile that now is a really exciting time for practice owners.
AJ Chambers ® has been involved in numerous processes and discussions so far this year, in a variety of different practice profiles across the UK and Ireland. From retiring sole practitioners through to c.£20 million revenue firms joining larger investment backed platforms. 2025 so far has easily been our busiest year on record in terms of incoming enquiries and wishes to set up exploratory conversations to understand options, which shows no signs of slowing down and I imagine with practice owners having the headspace to think about their future during the summer holiday period we will be holding fresh new conversations. Within the the smaller end of the the market where the impact would be greater for those selling, I am sure the increased BADR in April next year will also influence some decisions to sell now rather than wait- we certainly saw this late last year and Q1 of this year before April’s BADR increase.
There is a vast range of options available to both acquirers, sellers or those wishing to merge or embark on the ‘next chapter’ of their business or personal and professional life. The flexibility and pragmatism on approach to deals in the professional services arena is of great benefit. However, the sheer amount of options does make the decision process as someone looking to sell or merge significantly more confusing, with the potential of much time being wasted.
There is a vast range of options available to both acquirers, sellers and those wishing to merge or embark on the ‘next chapter’ of their business or personal and professional life.
This is why it is important to engage with M&A consultants who are immersed within the sector and have a very strong grip on the market, knowledge of the various models and hold good relationships with the various parties whom you could speak with.
Importantly though, we can listen and understand your objectives and requirements, to ensure only suitable parties are introduced. This ensures the right options are placed before you and any process is navigated as smoothly and as stress-free as possible.
AJ Chambers ® are well equipped to advise you of the options open to you, cut out the noise and ensure you achieve the objectives you would wish to reach for any next chapter of your business.
AJ Chambers: Fully Equipped to Assist
If you are an Accountancy Practice owner and would like to discuss any of the above further, including your exit plans, merger or indeed growth plans via acquisition, please get in touch for a confidential, no obligation conversation. We are well equipped to advise you of the options open to you, and ensure you achieve the objectives you would wish to reach for any next chapter of your business. Please click here to find out more: AJ Chambers M&A
Digital Accountancy Show 2025 #DAS2025
Summary
Due to all of the above, 2025 is set to continue to be a busy year within the accountancy practice sector. I certainly feel it will be a pivotal year, alongside 2026, in shaping the landscape of the market before the next big events due to come once the next PE and investors come to the end of their cycle and need to exit themselves such as we have seen with Waterland from Cooper Parry, August Equity from AAB and Horizon Capital from Dains.
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