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Not so stuffy any more! How PE money is changing the soul of British accountancies

$6B TAM up for grabs - but what's the endgame?

Why is this important?

According to the British Office of National Statistics, the country has 43,000 accountancy practices.  IRIS Software Group pegs the number at 94,000.

Either way, SME focused practices represent the vast majority of the industry:

  • SME accounting / related services TAM is worth £4-5B, with 2/3 in recurring revenue service lines (source: Fairgrove Partners)

  • The number of firms that generate £1M+ in turnover is 2,000+

You can see why private equity is all excited. 

Below, we listed major PE backed accountancy rollups in the UK. As you can see, the ostensibly boring accountancy practices are attracting increasingly frenetic dealmaking levels - on par with IFAs, insurance brokers and software.

This activity is unlikely to mount a serious challenge to the Big 4’s dominance. KPMG, the smallest of the four, reported revenue of £3B in 2023 - more than 10 times the revenues of Azets UK, the largest PE backed accountancy.

But that’s not the point. There’s plenty to go after in the small/mid cap segment.

In this article, we explore five topics:

  1. Private equity’s investment thesis

  2. Why small and mid sized accountancies are feeling squeezed

  3. Why the partnership / LLP structure is stifling growth and talent replenishment

  4. The PE playbook

  5. What does the end game look like? 

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