Accounting services are often described as the backbone of the business world, providing essential financial management and compliance for companies of all sizes. Unlike many industries that rise and fall with economic cycles, accounting has proven to be remarkably resilient. No matter the climate, boom or recession, businesses always need bookkeeping, reporting, and tax compliance.
This foundational importance makes accounting services a stable, and often recession-resistant, sector. History has shown that while other industries may contract in downturns, demand for accounting services remains relatively stable. The profession’s longevity and steady demand have made it an attractive target for investment. Investors recognize that accounting firms generate recurring revenues and are “not dependent on the cycles” of the economy as much as other businesses, offering a measure of safety in turbulent times.
In this article, we are going to examine how the accounting services industry is entering a period of significant transformation. We explore the drivers of this shift, including the impact of automation and AI on traditional workflows, the looming retirement wave among firm owners, and the growing role of private equity in consolidating a historically fragmented market. With thousands of small practices facing succession challenges, M&A activity is accelerating. Valuation multiples vary widely, favoring firms with scale, recurring revenues, and advisory capabilities.
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A Traditionally Fragmented Industry
For decades, the accounting industry has been highly fragmented, dominated by thousands of small practices, often solo practitioners or small partnerships serving local clients. Unlike some industries that consolidated into a few large players, most accounting firms outside the famous “Big Four” remained small and regionally focused. In the United States alone, there are tens of thousands of accounting firms, illustrating this fragmentation.
An analysis by IBIS World noted “well over 80,000 accounting firms” operating in the U.S. In the UK, similarly, there are only a handful of very large firms but literally thousands of smaller accounting and audit practices (fewer than 6,000 audit firms were registered in the UK as of 2022). Many of these firms have long been owner-operated boutiques, serving loyal client bases but often lacking scale.
This fragmentation has historical roots. Professional regulations and the personalized nature of accounting services made it common for skilled accountants to hang their own shingle and build a local practice. Over time, this led to a landscape with many “one-person accountancies” and small firms each serving their niche.
Technology and AI Are Transforming the Accounting Profession
Now, the long-established accounting profession is undergoing significant change. New technologies, especially automation software and AI, are reshaping how routine accounting tasks are done.
Modern software is increasingly automating traditional bookkeeping and data entry, which were once the core services of many accounting firms. Cloud accounting platforms and AI-powered tools now handle transaction coding, invoice processing, and even parts of audit and tax preparation more efficiently. As one industry observer noted, automation performs well on repetitive tasks, while complex work like financial analysis or personalized advice still depends on human expertise. In practice, this means that while computers are taking over the number-crunching, accountants are shifting toward higher-value activities.
Critically, this technological shift is redefining the role of accountants. Rather than spending days compiling ledgers or balancing books manually, accountants can leverage automation to do that heavy lifting. This frees up time to focus on advisory services: interpreting the numbers, providing insights, and guiding strategic decisions.
That pivot demands capital for platforms, data engineering, and continuous professional development – investments impractical for two-partner shops yet entirely feasible in a 200-partner network backed by private equity.
Retirement Wave and Succession Challenges Spur Consolidation
Technology is not the only change agent. Demographics are playing a huge role as well. The accounting industry is facing an upcoming wave of partner retirements. Many firm owners and senior CPAs who founded practices in past decades are now reaching retirement age, raising the question of who will take over their book of business. In fact, a startling statistic indicates that roughly 75% of CPAs (many of them firm owners) have reached retirement age in recent years.
For many years, firm owners approached succession planning by passing the business to an internal partner or preparing a younger colleague to take over. In very small practices, however, that option often doesn’t exist. Many sole proprietors have no second-in-command ready to step in or buy them out. In these cases, mergers and acquisitions offer an alternative. Instead of closing the business, an aging practitioner can sell to or merge with another firm, which helps maintain continuity for clients and unlocks the value of the firm they built. M&A has become a practical succession strategy for many small and mid-sized firms without a clear next generation of leadership.
Together, technology pressures and succession challenges have created strong momentum for consolidation across the industry.
Private Equity and the Accounting Roll-Up Wave
Why Accounting Firms Attract Private Equity
Private equity firms have increasingly focused on accounting firms, especially in the United States and the United Kingdom. The combination of a fragmented market and reliable cash flows makes the industry well-suited for a roll-up strategy. Investors buy smaller firms and consolidate them into a larger platform to generate value through scale. Many private equity sponsors are actively building these platforms, executing buy-and-build strategies across multiple small acquisitions.
Case Studies in the United Kingdom and Europe
In the United Kingdom, the consolidation wave is already producing large-scale platforms. Xeinadin reached national scale almost overnight by merging more than one hundred independent firms, proving how quickly investors can unite a fragmented market. Cooper Parry followed a similar path, first securing backing from Waterland and later from Lee Equity, and more than doubling its valuation by adding technology and advisory services.
The trend is spreading across Europe. Grant Thornton UK broke tradition in 2024 when it sold a minority stake to Cinven for about £1.5 billion, opening the door to outside capital in a partnership-led firm. In Poland, private-equity funds are now launching early roll-ups that focus on mid-sized practices, bringing the consolidation playbook to a still-developing market.
The United States: From Zero to Majority PE Ownership
A regulatory shift that allows alternative practice structures has accelerated deals. PE platforms are racing to acquire CPA firms across the country. The Financial Times recently reported that as many as 10 of the top 30 U.S. accounting firms could soon have private-equity owners.
Citrin Cooperman shows the pace of change: it first partnered with New Mountain Capital, then sold to Blackstone in early 2025 in a deal worth nearly $2 billion. Other major firms, such as Grant Thornton, Baker Tilly, CohnReznick, and EisnerAmper, have all accepted PE investment in the last three years.
“By the end of 2025, more than half of the largest 30 U.S. accounting firms will have either sold an ownership stake or part of their business to private equity investors, up from zero in 2020.” – Allan Koltin, CEO, Koltin Consulting Group
What This Means for Firm Owners
Private-equity buyers create both competition and opportunity. Owners can:
- Join a platform and de-risk their succession plan.
- Build scale first, then seek capital on better terms.
- Stay independent, but invest in tech and advisory services to defend margins.
Acting early widens those choices. Waiting may leave a firm reacting to market pressure rather than shaping its own outcome.
Valuation Multiples: What Are Accounting Firms Worth?
One of the most important questions for both sellers (founders of accounting firms) and buyers (investors or consolidators) is how to value an accounting practice. As deal activity increases and private equity enters the space, EBITDA multiples have become the standard currency of valuation, measuring a firm’s value as a multiple of its operating earnings.
In practice, valuation multiples vary widely depending on size, growth profile, services offered, and operational maturity. Based on observed deal patterns, the market tends to segment into broad tiers:
Top-tier platform firms with strong margins, recurring revenue, and scale can command high single-digit to even low double-digit EBITDA multiples. For example, the UK’s Xeinadin Group is rumored to be valued at around 13× EBITDA ahead of its next transaction, based on ~£60 million in earnings. That said, these valuations are outliers. They reflect firms that have already built scale, diversified services, and operational leverage.
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What Drives the Valuation Premium?
Not all revenue streams are valued equally by buyers. Basic compliance work like bookkeeping and tax filing is essential, but it’s often lower-margin, easier to automate, and easier to replace. In contrast, services like tax advisory, audit, and virtual CFO support are harder to replicate and generate stronger client relationships. These are the services that unlock higher valuations.
The chart below shows how firms typically evolve from essential compliance services to more specialized, high-value offerings. Moving up this stack doesn’t just improve margins. It directly impacts what a buyer is willing to pay.
Each layer of the map reflects a step up in both service complexity and strategic value. The compliance core is often commoditized. As firms expand into people and entry services like payroll or company formation, they start increasing client retention and lifetime value. The real shift happens when a firm moves into advisory and assurance. Services like tax structuring, audit, or virtual CFO support signal that the firm is no longer just a processor of information, but a trusted partner. The more a firm builds in these upper tiers, the stronger its case for a valuation premium.
Buyers typically reward firms that check a few key boxes:
- Recurring revenue and long-term client relationships
Predictable income from loyal clients reduces risk and supports higher multiples. - Healthy margins and operational efficiency
Firms with strong EBITDA margins and disciplined cost structures are viewed as better run and more scalable. - Advisory-led service mix
Generalist firms focused only on compliance often face price pressure. Advisory services not only improve margins but also raise the strategic value of the business. - Modern systems and tech stack
Cloud accounting, automation, and standardized workflows make the firm less dependent on individual staff and easier to integrate post-acquisition. - Succession readiness
If the firm relies heavily on one owner, especially one planning to retire, buyers will factor that risk into both valuation and deal structure. By contrast, firms with second-line leadership and standardized operations are more attractive targets.
Even well-positioned firms are rarely sold for 100 percent upfront. Most deals include deferred payments or earn-outs tied to client retention or performance targets. These structures are designed to reduce buyer risk and align incentives post-close.
For founders, that means valuation is only part of the equation. A strong business profile influences how much of that value is actually realized, and how much remains at risk. The earlier you address these fundamentals, the more leverage and options you will have at the negotiation table.
Strategic Choices for Firm Owners and Investors
For owners of accounting firms, especially those who have built their practice over many years—the current market presents an important strategic crossroads. Is now the right time to sell to a larger player? Or, if your firm is of sufficient size, should you consider becoming a consolidator (a platform) yourself? There is no one-size-fits-all answer, but the wave of M&A means standing still is also a choice (and possibly a risky one if competitors are gaining scale around you).
From the investor perspective, the accounting sector’s M&A offers attractive opportunities but also requires careful execution. Investors are drawn by the reliable cash flows and fragmentation (lots of room to consolidate), but success depends on integrating professional service cultures and retaining talent post-merger. Thus far, many PE players have found the formula profitable, especially by focusing on advisory and high-margin niches within accounting to drive growth after roll-ups.
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Conclusion: Planning Your Path Forward
Global trends point in one direction. Technology, retiring partners, and new capital are reshaping a once-steady profession into a market of larger, tech-enabled advisory firms. The choices you make in the next few years will steer your firm’s trajectory and shape your own exit options. Will you buy other practices, sell to a consolidator, or invest in AI-driven services to stay independent? Now is the time to decide.
Aventis Advisors helps firm owners and investors navigate these decisions. Our team can review your financials, clarify your growth or exit goals, and outline current valuation benchmarks.
We invite you to get in touch with us to explore the best path forward for your firm’s future.
About Aventis Advisors
At Aventis Advisors, we specialize in providing top-tier M&A advisory services across technology and business services sectors.
We believe the world would be better off with fewer (but better quality) M&A deals done at the right moment for the company and its owners. Our goal is to provide honest, insight-driven advice, clearly laying out all the options for our clients – including the one to keep the status quo.
Get in touch with us to discuss how much your business could be worth and how M&A advisor in the accounting industry can help.
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