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.
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.
Traditional bookkeeping and data entry, once the bread and butter of many accounting firms, can increasingly be automated by modern software. Cloud accounting platforms and AI-powered tools can handle tasks like transaction coding, invoice processing, and even aspects of audit and tax preparation far more efficiently. As one industry commentary put it, automation excels at handling repetitive tasks, whereas complex work like financial analysis or giving personalized advice still relies 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 a long time, succession planning in accounting often meant passing the firm to an internal partner or grooming a younger successor. But in a very small practice, there may be no obvious internal successor — many sole proprietors don’t have a second-in-command ready to buy them out. This is where mergers and acquisitions come into play. Rather than simply closing up shop, an aging practitioner can merge with or sell to another firm, ensuring continuity for clients and extracting value from the practice they built. M&A has thus become a viable succession solution for many small and mid-sized firms that lack a next generation of leadership.
The convergence of these factors — technology pressures and succession needs — has created a perfect storm for consolidation.
A Wave of Consolidation and Private Equity Investment
All these conditions have attracted significant outside investment, kicking the accounting M&A trend into higher gear. In particular, private equity (PE) firms have turned their attention to accounting firms in a big way, especially in the United States and United Kingdom. The fragmented market and steady cash flows make the industry ripe for a “roll-up” strategy—buying up smaller firms and consolidating them under a larger platform to create value through scale. Private equity sponsors have been actively assembling platforms of accounting firms, executing a “buy-and-build” strategy across many small acquisitions.
In the UK, names like Xeinadin and Cooper Parry have become case studies in this trend. Xeinadin’s overnight merger of over a hundred independent firms demonstrates how quickly scale can be achieved in a highly fragmented market. Similarly, mid-tier firm Cooper Parry secured private equity investment (from Waterland and later Lee Equity) to fuel its growth, targeting a valuation far above what it could achieve alone.
Even some historically partnership-only firms have opened the door to outside capital; for instance, Grant Thornton UK (the country’s sixth-largest audit firm) sold a stake to PE firm Cinven in 2024, valuing the firm at about £1.5 billion. This was a groundbreaking move in a market where external ownership of accounting firms had been unheard of.
Other countries are following suit. In Poland, where the accounting and consulting market is still developing, we’re seeing early signs of consolidation as well.
In the United States, the trend has arguably been the most pronounced due to a regulatory shift allowing alternative practice structures (which let outside investors take stakes in accounting firms via advisory affiliates). Private equity-backed platforms are racing to acquire CPA firms across the country. In fact, a report in the Financial Times noted that as many as 10 of the top 30 accounting firms in the U.S. could soon have private equity owners or investors – a remarkable prediction that signals just how much the profession’s business model is shifting.
Valuation Multiples: What Are Accounting Firms Worth?
One of the critical questions for both sellers (founders of accounting firms) and buyers (investors or larger firms) is how to value an accounting practice. In recent years, as firms grow larger and private equity thinking enters the fray, EBITDA multiples (valuing the firm as a multiple of its earnings) is a most common valuation method.
Accounting services valuations can vary widely based on firm size, profitability, growth, and specialization. Data from practice sales suggests clear tiers: for small firms (say, single owner with under $1 million in revenue), the sale price often falls around 2× to 4× EBITDA in many cases. For mid-sized firms (around $1–5 million revenue with a partnership structure), buyers have paid roughly 4× to 6× EBITDA. These are benchmark ranges for typical transactions in recent years.
However, the upper end of the market – larger accounting firms or those with exceptional profitability – can command higher multiples. It’s not uncommon now to see healthy accounting firms (especially those seen as platform acquisitions) trading at high single-digit or even low double-digit EBITDA multiples. For example, the UK’s Xeinadin group, with ~£60M EBITDA, is speculated to be valued around 13× EBITDA (over £800M) in its upcoming sale. We have to note, though, that such numbers are unreachable for smaller accounting practices.
Key factors that drive higher accounting practice multiples include strong recurring client relationships, high profit margins, specialized or advisory services (beyond basic bookkeeping), and robust technology-enabled operations. Firms that check these boxes are perceived as lower risk and higher growth, thus buyers are willing to pay a premium. Conversely, a small practice heavily dependent on one owner (with that owner planning to exit) and lacking modern systems might fetch a lower multiple due to higher transition risk.
Most deals also incorporate earn-out structures or deferred payments tied to client retention, to ensure the buyer gets what they pay for. As a founder, it’s important to understand where your firm would fit in this spectrum of multiples, and what steps you can take (in terms of improving margins, diversifying services, or systematizing the business) to move your accounting firm valuation toward the higher end of the range.
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.
Conclusion: Planning Your Path Forward
The global trends are clear: the accounting services industry is consolidating and evolving. Technology, demographics, and capital are reshaping an old, stable industry into a new landscape of larger, tech-enabled advisory firms. For accounting firm owners, it’s an exciting yet challenging time. The choices you make in the next few years could determine your firm’s trajectory (or your own retirement outcome). Is your firm going to be an acquirer or acquired? How will you adapt to the AI-driven changes in services? These strategic questions merit careful consideration.
At Aventis Advisors, we specialize in guiding firm owners and investors through exactly these kinds of decisions. With our expertise in accounting services M&A, we can provide a confidential assessment of your firm’s financials, discuss your growth or exit goals, and give you insights into the current valuation environment.
We invite you to get in touch with us to explore the best path forward for your firm’s future.
