The third year of ICAEW’s Evolution of Mid-Tier Accountancy Firms research reveals that adoption of artificial intelligence (AI) is within the technology strategies of 86% of participants, but the majority are not yet sure of its impact on the workforce.

The research, which saw leaders from 35 firms surveyed in February and March 2026, also confirms that fee growth continues and that consolidation activity defines the mid-tier sector.

“This year’s research shows a sector that is confident and ambitious but increasingly differentiated” says Alan Vallance, ICAEW’s Chief Executive.

“Consolidation, private equity investment and the accelerating impact of technology and AI, are not emerging trends; they are reshaping how firms grow, how they operate and how professional careers are built.

Vallance continues: “At the same time, firms are grappling with sustained regulatory pressure and a more complex risk environment, while trying to maintain growth.”

He also highlights the valuable role the research will play in shaping ICAEW’s policy work: “The insights gathered will ensure the priorities of mid-tier firms are represented to government and regulators, and reinforcing our role as a strong, credible and evidence-led influential voice for the profession,” he says.

Consolidation activity remains high

Acquisition activity is widespread, with nearly three-quarters of firms reporting that they have acquired another firm in the past, and appetite for further acquisitions over the next three years remains strong.

Larger firms and those with private equity (PE) investment are significantly more likely to be interested in buying other firms.

PE has become an increasingly prominent feature of the sector. Nearly half of responding firms are now PE-backed. For these firms, the external capital is associated with:

• expansion through acquisitions;
• investment in technology and talent; and
• driving operational change and efficiency.

However, the research indicates that PE investment is not becoming a default route to raising capital. Of the independent firms responding to the survey fewer said they were considering PE investment than in previous years, suggesting a stabilisation in appetite for PE. Many firms cited culture, autonomy and long term incentives as reasons for remaining independent.

Sarah Ghaffari, Director of Practice, says: “Consolidation is reshaping the mid-tier, but PE-backed growth and deliberate independence continue to exist alongside one another. This demonstrates there is no single successful ownership or growth model.”

AI and operating models

The impact of technology, particularly AI, is woven throughout the 2026 findings. Almost all participating firms agree that technology plays a key role in delivering their strategic objectives, and 86% have a technology strategy that includes AI adoption. Most firms believe they are adopting AI and technology at the right pace.

AI use is widespread across firms, spanning core service lines as well as internal knowledge management and client support functions. However, the research suggests that AI is being incrementally embedded into firms with most firms only claiming moderate use of the technology to date.

Firms that participated in the research overwhelmingly expect the use of AI and automation to increase significantly over the next three years. Participants also indicate they will increase the recruitment of specialist expertise, particularly in data and technology-related roles.

However, relatively few firms feel confident in assessing the impact AI will have on their workforce, with only 17% expressing confidence in this area.

Growth remains strong

The research suggests that growth across the mid-tier continues. Almost all surveyed firms reported fee growth in their most recent financial year, and the vast majority expect growth to continue over the next three years.

The top factors contributing to this growth are increased spend from existing clients, a factor which has been trending upwards since 2024, together with growth in fees from new clients, a factor which conversely has fallen in prominence since 2024.

Service line offerings remain relatively stable. Tax, accounting, audit and advisory continue to dominate, with sustainability-related services developing more gradually.

While more firms now offer sustainability-related services, a significant minority neither offer nor plan to offer them, most often citing limited client demand or internal capability constraints.

Meanwhile several firms identify further growth in their existing core audit and tax service lines as a significant opportunity in the future.

Regulation hindering growth

When asked about “macro trends” driving change in the profession, the impact of regulation was cited less frequently in 2026 than in previous years. However, firms continue to identify it as a constraint on growth.

Audit regulation is most often highlighted, particularly audit majority and control requirements. Firms also highlight anti-money laundering requirements and employment costs and regulation as factors that inhibit growth through compliance and administrative demands.

Iain Wright, ICAEW’s Chief Policy and Communications Officer, observes: “Realising this growth potential will depend in part on whether the policy and regulatory environment enables, rather than constrains, these ambitions.”

The future of the profession

Clear in the research findings is the level of confidence firms retain in the future of the profession. More than 80% of participating firms agree that demand for accountants will continue, but for a redefined profession. The same proportion believe that the role of the accountant will pivot from compliance and reporting towards judgement, systems thinking and ethical oversight by 2030.

Of those surveyed, 71% agree that AI will allow them to move up the value chain in terms of service offering. While 68% of firms expect AI to reduce the need for some early-career roles, compress mid-tier positions and require more senior accountants to have broader capabilities, only 12% believe the attractiveness of the profession will decline with the perception that accountancy will be replaced by AI.