Growth

The professional services sector is firmly in the spotlight, identified by the UK Government as one of eight key industries to accelerate economic growth. All respondent firms reported fee growth in the last financial year, which was primarily driven by an increase in new clients, some of which, in turn, was driven by merger and acquisition (M&A) activity. However, they also faced obstacles to growth, including limited access to skills and an increasingly complex regulatory landscape.

Several macro trends continue to influence the profession, with private equity investment (PEI) emerging as the most significant, followed by evolving regulatory and compliance requirements and the impact of generative AI.

Firm structures

Consolidation activity continues at pace among mid-tier firms. This trend is driven by firms’ desire to expand their client base and secure the skills and talent needed to stay competitive and support succession planning.

Acquisitions have emerged as the leading form of consolidation, with nearly half of firms completing one in the past year. These acquisitions are widely seen as strategic opportunities to scale up, expand capabilities, and strengthen service offerings.

Private equity (PE) interest in the sector remains high, with one-quarter of respondent firms now PE backed, and some non-PE backed firms considering PE investment within the next three years. Conversely, a significant number of firms choose to remain independent to preserve their culture and long-term strategy, despite interest from PE houses.

Talent and skills

Talent remains a critical focus area. In the findings reported in 2024, the recruitment and retention of qualified staff were reported as the top talent challenges. However, this year there is a shift towards developing and acquiring the right skills.

Firms recognise that the pace of technological change together with the evolving demands of clients require accountants to have a wider and more agile skillset. Whether through internal training or strategic hiring, firms are investing in their people.

Technology

Data management and business intelligence, as well as cybersecurity and risk management, are the main areas that firms identified for investment. The pace of technological change remains a major concern, and firms recognise the ongoing imperative to continually train staff to keep pace with emerging and enhanced technologies. Despite these challenges, firms remain focused on leveraging technology to build resilient, future-ready practices.

Service lines

Traditional services remain the pillars of the firms’ offering. Nevertheless, many are now focusing on expanding into rapidly growing fields such as Environmental, Social and Governance (ESG) and tech / app advisory. ESG is emerging as a strategic priority, with firms exploring how to shape their offerings and equip their teams with the knowledge needed to support clients. This marks a significant shift from the findings reported in 2024, when only a small minority of firms viewed ESG as a top growth opportunity.

Conversely, Public Interest Entity (PIE) audit remains an area of low appeal. The high regulatory and compliance demands, strategic misalignment and the substantial investment required for upskilling deter firms from venturing into this area.