Consolidation activity: scale, choice and a more differentiated mid-tier

ICAEW’s 2026 Evolution of Mid-Tier Accountancy Firms research findings evidence that consolidation activity continues to be a defining feature of the mid-tier accountancy sector. While acquisition activity remains widespread and private equity (PE) investment has a sizeable presence in the market, mid-tier firms are making more deliberate and differentiated choices about how, and whether, to pursue scale. Rather than converging on a single model, the sector is evolving along multiple paths, reflecting differing priorities around growth, culture and control.

Acquisition activity remains widespread

Among mid-tier firms responding to the research, acquisition activity remains common. Nearly three-quarters report having acquired another firm, with a significant proportion doing so within the last year. Appetite for further acquisitions also remains strong over the next three years, particularly among larger firms and those with PE backing.

However, the motivations behind this activity are shifting. While expanding the client base continues to be the primary driver of acquisitions, factors linked to talent, such as succession planning, accessing skills and meeting short-term capacity demands, have declined in prominence compared with previous years.

For firms that are unlikely to pursue mergers or acquisitions, the reasons are consistent and intentional. Concerns centre on maintaining culture and identity, managing integration risk, and a preference for controlled organic growth over the complexity of M&A.

Private equity: enabling scale, but not universally attractive

PE investment has become a much more established feature of the mid-tier landscape. Nearly half of responding firms now report being PE-backed, a substantial increase compared with earlier years, and those with PEI are significantly more likely to be acquisitive.

For these firms, external capital is primarily seen as an enabler of scale. Investment supports acquisition programmes, technology investment and talent development, alongside growth in service lines offered. Firms that have accepted PEI also report positive outcomes in areas such as operational efficiency and access to strategic expertise, often exceeding their initial expectations. PE-backed firms acknowledge some of the challenges associated with the investment: increased scrutiny, reporting and governance from investors remains the top challenge, although cited by a smaller number of firms this year, and a new challenge has emerged in 2026 around cultural intention and alignment having secured investment.

PE investment is not becoming a default pathway. The proportion of independent mid-tier firms considering external investment for the first time has fallen markedly with only 5% of independent firms likely to accept PEI for the first time (2025: 15%), suggesting that appetite for new PE investment may be reaching a plateau across the firms responding.

Independence as a deliberate strategic choice

Most firms that do not plan to accept PE investment over the next three years cite a desire to preserve culture, values and decision making autonomy. Succession and progression considerations also feature prominently, with concerns about how external ownership might affect leadership pathways and partner incentives.

A smaller group of firms remain undecided, largely because they wish to retain flexibility as market conditions evolve. Taken together, this points to a sector in which independence is increasingly framed as a differentiator for clients, for talent and for firm identity, rather than as an absence of alternatives.

A more polarised market in prospect

Looking ahead, mid-tier firms broadly anticipate that consolidation and external capital will play a growing role in how the sector is financed and structured. At the same time, most expect this to lead to a more polarised market by the end of the decade with fewer large firms, a reduced middle, and a large number of smaller practices.

Consolidation as a driver of differentiation

Sarah Ghaffari, ICAEW’s Director of Practice, reflects that consolidation is now an established, and permanent, driver of change within the mid-tier. While firms continue to differ in their views on whether PE is positive for the profession overall, there is widespread acceptance that the future structure of the sector will be more varied than in the past.

Some firms are scaling rapidly through external capital and acquisition, while others are prioritising organic growth and independence. This divergence raises important questions around career pathways, resilience and how professional standards are sustained across different ownership models, but it also underlines a key strength of the sector: its capacity to accommodate different approaches.