Consolidation: De-Risking M&A and PE in Mid-Tier Firms

The UK mid-tier accountancy sector continues to experience sustained consolidation, driven by strategic growth ambitions and increasing private equity (PE) interest. The ICAEW’s Evolution of Mid-Tier Accountancy Firms: 2025 report highlights that acquisition-led growth is now firmly embedded across the segment, with a substantial majority of firms having already completed at least one acquisition and many planning further transactions.

The 2025 findings show that:

• A significant proportion of mid-tier firms have already undertaken acquisitions, with a clear majority expecting M&A activity to continue as part of their growth strategy.
• Client base expansion remains the dominant driver for consolidation, followed closely by access to skills, geographic reach, and long-term succession planning.
• Private equity is now a mainstream feature of the mid-tier landscape, with approximately a quarter of firms PE-backed and PE involvement cited as the most influential macro trend affecting the sector.

The report also evidences a clear tension between growth and cultural preservation. While firms recognise the strategic benefits of consolidation, cultural integration and retention of key people remain leading concerns, particularly where PE investment or serial acquisitions are involved.

Why Consolidation Has Become a Board-Level Issue

In the evolving landscape of mid-tier accountancy firms, consolidation has emerged as a double-edged sword, accelerating growth while introducing significant risks that demand board-level scrutiny. According to ICAEW's 2025 research on the evolution of mid-tier firms, consolidation activity—driven by mergers, acquisitions, and private equity investment (PEI)—continues at pace, with acquisitions as the leading form and nearly half of firms completing one in the past year.

This trend is fuelled by the desire to expand client bases and secure skills and talent needed to stay competitive and support succession planning, but it also heightens vulnerabilities such as cultural misalignment and talent attrition. The report highlights that one-quarter of respondent firms are now PE-backed, with some non-PE-backed firms considering PEI within the next three years; however, a significant number choose to remain independent to preserve their culture and long-term strategy, despite interest from PE houses. Notably, 93% of independent firms report being approached by PE houses in the past three years, forcing strategic decisions at the board level on whether to pursue external capital or maintain autonomy.

Elevating consolidation risk to the boardroom reflects broader implications for governance and resilience in an uncertain environment. The ICAEW findings reveal that while PEI is seen as transformative—enabling investments in technology, infrastructure, and operational efficiencies—it often clashes with traditional partnership models, with 85% of non-PE-backed firms expressing concerns over PEI's potential negative impact on talent retention, 80% worried about cultural and ethical alignment, and 65% concerned about succession planning.

This tension is amplified by regulatory complexities, making consolidation not just an operational tactic but a core strategic issue that could reshape firm identity and market positioning. Boards ignoring these risks may find their organizations outpaced by consolidated competitors, yet hasty engagement could erode unique values and public trust. As the profession navigates this transformation, proactive board oversight is essential to balance opportunity with safeguards, ensuring firms remain agile and client-focused amid accelerating change.

Private Equity: Accelerating Growth and Governance Expectations

Private equity involvement is identified in the 2025 ICAEW report as the single most influential macro trend shaping the accountancy profession. While PE backing provides access to capital, strategic discipline, and accelerated growth opportunities, it also introduces additional layers of risk.

Among firms that had already secured PE investment, 89% cited M&A as a route to expand geographic reach or service lines. The ICAEW report does not assess post-acquisition outcomes, but it does show how PE investment supports growth ambitions and introduces more formal governance expectations.

These changes require leadership teams to operate within clearer reporting, oversight, and accountability frameworks, particularly at board level.

Managing Risk Across the Consolidation Lifecycle

As firms pursue consolidation strategies, the ICAEW findings show that organisational complexity increases alongside growth. Changes in ownership models, governance structures, and leadership accountability are a natural consequence of acquisition activity and external investment.

Consolidation can materially increase a firm’s exposure profile in several ways:

• Latent professional risk: Acquisitions bring inherited client work, historic advice, and legacy engagement terms. Even where due diligence is robust, claims frequently arise post-completion as standards, methodologies, or documentation are reassessed under a new firm structure.
• Integration pressure: System migrations, changes to service delivery models, and the blending of teams can increase the likelihood of errors, omissions, or service disruption—particularly during the first 12–24 months following a transaction.
• Governance and personal exposure: The shift toward limited company structures—especially among PE-backed firms—alters where liability sits. Directors and senior management face increased scrutiny over strategic decisions, capital deployment, and regulatory oversight, heightening exposure to management and governance-related claims.
• Succession and run-off risk: As consolidation accelerates partner retirements and leadership transitions, firms face extended exposure to claims arising long after individuals have exited the business. Without appropriate run-off arrangements, this risk can crystallise personally rather than at firm level.

They are a natural consequence of scale, speed, and structural change—and they demand proactive, specialist-led risk management rather than reliance on legacy insurance arrangements.

How Marsh FINPRO Supports Mid-Tier Firms Through Consolidation

Marsh FINPRO works with mid-tier accountancy firms to address the precise risks highlighted in the ICAEW 2025 report, supporting firms through every stage of the consolidation lifecycle.

Our capabilities include:

• Transaction Risk Insurance: Warranty & Indemnity and Tax Liability solutions designed to protect deal value and manage legacy exposures identified during acquisitions.
• Run-Off Cover: Long-term Professional Indemnity and Directors’ & Officers’ protection aligned with ICAEW expectations, supporting orderly succession and partner retirements.
• Professional Indemnity Insurance: ICAEW-compliant PI solutions designed to respond to claims arising during integration, operational change, and post-merger delivery.
• Directors’ & Officers’ Insurance: Protection for partners and executives operating within increasingly complex governance and ownership structures.
• Change-of-Control Advisory: Insurance and risk advisory support aligned to ownership transitions, cultural integration challenges, and evolving firm structures.

Marsh FINPRO’s dedicated professional and financial lines specialists support a significant proportion of the UK mid-tier market, combining sector insight with practical M&A and claims experience.

Conclusion

The ICAEW Evolution of Mid-Tier Accountancy Firms: 2025 report confirms that consolidation is reshaping the sector at pace. What is equally clear is that growth, if not carefully managed, can amplify professional, governance, and personal exposure in ways that only become visible when something goes wrong.

Firms that succeed through this period are those that treat risk as a strategic consideration—not an administrative afterthought. By aligning transaction strategy, firm structure, and insurance architecture early, firms can protect their people, preserve client trust, and pursue growth without unintended consequences.

Marsh FINPRO works alongside mid-tier accountancy firms precisely at this intersection of growth and risk. Our specialists work with firms that are actively acquiring, exploring private equity, or managing partner succession, and we understand how the trends highlighted in the 2025 ICAEW research translate into real-world exposure.

For firms navigating consolidation, the question is no longer whether risk will evolve, but whether it is being actively managed.

Engaging early—before a transaction completes, governance changes, or partners exit—allows firms to de-risk decisions, protect leadership, and safeguard long-term value.

If your firm is considering acquisition activity, private equity investment, or structural change, Marsh FINPRO can provide a confidential, scenario-based review aligned to the challenges identified in the ICAEW’s 2025 research.

This is not about adding complexity—it is about ensuring that consolidation delivers sustainable growth, supported by risk advice from specialists who understand the mid-tier accountancy sector and the realities firms now face.

We provide comprehensive insurance solutions to 18 of the UK’s top 50 accountancy firms and manage over 4,000 mid-tier clients nationwide. Our professional indemnity advisory services are regularly utilised by the ICAEW itself, reflecting our leadership in the market. Whether your firm is navigating PE involvement, planning acquisitions, or managing partner retirements, Marsh FINPRO delivers the guidance and protection necessary to de-risk consolidation and secure your future. Contact us today at marsh or Michael.Newton@Marsh.com to begin safeguarding your firm against the complexities of M&A in a rapidly evolving market.