ICAEW research highlights the evolution of mid-tier accountancy firms

Consolidation activity continues at pace

Consolidation activity continues to define the mid-tier landscape. According to the 2025 findings, 80% of firms have made at least one acquisition in the past, and 67% anticipate making further acquisitions within the next three years, reflecting a notable increase from the previous year.

The drivers behind this trend are clear. Among firms planning acquisitions, 92% cite client base expansion as a primary motivator, while 80% aim to broaden their geographical reach.

The influence of private equity (PE) is also gaining prominence. Although only 25% of firms have secured PE investment to date, a similar proportion expect to do so in the next three years. For these firms, PE is not merely a source of capital but a catalyst for transformation, enabling further growth through consolidation activity, together with investment in technology, talent, and new service lines.

Skills and talent remain a challenge

Future-proofing skills is now the top talent challenge, with 44% of firms ranking it among their top three concerns. In addition, access to skills emerged as the single biggest barrier to growth for mid-tier firms. This concern is a thread running throughout the 2025 report, from succession planning and recruitment to service line expansion and technology adoption.

Firms also report that the most difficult roles to recruit to are at the manager and assistant manager levels. 56% of firms cite attracting and recruiting qualified staff as a top three talent challenge with remuneration and a lack of suitable candidates as the primary obstacles. The most significant factor impacting the retention of qualified staff is the attractiveness of alternative career paths outside the profession while reluctance to pursue leadership roles hampers succession planning.

To address these challenges, firms are prioritising investment in upskilling, with 75% of firms identifying this as a key operating model priority. Furthermore, one of the main technology investment priorities is upskilling staff, with 81% of firms identifying this as a priority. This focus reflects the fast-paced evolution of digital tools and platforms, where the ability of teams to adapt and capitalise on new technologies is critical to realising operational efficiencies.

Recruitment of trainees remains relatively unproblematic; however, firms are increasingly turning to school leavers as their primary intake. Nearly half of firms (47%) expect to increase their annual trainee intake over the next three years, with many firms leaning towards employing more school leavers than graduates. However, it is worth noting that the research was conducted before the final announcement on Level 7 apprenticeship funding.

The link between skills and strategic growth is also evident in firms’ consolidation strategies. Among those pursuing M&A, 84% are motivated by the opportunity to access or expand skillsets, while 68% see it as a means to secure talent for succession planning. Similarly, 80% of independent firms attracted to PE cite access to skills as a key factor.

ESG: A rising priority

Perhaps the most forward-looking insight from the 2025 research is the growing prominence of ESG as a service line. 44% percent of mid-tier firms plan to introduce ESG related services within the next three years, signalling not only a response to client demand but also a recognition of ESG’s potential to drive growth and differentiation.

Mid-tier firms are already laying the groundwork for this expansion. The primary area of focus is on upskilling staff to deliver these services, where the anticipated focus of work will be ESG advisory and external assurance services.

The growth of ESG underscores the evolving role of the accountant. No longer confined to financial metrics, practitioners are increasingly expected to help clients navigate complex non-financial disclosures and integrate ESG considerations into their strategic decision-making.

The growing momentum in this area is likely to impact all practices as client expectations evolve and regulatory pressures increase. This will require careful consideration of internal capabilities, particularly around skills and expertise. For many, the first step will be evaluating whether a firm has, or can acquire, the necessary knowledge to deliver ESG services effectively, either through upskilling existing staff or forming strategic partnerships. A good starting point could be to attend ICAEW’s Sustainability in Practice event in September 2025.

Looking ahead

The ICAEW’s 2025 research paints a picture of a mid-tier sector that is growing, resilient, and forward-looking. Firms are consolidating to strengthen their market position, investing in talent to meet new demands, and embracing ESG as a pathway to relevance and growth.

For ICAEW, these findings will inform ongoing support for member firms through policy advocacy, practical guidance, and targeted support. As the profession continues to evolve, ICAEW remains committed to helping firms adapt, innovate, and thrive in a rapidly changing world.