Who is buying accountancy practices and how the market is changing

We will consider different buyers in the market, what they are looking for and what their motivations are.

The Private Equity (PE): Offering high multiples

Private Equity has aggressively entered the UK accounting landscape, with over a quarter of top-60 firms now backed by external capital.

What they want: 

• They are looking for mid-tier and larger regional firms with fees of around £5m plus, with robust leadership, high margins, and highly predictable, recurring compliance or audit revenues.  Quality rather than quantity.

Why they want it:

• PE operates on a classic "buy-and-build" roll-up strategy.  They buy practices at premium EBITDA multiples which sometimes exceeds 10x–14x for prime assets.  Vendors are often attracted to the high rates, retiring early to take advantage of these overly inflated prices.
• They extract value by centralizing back-office functions, often offshoring this work, and funding the heavy capital expenditure required for the introduction of AI automation and cloud software.

Regional Firms: Growth

Traditional regional partnerships remain highly active buyers, they know and understand the market place and have a solid offering to local independent firms.

What they want:

• High-quality local fee portfolios, localized sector expertise, sometimes with regional specialisms such as agriculture and farming.

Why they want it:

• There is a national shortage of mid-to-senior accounting talent in the UK.  Buying an accountancy practice within the same geographic region that has a well integrated management team with demonstrable business generation expertise, will always be attractive to a regional player.   It kills two birds with one stone.  The acquisition of fees and talent.
• Buying a local competitor ring fences clients thereby maximising retention.
• Growing the firm offers career progression to staff that may otherwise leave for better opportunities with a larger firm.

National Firms: Specialist Niches and Advisory Capabilities

Top-tier and national networks look for specific offerings.

What they want:

• Firms with highly profitable, specialized niches such as ESG advisory, tech consulting, R&D tax credits, or robust statutory audit functions.

Why they want it:

• National firms are moving away from low-margin, generalized compliance toward high-value advisory work. They target specific specialist teams that can immediately help grow their firms and service a quality corporate client base.  They can grow a niche faster by buying than through organic growth.

Local independents:  Maximising their existing resources

Accountants that do not want to grow too big but have not yet maximised their resources.

What they want:

• To reach a defined goal of a set turnover ie £1m, not to sell straight away, but to realise the profit for a set period of time.  They look to back fees into their existing practice, maximising resources and profitability.

Why they want it:

• Some accountants just enjoy running the practice they have built from scratch.  Giving a real sense of achievement and a lifestyle that fulfils their needs, with little or no ambition to grow too big.  

My predictions for the next 12 months

• PE firms are not getting the ROI they were hoping for, so there will be a slow down in the buying of accountancy firms.
• PE firms will be integrating and rather than consolidating.
• Quality firms want to keep the profits for themselves and not sell.
• AI enhanced practices become more prevalent.
• There will always be a competitive market for the smaller sub £1m t/o practices looking to sell that are not attractive to the PE firms.

Draper Hinks is a brokerage specialising in the buying and selling of accountancy practices and has been going for over 20 years.  We specialise in dealing with sub £1m practices.  If you want to speak to Nicola Draper at Draper Hinks please use this email address: n.draper@draperhinks.co.uk.  We would be happy to have a chat.