Private equity is onboard - what does this mean for other advisory and consultancy firms?

A decade ago, private equity avoided professional services, considering it too risky to invest in a business whose most valuable assets were people.

A series of successful deals, particularly in accountancy, has changed the narrative. Interest continues to rise – there were 310 professional services deals completed in 2025, compared to 292 in 2024.

This trajectory will continue as investors who entered the sector through accountancy begin to look across legal services, specialist consulting from forensic advisory to fractional CFO and wider to built environment practices and beyond. The question for leaders of those firms is whether and how to get on board.

When did private equity change its mind about professional services?

Private equity's entry into professional services began in earnest in accountancy. Audit and tax practices offered the characteristics that investors prize: recurring revenues, a fragmented market, and regulatory barriers to entry.

Success from early deals bred confidence. These include a wave of bolt-on acquisitions by PE-backed consolidators such as Azets, and successive rounds of investment into fast-growing firms like Cooper Parry.

Cinven's majority investment in our own business in late 2024 marked a watershed moment as the largest ever private equity investment in the UK accountancy sector.

A more recent proof point of PE's evolving ease with professional services is Bridgepoint's 2026 acquisition of Interpath Advisory at a reported £800 million valuation. Interpath is a pure advisory business, carved out of KPMG in 2021, with no audit-backed recurring revenue to its name.

The deal suggests investors no longer need the safety of contracted revenue, as they've grown comfortable with the economics of reoccurring (vs contractually recurring), relationship-driven work.

Legal services are ripe for consolidation

If accountancy was the proof of concept, legal services is the next obvious frontier. With close to 9,000 registered law firms in the UK according to the Solicitors Regulation Authority, the sector has the fragmentation that made accountancy so attractive.

However, the legal sector brings its own complexities. Revenue tends to be less recurring, partner mobility creates retention risk, and many firms carry decades of heritage that makes cultural change harder to navigate. Investors who thrived in accountancy are learning that the playbook needs adapting.

What makes a professional services firm investable?

For leaders watching this market evolve, the practical question is: what are investors looking for?

A good equity story framed in a deliverable growth plan is non-negotiable. Investors want to see how the business will be materially larger, more sustainable and more versatile over a five-year horizon. That might mean a compelling cross-sell strategy, a demonstrable international opportunity, or a technology-led efficiency play.

Beyond the narrative, the fundamentals matter. Diversification of service lines and client base reduces risk. In addition, the ability to attract and retain talent and raise the next generation of partners signals a business that isn't overly dependent on its current leadership.

Increasingly, a firm's relationship with technology and AI is becoming a differentiator. Investors want businesses that can articulate how they will deploy capital to modernise delivery and enhance client experience, not just that they recognise technology is important.

What doesn't work are strategies built around maximising day-one cash. Sale processes involving firms that have stripped back investment, suppressed salaries and inflated short-term profitability tend to come unstuck.

The businesses that command the strongest multiples have a growth story backed by evidence: a track record of execution, a management team with the capability to deliver, and a clear rationale for why external capital will accelerate what organic growth alone cannot.

Prioritising people and pay

No discussion of professional services M&A is complete without addressing the central tension: people risk. In a business where the assets are its partners and their client relationships, any transaction must navigate the reality that, if collectively the partnership disagrees with the direction of travel, they can leave.

This is why the remuneration model sits at the heart of every professional services deal. In a traditional, fully distributed partnership, creating investable EBITDA typically requires a reduction in ongoing partner earnings. Partners need to be compensated for this but not so generously that they have no incentive to stay and build. Getting this balance right is the cornerstone of a successful transaction, and it's where investors spend more diligence time than on almost any other element.

Cultural alignment is central. The most successful transactions are those where the investor and the firm share a genuine strategic vision, otherwise the risk of post-deal attrition rises sharply.

Private equity is seeking quality over quantity

The professional services M&A market is maturing. Consolidation will continue across all sub-sectors, but the emphasis is shifting from volume to quality. Investors are becoming more disciplined about which businesses they back, and firms coming to market without a clear, well-evidenced proposition will struggle.

Technology and AI adoption will play a growing role in deal rationale, as firms seek the capital investment that partnership structures alone may struggle to fund. And the question of exit routes that are well-proven in accountancy (but far less tested elsewhere) will become increasingly important as early platform investments approach maturity.

This market is evolving rapidly and the professional services firms that position themselves thoughtfully with a clear understanding of what they want from external capital will shape the next phase.

What needs to be considered?

The Board of professional services firms must ensure they are increasingly flexible and adaptable to change. This will stand them in good stead to cope with swift implementation of AI and digital initiatives required, respond to sectoral changes and consolidation or deciding on their own M&A journey.

For those looking to pursue a transaction preparation is key. The top four considerations;

Firstly, establish a three-five year strategy. This needs to be robust, resilient and considers the business impact of AI and digital change while ensuring these changes can be demonstrated by past performance or future proof points.

Second, prepare the people strategy – how many partners will be required to achieve the growth forecast over this period and where will they come from? Do you have an strong internal pipeline of future partners and need to bring in lateral hires?

Third – which is fundamental particularly in partnership transactions – is the future remuneration model; what are the changes to the existing structure, how are proceeds and equity allocated and how are you structuring the business to future proof it and attract the best talent?

Fourth, stakeholder engagement. A transaction is a significant distraction in the business. Communication with partners/shareholders to ensure they are kept abreast of the process while not distracted from the day-to-day is critical.

We've seen a number of processes fail due to a combination of one or all of these items not standing up to scrutiny. Having prepared well, credibility, confidence and trust is enhanced through a process rather than eroded. Through first hand experience of our own transaction and having advised on several others, each of these key issues needs significant thought and development before entering into a transaction.