We have seen a considerable amount of consolidation within the accounting sector in recent years and are now seeing this expanding into the legal services sector. Professional services firms have consistently attracted M&A activity, due to the fragmented nature of the industries.

Although Buzzacott itself has remained independently owned through our partnership model, we have first-hand experience of the trend. Tenzing Private Equity’s accountancy platform, Gravita, have been on a buy-and-build journey, with multiple deals taking place, which we’ve provided transaction support on. In addition, we also advised on the sale of Haines Watts North London to Duncan & Toplis (who themselves have been backed by Blixt Group) in 2024. These strategies are paying off for acquisitive firms, with Gravita (previously Jeffreys Henry) climbing from 62 in 2021 to 33 in 2025 in Accountancy Age’s Top 100 Accounting Firms.

In a similar vein, we have also aided multiple IFA consolidators on over 20 separate transactions including Liberate Wealth, IWP, Arven Capital and Elevation.

In our experience, there are some common themes driving these industry-specific acquisition strategies.

Why are these businesses attractive for consolidation?

1) Highly fragmented market

All these industries are characterised by a significant number of separate practices.

Across the UK there are:

• Over 40,000 separate accounting firms and more than 350,000 individual registered accountants

• Over 5,500 IFA firms and 31,000 advisors

• Over 9,000 Solicitor firms and 207,000 individual solicitors and lawyers.

*Data taken from ONS Statistics, FT Adviser

These figures do include sole traders and entities that are below the required size to make a formal M&A process cost effective, but there are clearly significant opportunities for these firms to combine, consolidating not only their client lists, but also their service offerings and specialisms.

2) Low levels of capital investment

The main expense in professional service industries is the experts employed and deployed. Though many of these firms will offer training, the structure of these firms is set to ensure each employee produces a profitable result, driving higher return.

The main capital expense tends to be IT equipment and office furnishings. This low level of capital requirements means these businesses are cheaper to scale, meaning there is a lower risk for an acquiror

And finally, further consideration is the relatively high software requirements for modern advisory firms. As the advisory world becomes more complex, there is a drive is to move towards a tech-enabled approach, allowing advisors to work more efficiently and focus on adding value to their clients. The cost of these software systems can be high and can be better managed and utilised by larger firms. Cost efficiencies can also be achieved as buyer purchasing power increases.

3) Talent and expertise acquisition

M&A scaling improves recruitment for professional services firms for a variety of reasons, including:

• The ability of bigger firms being able to attract talent from a wider geographic pool.

• Better branding and wider recognition in the market creating a network effect, raising the firm’s awareness with applicants.

• The enhanced career opportunities and greater job security that larger firms offer. Bigger firms can invest in HR and create more structured career paths and training for employees.

• The growth opportunities and career satisfaction gained from working with more complex clients that you get in larger firms.

A professional service firm’s main asset is its people, and so success is primarily driven by employing and retaining the best employees. As such, the need to keep key employees both motivated and incentivised throughout a transaction is essential to continued growth. A common method to achieve this is to include an earnout in consideration for existing owners but also employing share schemes, sweet equity, or performance bonuses to align the next generation of leaders to the business’s goals.

4) Cross-selling and client expansion

The creation of a broader offering and new service lines increases opportunities to cross- and upsell to both existing and new clients. One of the key reasons for a buy-and-build strategy is to quickly gain access to new service lines, and this is very apt for professional services.

By only focusing on organic growth, firms are required to recruit and/or train new specialists, if they want to break into new areas. These individuals will then need to build their brand and reputation within this service line. This can be time-consuming and come with higher risks. In contrast, acquiring firms with the desired specialism gives you access to their existing reputation and client base, fast-tracking your entrance into a new service line.

5) Succession planning and exit strategies

The professional services industry has historically been dominated by owner-managed business,with the key figures driving the majority of the business’s value. Due to limitations in size, and the difficulty smaller firms can face recruiting senior talent, it is much harder to plan for succession. As such, these firms are particularly open to acquisition, which allows owners to realise the value they have built over their careers.

With the UK market now seeing a high volume of transactions, and larger players emerging, there are multiple routes to exit. All this significantly lowers the barriers to transact.

Risks of strategy

As part of the acquisition strategy, new owners will look to make changes to the business, but it is crucial that this is managed with care. Below, we have highlighted some of the prevalent risks to be wary of in the professional services industry.

1) Fragile assets

As previously mentioned, employees are any professional services firms’ key asset. It is therefore necessary to retain the employees that drive the value for the firm. This means that during a transaction, it is important to understand these individuals and ensure they are kept motivated. This may mean needing to provide key workers with some form of equity to bind them to the business, or a bonus incentive to ensure performance does not dip post-transaction.

Failing to do so may mean key employees depart the business, and a large amount of perceived value leaves with them. This risk is heightened if one of the drivers of the transaction is for the owners to retire.

2) Risks to client relationships

A transaction can be a disruptive time for a business. New ownership comes with multiple changes, and it is important that client service does not suffer. Professional relationships are built over time - new systems, pricing models, and staff can result in unwanted changes for clients. Some clients may use the change in ownership as an opportunity to change providers.

It is therefore important to ensure clients are kept well-informed of the changes being implemented.. This means ensuring staff are able to communicate expected changes.

It is important to plan out any hand over of clients to ensure a smooth transition, and look to move the clients from being a specific partner or director’s clients to clients of the firm.

3) Brand and culture dilution

When smaller firms are absorbed into larger entities there can be a loss of the brand identity that drove its original success. If the acquirer is looking to establish a wider brand in the market, then it is typical for the acquiring firm to change its trading name, which can result in a loss of goodwill on day one. Many clients enjoy the personalised and tailored approach that smaller firms offer.

At smaller firms, staff may enjoy the owner-managed approach which typically allows less bureaucracy, more autonomy, and quicker decision making. The frustration from losing this may push staff to look at other options.

In order to mitigate these risks, it is important to set out the new culture and ideally ensure target firms already share many of the same values. Aligning staff and clients to the new firm requires constant communication and clear messaging.

4) Debt financing risks

There tends to be minimal “hard assets” that a professional services firm can borrow against. Legal and accounting firms are traditionally partnership models, meaning the business is underpinned by capital contributions from the partners. Businesses will tend to rely on more expensive forms of financing, leveraging their WIP/debtor book or against cash flow.

Therefore, it is crucial to ensure that when looking at financials of the business there is a clear understanding of the recoverability of debtors and WIP as well as the recurring revenues/profits to ensure that these finance facilities can be reliably repaid.

5) Regulatory changes

Both legal and accounting firms in the UK are subject to rules that generally restrict ownership to qualified professionals within the practice.

For law firms, unless they register as an Alternative Business Structure (ABS), ownership and control must remain with lawyers. ABSs allow some non-lawyer ownership, but still require regulatory approval and oversight.

Similarly, accounting firms regulated by bodies like the ICAEW or ACCA require that a majority of ownership and voting rights remain with qualified accountants. These rules exist to maintain professional independence, uphold ethical standards, and protect the public interest, which can present challenges for external investors or private equity backing.

There are no ownership rules for IFAs. However, these are regulated by the Financial Conduct Authority (FCA) meaning any person or entity acquiring more than 10% of a regulated IFA must undergo a Change in Control approval by the FCA. This assesses whether the new owner has suitable financial strength and is fit and proper to run the business. Again, this is to ensure a transaction does not compromise the client’s interests or undermine industry standards.

6) Tax considerations

Many of these firms are incorporated as LLPs, which creates a number of tax implications that should be considered for both the transaction itself, and the business post-deal. There’s also often more flexibility in how deal proceeds are split among sellers, unlike in a typical corporate deal.

It is recommended specific tax advice is undertaken to ensure that the future cash drawings from the business are carried out in a tax efficient and compliant manner.

Conclusion

Consolidation within the professional services sector shows no signs of slowing down. With highly fragmented markets, low capital intensity, and strong opportunities for growth through cross-selling and talent acquisition, accountancy, legal, and IFA firms continue to attract significant interest from both strategic acquirers and private equity investors.

However, while the upside potential is clear, the risks, particularly around talent retention, cultural integration, and client relationship management, should not be underestimated. The success of a buy-and-build strategy in these sectors relies heavily on mindful integration, ongoing communication, and a deep understanding of what makes each firm valuable beyond the numbers.

At Buzzacott, our experience advising across numerous transactions in this space has shown us that the most successful consolidators are those that balance financial performance with a long-term commitment to people, culture, and client care. As consolidation accelerates, those who manage these dynamics well will be best positioned to thrive in a rapidly evolving professional services landscape.

Next in the series

The above explores the professional services sector, the following articles in this series will look to delve into more detail on the other active industries we see transactions taking place in.

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