Private equity in UK accountancy: what it means for small firms

Private equity now drives much of the buying and selling of UK accountancy practices. Accountancy Europe counted 92 PE-backed transactions in the UK in 2025, most of them small and medium-sized practices bought by larger groups. For a small firm this means more offers to sell, more competition for staff and clients, and audit rules that limit what an investor can own.

How much private equity is there in UK accountancy?

The UK is still Europe’s busiest market for PE deals in accountancy. Accountancy Europe’s update covering January 2025 to April 2026 gives these figures.

Over the previous decade the UK made up 40% of European deals, 233 in total. Its share has fallen as Norway, Sweden and France have picked up, but the UK remains the largest single market. Globally, IFAC said in March 2026 that more than 1,000 accountancy firms have had PE investment in the past ten years.

Which firms are being bought?

Mostly small and medium-sized practices. Accountancy Europe says “the majority of these transactions involved small and medium-sized accounting practices,” and that deal volumes are driven by “a small number of large PE-backed accountancy groups” buying smaller firms one after another.

The usual model is a buy-and-build: an investor backs a platform group, which then acquires local practices as bolt-ons. Each bolt-on is counted as a transaction, which is why deal numbers are high.

Can private equity own an audit firm?

Not outright. Under Schedule 10, paragraph 7 of the Companies Act 2006, a statutory audit firm must be controlled by qualified persons: a majority of its members, and of its management body, must be qualified.

ICAEW’s guidance from 13 February 2025 says this means audit-qualified people must hold more than 50% of voting rights, or more if the firm’s constitution sets a higher threshold. Control must be real, not “artificial”. ICAEW notes that deals have used a separate audit entity that meets these rules. When Cinven’s investment in Grant Thornton UK completed in early 2025, the audit practice stayed in the existing LLP and tax and advisory moved to a new entity.

The FRC’s letter of 26 September 2024 says it is not opposed to private capital in principle, but stresses audit quality, independence and the public interest, and encourages firms to engage early. Across Europe, 36% of PE deals in 2025 involved audit firms.

What it means for small firms

The effects differ depending on whether you sell, compete or work for a PE-backed group.

• If you are thinking of selling: expect approaches from consolidators. Part of the price may be deferred or tied to future results, so check what you are paid on completion.
• If you are staying independent: you will compete with groups that can spend more on software, marketing and salaries. Local relationships and specialist services are your advantage.
• If you have audit clients: any investor must fit the qualified-person control test. Talk to your audit registration body early.
• If you are planning succession: PE buyers are a new exit route alongside a sale to a staff member or a merger.
• If you are an employee: ask how pay, policies and systems will change after a sale, and whether staff share in the deal.

Are PE-backed groups finding it hard to sell?

Some are. Accountancy Europe reports that several large UK consolidators built since 2021 have reached the point where owners want to exit. Xeinadin’s sale, seeking over £1 billion, was paused after bids fell short. Sumer’s planned sale was delayed, and its owner, Penta Capital, has looked at a continuation vehicle. Both groups kept buying firms during the period.

For a seller, that matters. If your buyer is itself due to be sold within a few years, ask what happens to your earn-out and your staff if the group changes hands.

Tax points for owners who sell

A sale of shares in a trading practice company may qualify for Business Asset Disposal Relief at 18%. Budget 2026 cuts the lifetime limit from £1 million to £500,000 for disposals on or after 6 April 2027. See the BADR limit change for the detail and the rules for contracts that straddle that date.

What to do now

1. Value your practice before you take a call from a buyer.
2. Read the heads of terms closely, especially earn-outs, restrictive covenants and staff terms.
3. Check audit eligibility with your registration body if you hold an audit licence.
4. Review engagement letters so client consent to transfer is covered.
5. Take independent tax and legal advice before you sign.

For more, see our guides to succession planning for sole practitioners, scaling an accounting practice, engagement letters and audit exemption plans.

Frequently asked questions

How many UK accountancy firms were bought by private equity in 2025?

Accountancy Europe counted 92 PE-related transactions involving UK accountancy and audit firms in 2025. A further 41 followed in January to April 2026.

Can a private equity firm own a UK audit practice?

Not in full. The Companies Act 2006 requires an audit firm to be controlled by qualified persons, so investors usually buy the non-audit business and audit stays in a separate entity.

What does the FRC say about private equity in audit firms?

In its letter of 26 September 2024, the FRC said it is not opposed in principle, but expects audit quality, independence and the public interest to be protected, and encourages early engagement.

Are small practices being targeted by private equity?

Yes. Accountancy Europe says most UK transactions involve small and medium-sized practices, often bought as bolt-ons by PE-backed groups.

What tax relief applies when I sell my practice?

Business Asset Disposal Relief may tax qualifying gains at 18%. The lifetime limit is £1 million until 5 April 2027 and £500,000 from 6 April 2027.