Navigating PE Expectations in the Mid-Market: Balancing Growth with Client Trust

Mid-market accountancy firms have increasingly become attractive targets for private equity investment. At TPI, we’ve been working with some fantastic clients where this model has successfully been in place for several years. Whilst it presents opportunities for growth and technological advancement, it can also create unique challenges in maintaining the personalised service that distinguishes mid-market firms from their larger competitors.

Before PE backing, mid-tier tax professionals regularly shared with me the "family and close knit team' vibe that drew them to their employer in the first place. This culture can be lost surprisingly quickly if a series of acquisitions are made in a short time frame or growth is super speedy without a clear "people plan". Growth can be extraordinarily difficult if you're haemorrhaging staff and impacting on what was previously a strong brand in the market.

Private equity investment offers compelling advantages: capital for technological modernisation, resources for talent acquisition, and operational expertise. However, the traditional PE focus on rapid growth can conflict with the relationship-driven nature of accounting services. Two key things to focus on come down to:

1. Client Relationship Dynamics

Professional relationships in accounting are built on trust developed over years. Any perception of prioritising short-term gains over client needs can irreparably damage these relationships.

2. Service Quality and Staff Retention

Whilst PE firms push for efficiency improvements, accounting services require careful attention to detail that cannot be compromised. Additionally, experienced accountants who understand client businesses are invaluable, making aggressive cost-cutting measures particularly risky.

Firms that have been successful under the PE model have phased changes in gradually and taken the time to monitor client feedback closely. They are also hyper focused on placing staff retention at the centre of the strategy.

Mid-market accountancy firms can successfully balance PE growth expectations with client trust through sustainable growth strategies. By maintaining a personalised service whilst leveraging PE resources to enhance efficiency, firms can achieve growth targets without compromising client relationships. In an increasingly competitive market - there are some exciting changes and challenges for the mid-tier and what's clear is that it's great for the industry as a whole. As we move through 2025, every indication is that clients want to discuss growth starting from the top down in addition to getting creative about hiring the Partners of the future. If we connect this year, we can discuss where your growth strategy is at, the challenges you're encountering and come up with creative ideas around talent attraction and retention. For further information you can reach me at [email protected]

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