Private Equity’s Role in Public Practice

Private equity (PE) has been making waves across a wide range of industries, and public practice is no exception.

In recent years, we’ve seen a noticeable increase in the number of private equity firms acquiring and investing in accountancy practices across the UK. For some, it signals a new era of growth, technology upgrades, and heightened profitability.

For others, it represents challenges - especially in maintaining culture and employee satisfaction in an increasingly corporate environment.

With these trends shaking up the sector, it’s crucial for accountancy firms to understand how private equity is reshaping the landscape and what it means for businesses, employees, and recruitment strategies.

The Growing Influence of Private Equity in Accountancy Firms

Private equity’s footprint in public practice has grown significantly. In recent years, UK accountancy firms - especially mid-sized and regional practices - have become prime targets for private equity acquisitions.

So far this year, we've seen the likes of LB Group, Dains Accountants, and Cooper Parry turn to PE support. Why? PE firms are drawn to the reliable revenue streams and stable client bases that accountancy firms offer.

For private equity investors, acquiring an accountancy practice means gaining a foothold in a steady, well-regulated industry with predictable cash flow.

From a growth perspective, many accountancy firms offer an attractive mix of untapped potential and resilience against economic downturns, making them ripe for investment.

What Private Equity Investment Means for Accountancy Firms

For the firms involved, private equity investment can unlock significant growth opportunities.

With an influx of capital, firms can invest in expanding their service lines, adopting new technologies, and enhancing operational efficiency.

Private equity backing often comes with ambitious growth targets, meaning that firms may be pushed to expand more aggressively - whether that’s through geographic expansion, diversification of services, or building out digital transformation strategies.

However, the shift from a traditional partnership model to one backed by private equity isn’t without its complexities.

Decision-making often becomes more profit-driven, as PE firms typically expect a strong return on investment within a set timeframe. This can sometimes clash with the more cautious, client-focused approach many accountancy firms have been used to.

A Double-Edged Sword: Opportunities and Challenges

Private equity brings opportunities for expansion, but it can also pose significant challenges.

On the one hand, firms benefit from greater access to resources, allowing them to enhance service offerings and become more competitive in a crowded market. Technology investment, in particular, is a major benefit, helping firms to automate processes, improve accuracy, and deliver higher-value services to clients.

On the flip side, the cultural shift from a partner-led structure to one influenced by external investors can be jarring.

Existing partners may find themselves with reduced control over key decisions, as the focus shifts towards meeting financial performance targets.

For some firms, this can lead to tension and a disconnect between the traditional values of the firm and the profit-driven goals of its new PE owners.

The Impact on Employee Satisfaction in PE-Owned Firms

One of the most significant areas impacted by private equity investment is employee satisfaction.

In PE-owned firms, there is often increased pressure to meet financial objectives, which can create a more performance-driven and high-stakes work environment. While some employees may thrive in this type of setting, others may struggle with the added stress and heightened expectations.

Changes in company culture are also a concern. PE-backed firms may adopt a more corporate, less traditional atmosphere. This shift can affect everything from employee morale to retention rates.

On the flip side, PE investments can bring better career development opportunities, as well as enhanced salaries and benefits, making the prospect of staying at a PE-backed firm appealing for many.

Employee Satisfaction: The Good and the Bad

For some employees, private equity involvement can open doors to more structured career progression, additional resources, and higher salaries.

With PE firms often focused on scaling up and improving efficiency, they may be more willing to invest in employee training, offer promotions, or even provide performance-based incentives. These elements can lead to a motivated, goal-oriented workforce.

However, for others, the reality of life in a PE-owned firm may mean longer hours, increased workload, and a sharper focus on short-term profitability.

If not carefully managed, these pressures can result in employee burnout or higher staff turnover, especially among employees who value work-life balance and a traditional, client-focused approach.

Recruitment Trends in a Private Equity-Driven Market

As private equity continues to influence public practice, we’re seeing a shift in recruitment trends.

PE-backed firms often look for highly skilled employees who can hit the ground running and help drive business growth. This has created a competitive environment where top talent is in high demand, and firms are competing more than ever to secure the best candidates.

For many accountancy firms, particularly those in PE-backed businesses, recruitment is becoming more challenging.

There’s an increasing demand for accountants who are not only technically proficient but also capable of handling the pressures that come with working in a more fast-paced, results-driven environment.

What Private Equity Means for the Wider Accountancy Industry

The ripple effects of private equity investment aren’t just limited to individual firms.

As more firms become PE-backed, we’re likely to see a wider consolidation within the accountancy sector. Smaller, independent practices may find themselves either being absorbed by larger firms or pressured to merge in order to compete.

While this may streamline the industry and lead to the creation of larger, more competitive firms, it also raises questions about client relationships and service delivery.

As firms grow and scale, maintaining the high level of personal service that clients expect can become more challenging. Firms must find ways to balance growth with quality, ensuring that client satisfaction remains a priority.

Private Equity and the UK Economy: How Broader Trends Are Influencing Public Practice

The accountancy sector isn’t operating in a vacuum. Broader trends in the UK economy, including new government uncertainties, inflation, and regulatory changes , are all having an impact on public practice.

Private equity investors are drawn to the stability of public practice, especially as other industries face more volatility. However, adapting to new tax regimes , navigating regulatory complexities, and managing the financial uncertainty that’s prevalent in the wider economy remains a challenge for many firms.

In this unpredictable landscape, having the right talent in place is more important than ever. Firms need professionals who are not only experts in accounting but also equipped to handle the regulatory, technological, and economic challenges that come with operating in a PE-driven environment.

The Role of Specialist Recruitment Agencies

Firms that are slow to adapt or unable to offer competitive salaries and benefits may find themselves struggling to attract and retain the best employees.

In this context, it’s essential for accountancy firms to leverage specialist recruitment support to ensure they’re staying competitive in the job market.

This is where specialist recruitment agencies, like Public Practice Recruitment Ltd , can play a critical role.

As the job market continues to be candidate-driven, it’s essential for accountancy firms to have access to recruitment partners who understand the nuances of the industry.

Private equity-backed firms often require recruitment strategies that are swift, efficient, and highly targeted, and that’s where our deep industry knowledge comes into play.

By working with a recruitment agency that specialises in public practice, firms can navigate the uncertainties of a PE-driven market, ensuring they have the right people in place to drive growth and maintain stability, no matter what challenges come their way.

Here at Public Practice Recruitment Ltd, we have access to a wide talent pool of highly skilled accountants and finance professionals who are experienced in working in dynamic environments.

By leveraging our recruitment expertise, firms can find the right candidates to fit their unique needs, whether it’s for a PE-backed firm or a traditional partnership model.

As private equity continues to reshape the accountancy sector, having the right recruitment strategy in place is crucial.

Whether you’re a PE-backed firm looking for top talent to help drive growth or a traditional firm navigating an increasingly competitive market, we can help.

We specialise in matching highly skilled accountants with the right firms, ensuring that both businesses and candidates thrive in this fast-changing landscape.

Don’t leave your recruitment strategy to chance - get in touch with us today to secure the talent you need to succeed.