Top 50+50 Accountancy Firms 2023: Number of firms embarking on M&A up 22%

Almost 40 accounting firms among the UK’s top 100 bought or sold a firm in the last financial year, according to new data.

Accountancy Age’s Top 50+50 Rankings, sponsored by Source Advisors (previously known as GovGrant in the UK), saw the number of firms falling into this category rise from 31 to 38.

In 2022, almost 35% of those reporting they had sold or acquired a firm ranked in the top 20. A year later this percentage had dropped to 23%, signalling a rise in consolidation amongst mid-tier firms.

Several factors likely fuel this expanding deal appetite. An ageing partner demographic and succession woes continue driving smaller firms into the arms of growing regional players.

Meanwhile, mid-market practices seek mergers to broaden speciality capabilities as client needs to grow more complex amid constantly evolving regulations.

AAB Group went on a spending spree in 2022. In its entry to this year’s rankings alone, the firm reported acquisitions of FPM Accountants; Think People; May Figures; Charlton House (Customs Compliance); Kilkee Financial Services; AAB Payroll; French Duncan; and FD People; French Duncan (Financial Controller).

Smh Group, one of the smaller firms to feature in the rankings, also acquired three firms within the last financial year: BCL, Malcolm Harris and Darcy Howard.

Models are shifting

However, the M&A flurry also signals deep-rooted business model challenges confronting the profession as it grapples with fee pressures, talent squeezes and digital demands. Many lack the operational bandwidth or change management prowess to transform legacy practices at the pace required.

Tucking into fast-evolving acquirers represents an accelerated pathway to reinventing service delivery before external disruptors beat them to the punch.

Smh Group’s acquisition of Malcolm Harris has expanded the range of services it can offer its clients including personal financial services, such as pension and investment advice, and assistance with wills and probate and Inheritance tax.

Ultimately industry consolidation presents a double-edged sword. Multi-office networks allow better client experience through increased breadth and depth of advisory services.

Yet runaway concentration also risks decreased market competition, innovation stagnation and upward pricing pressure over the long term.

As deal momentum continues through 2024, regulators may need to pay close attention to balancing outcomes for both practitioners and SMEs/consumers reliant on their services.

Activity among the Big Four

Both PwC and EY reported undergoing M&A activity in 2022 and 2023 – data was not provided by KMPG and Deloitte.

In 2022, PwC acquired Pollen8, a technology consultancy focused on sustainability and green initiatives. Later that year, the firm also acquired Applications Consulting Training Solutions to help boost its banking and financial services offering.

A year later, it also took over People Force – an industry leader in the areas of people technology selection and implementation. The acquisition was part of PwC’s technology alliance strategy and saw 50 employees join PwC’s People and Organisation team.

Since 2021, EY has made a total of eight acquisitions in the UK. In April 2023, it announced it had taken on whyaye, a UK-based consulting services provider for the ServiceNow platform, as part of significant ongoing investments in technology consulting services.

Exit mobile version