Adam Croft’s Post

More PE-backed consolidation in the accountancy sector: https://lnkd.in/dqrw-_vu #accountancy #investments #privateequity

So why does a well run accountancy practice need access to private equity and will it end in better client service? As Sovereign Capital announces that it now proposes to launch a new firm with the intent of rolling up smaller regional firms I do wonder why the partners believe that selling out to private equity is in the best interest of their staff and clients. As with most private equity driven strategies it is focussed on taking out costs including use of technology to replace employees. So staff will be encouraged to increase billable hours at the same time that the incentive of at some time being admitted to the partnership has disappeared. It seems that at last the regulators are waking up to the risks of shortcuts in the audit process but meanwhile the Institute of Chartered Accountants stands on the sidelines and says nothing. People with long memories may remember what happened when a host of smaller accountancy practices floated on the AIM stock market which for many of them did not end well.

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I kinda understand why buying accounting firms can become a PE play - good cash flow model at its core which is auditing and due dillogence. Shedding everything else can generate significant savings since they are clearly marginal businesses which are cash flow consuming and normally not taken into consideration when increasing the revenue at established audit clients. But the exit strategy remains very unclear.

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Private equity isn't a silver bullet PE brings a lot to accounting, but it's not for everyone, say experts at Accounting Today's PE Summit. #privateequity #accounting #PESummit #cpafirm #cpapartnersllc

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Buyout firm Sovereign Capital Partners is set to launch a new professional services group, Affinia, which will combine seven regional accountants already owned by Sovereign.  The firm hopes to merge the support functions of accountancy practices, such as IT systems, to cut costs. Consolidation of the sector is likely to increase discontent amongst senior staff as they see succession potential disappear and will likely to lead to more start-ups and breakaways as these important members of firms leave. #accountancyfirms #privateequity https://lnkd.in/e2WuUJyM

'US private equity firm takes majority stake in Cooper Parry Cooper Parry, one of the UK’s fastest-growing accounting firms, has secured a majority investment from US-based Lee Equity Partners in what is being described as one of the largest deals of its kind in the global accountancy market. The deal, which marks Lee Equity’s entry into the UK professional services sector, follows Cooper Parry’s remarkable growth trajectory that has seen its turnover increase fourfold to £180 million over the past two years, with organic growth exceeding 24% annually between 2021 and 2024.' https://lnkd.in/eJNJYFEu