Silverfin

Silverfin M&A Discussion Webinar: Accounting Trends & Tech

The Silverfin M&A Discussion Webinar featured experts Sarah Gardner, Russell Frame, and Paul Finegan discussing the evolving UK top 100 accounting firm landscape, highlighting significant M&A-driven consolidation—especially among mid-sized firms—substantial technology investments including AI and automation, record-breaking fee incomes, ongoing talent retention challenges, and the critical importance of preserving company culture during acquisitions.

This session explores the changing UK top 100 accounting firm landscape, focusing on trends, M&A activity, and technology investments. The discussion features insights from Sarah Gardner (Shaw Gibbs), Russell Frame (Gravita), and Paul Finegan (consultant, formerly COO at Blick Rothenberg), moderated by Phil Hobden (Silverfin).

Webinar Overview

  • The session examines the relevance of the UK top 100 accounting firms, with a poll indicating strong support for its continued importance, especially for those within the ranking.
  • Key topics include growth among firms sized 20-40, consolidation via private equity (PE), and the importance of preserving company culture and communication during acquisitions.

Panel Introductions

  • Sarah Gardner: Partner at Shaw Gibbs, heads outsourcing division, works with private equity partner April Capital.
  • Russell Frame: Director of Transformation at Gravita, backed by private equity firm Tenzing.
  • Paul Finegan: Consultant, formerly COO at Blick Rothenberg, with experience in PE investments and consulting for fast-growing accountancy firms and PE investors.
  • Phil Hobden: UK Sales Lead for Silverfin (cloud compliance software).

Key Trends in the UK Top 100 Accounting Firms

  1. 1.M&A Driving Growth: Significant consolidation, especially among firms in the 20-40 size bracket.
  2. 2.Technology Investments: Notable tech spending, particularly by large firms like Deloitte, but also among mid-sized firms investing in infrastructure and automation.
  3. 3.Innovation Impact: Adoption of AI and automation is leading to growth and improved services.
  4. 4.Ongoing Consolidation: Over 35% of top 100 firms involved in M&A, with expectations for this number to rise.
  5. 5.Record Fee Income: Firms like PwC breaking revenue records, with strong performance across the sector.
  6. 6.Talent Challenges: Attracting and retaining talent remains a significant issue.
  7. 7.Variety Shifts: Firms are expanding service offerings to maximize revenue.
  8. 8.New Entrants: Private equity is enabling new firms to enter the top 100.

Panel Insights:

  • The number of firms involved in consolidation may be underreported and is expected to increase.
  • Acquisitions are increasingly sector- or niche-focused, aiming to expand advisory and service lines.
  • Despite consolidation and investment, metrics like revenue per partner have not shifted dramatically.
  • The gap in revenue between larger and smaller top 100 firms is not as wide as expected, possibly due to different stages in the PE investment lifecycle.
  • There are now more firms with £100m+ turnover, but the entry point for the top 100 has decreased, indicating smaller firms are being absorbed.

Drivers of M&A Activity

  • Why Firms Sell: Not just succession planning or lack of options; many entrepreneurial firms are building specifically to attract PE or strategic buyers.
  • Why Firms Buy: Desire for scale, economies of scale for technology investment, and expanding service offerings.
  • Technology and Scale: Investment in technology requires scale to be cost-effective; M&A helps spread these costs.
  • Advisory Expansion: Acquiring firms with complementary skills broadens service offerings and attracts talent.
  • Market Dynamics: New PE houses are entering the market with varied strategies, leading to a dynamic and competitive environment.

The Importance of Size and Rankings

  • Client Perspective: For clients, the specific ranking (e.g., 30th vs. 50th) is less important than the firm's ability to deliver quality and breadth of services.
  • Internal Perspective: Rankings can foster pride and engagement among staff, especially when paired with positive retention and engagement metrics.
  • Recruitment: Rankings and growth trajectories are important for attracting graduates and new talent.
  • Cultural Impact: As firms grow through M&A, maintaining culture and communication is critical.
  • Metrics Beyond Revenue: Other metrics like EBITDA or staff retention could provide alternative views of firm success.

Summary

The UK accounting industry is experiencing rapid change, driven by M&A, private equity investment, and technology adoption. While size and rankings matter for some stakeholders, the ability to innovate, retain talent, and deliver a broad range of services is increasingly important. The landscape is expected to continue evolving, with ongoing consolidation and new entrants shaping the future of the top 100 firms.