Professional Services M&A in 2024: A Market in Transition, Poised for Growth in 2025

For both sets of buyers, there was a pendulum swing from the market craziness of 2021-2022 to a refined focus in 2023-2024. Strategic firms divested non-core capabilities, such as GlobalData’s purchase of Celent from Oliver Wyman, while PE executed calculated approaches on what businesses and industries to chase. Since 2022, we’ve seen more PE firms formalize a thesis and investment team tailored around the professional services market. This trend, combined with even more PE firms receiving pressure from their limited partners (LPs) to exit current investments, will help fuel M&A in 2025. As we see it, economic sentiment has improved, macroeconomic headwinds are abating, and professional services firms’ trendlines are heading in the right direction for more robust M&A activity this year.

Private equity is progressively becoming a bell-weather for professional services M&A, as seen across various thematic areas. Specifically, numerous acquisitions of large accounting firms made headlines – New Mountain Capital’s sale of Citrin Cooperman to Blackstone and Cherry Bekaert’s sale to Parthenon Capital. These represent the tip of the iceberg for PE’s overall appetite across accounting and the office of the CFO advisory firms; interim or part-time CFO, CPA groups, and even bookkeeping businesses are now all in the crosshairs. These businesses typically have stable, recurring revenue, sticky client relationships, and operate in a largely fragmented space, further bolstering the consolidation thesis. The outsized acquisition activity and eagerness in this space, as well as some early successes, are the firing of the starting gun and, as this race continues, this thesis is primed for expansion into broader consulting. We would not be surprised if a large, mid-tier consulting firm completes a deal with PE in 2025 that could accelerate the trend in the sector. To pull on this thread further, it’s likely the playbook for accounting firms is brought to other, traditionally shunned industries, including law and lobbying firms.