Private equity (PE) investors have long held a keen interest in professional services firms, but 2025 is shaping up to be an especially dynamic year. At Cooper Parry, we’ve seen firsthand how PE investment can unlock potential, both as a PE-backed business ourselves and as trusted advisers to PE investors and their portfolio companies.
Here’s our take on why the sector remains attractive, the emerging trends driving investment, and what’s next in the evolution of PE-backed professional services.
WHY PE CAN’T RESIST PROFESSIONAL SERVICES FIRMS
Professional services firms — ranging from accountancy and law to financial planning and HR services, architects, surveyors, IFAs and consultancies — have always been a firm favourite for private equity investors, and it’s easy to see why. At our recent roundtable event Professional Services Roundtable: The Key Themes for Professional Services Firms my Corporate Finance colleague Sachin Parmar and Faye Wyles whose focus is on delivering audits for such firms, identified a number of key themes which are still relevant including:
Recurring revenue – These businesses frequently come with predictable cash flows, making them a reliable investment. Services like annual audits or IFA offerings deliver “sticky” revenues, meaning clients return year after year, providing a steady income stream.
Consolidation through buy-and-build strategies – The sector is also highly fragmented, creating significant opportunities. With so many smaller players, private equity investors can step in to unite firms, drive efficiency, and create larger, more competitive entities.
Client retention – Professional services firms are appealing as they tend to build long-standing relationships, offering opportunities to cross-sell services. This not only deepens client loyalty but also adds stable, long-term value to the business.
Demand for specialist expertise – Another growth driver as niche markets expand rapidly, firms offering specialist professional services are perfectly positioned to capitalise on this demand, opening new avenues for growth and innovation.
Operational upgrades – Many traditional partnership models haven’t focused on prioritising technology or improving operational efficiency, presenting further opportunities. This leaves room for private equity to step in, streamline processes, invest in technology and add considerable value.
Attractive exits – Finally, firms that demonstrate growth, scalability, seamless integrations of acquisitions and strong recurring revenues are often able to secure premium valuations when it’s time to sell.
Altogether, this mix of stability and growth potential makes professional services firms a natural fit for private equity’s value-creation strategies.
EMERGING THEMES DRIVING PE ACTIVITY
In 2025, several key themes are expected to shape the PE landscape for professional services:
1. Technology and Digital Transformation
Technology is no longer just a value-add, it’s essential. PE investors are encouraging portfolio companies to embrace:
- AI and Automation: From streamlining back-office functions to improving client delivery, AI is being adopted as a powerful tool. That said, human oversight remains crucial to deliver high quality services, added value to clients as well as ensuring services are compliant.
- Infrastructure Investment: Cloud-based platforms, data analytics, and cutting-edge CRM systems are helping firms scale while improving the client experience.
2. Consolidation and Buy-and-Build Strategies
Professional services firms, especially in fragmented sub-sectors like legal, accountancy, and consulting, are prime candidates for consolidation.
- Operational Synergies: Merging firms creates efficiencies, but cultural alignment and talent retention remain critical challenges.
- Regional and National Players: Expect more PE-backed players expanding to dominate local and national markets.
- Multi-service professional firms: Larger PE-backed firms are expected to show a stronger appetite for diversifying services and leveraging cross-selling opportunities. For example, there are suggestions that accountancy firms are increasingly expanding into legal, tech, and wealth management offerings.
3. Responsible Investing and ESG
With ESG becoming a non-negotiable for clients, regulators, and investors alike:
- Sustainability Targets: Portfolio companies are under pressure to adopt carbon-neutral strategies and invest in green tech.
- Specialist ESG Services: Demand for expertise in this area is soaring, presenting growth opportunities.
4. Global Expansion
Cross-border M&A is gaining momentum, and for professional services firms, that’s a big opportunity. It means they can offer seamless, integrated services across markets, tap into diverse revenue streams, and access a wider talent pool. In short, it’s a chance to grow, adapt, and stay ahead.
Accountancy and Legal Services on the Rise: Domestic players are exploring international opportunities, though navigating legal and compliance frameworks remains a hurdle.
5. Performance-Driven Metrics
PE thrives on data, and professional services firms are adapting to this mindset:
- KPI Focus: Metrics like client retention, employee productivity, and utilisation rates are under the microscope.
- Upskilling Reporting Functions: Strong reporting capabilities are key to optimising decision-making and achieving premium valuations at exit.
6. Regulatory and Market Trends
Smaller firms cannot support ever-increasing regulatory burdens. The landscape is shifting, and PE is ready to adapt:
- Stricter Oversight: New compliance requirements are reshaping how professional services operate.
- Subscription Models: Firms moving away from hourly billing toward subscription pricing are becoming more attractive investments.
- Interest Rates: With rates stabilising and likely decreasing, 2025 could see a resurgence in platform investments and bolt-on acquisitions.
7. Leadership and Succession Challenges
For smaller professional services firms dealing with the retirement of partners and succession planning are critical issues. Partnering with PE can be a solution to help resolve these issues enabling retiring partners to exit the firm in a managed way without the next generation being overburdened with onerous financial commitments rendering it difficult for the firm to develop.
PE investment often accelerates leadership transitions positioning the firm well to deliver the next phase of growth with the support needed to successfully support the strategy.
8. Talent Strategy as a Growth Lever
PE’s influence on talent strategy is transformative but not without its complexities. From attracting top-tier talent to upskilling existing teams, a well-rounded strategy is a critical driver of post-investment success. At Cooper Parry, we’ve seen how a deliberate approach to talent embedding purpose, culture, and development opportunities can shape a firm’s trajectory. The right talent strategy doesn’t just fill roles; it builds a foundation for sustainable growth and innovation.
THE COOPER PARRY EXPERIENCE
At Cooper Parry, we have navigated these trends firsthand. As a PE-backed firm, we’ve harnessed investment to drive our own growth while also working alongside PE investors to create value across the investment cycle. From optimising operational efficiency to preparing businesses and advising on exits, we’ve seen what works, and what doesn’t.
Our experience also tells us that the professional services sector is going through significant change. Whether it’s embracing AI, adopting ESG strategies, or consolidating to achieve scale, the opportunities for PE-backed firms are immense.
LOOKING AHEAD
2025 will be a pivotal year for PE investment in professional services. With a more stable economic backdrop, falling interest rates, a focus on technology and ESG, and an appetite for consolidation, the sector offers fertile ground for growth. For PE investors, the key will be striking the right balance between operational improvements and preserving the unique culture and expertise that make professional services businesses so valuable.
For firms looking to attract PE investment, or maximise value as a portfolio company, the message is clear: focus on scalability, embrace innovation and don’t lose sight of the fundamentals that deliver value to clients thereby creating client trust and loyalty.
If you’re looking to navigate the evolving professional services landscape or explore the value private equity could bring to your business, let’s talk. At Cooper Parry, we’ve been on both sides of the journey, helping businesses scale, innovate, and prepare for standout exits.
Get in touch, and let’s explore how we can create value together.
