When you acquire a hundred accounting practices, what happens to the ‘X Factor’ that made each practice worth acquiring in the first place?
Over the past decade, fewer than 200 direct private equity investments in accounting firms have triggered around 900 follow-on acquisitions worldwide. Each initial transaction led, on average, to more than seven additional deals. Activity has quadrupled since 2021, and more than a thousand firms have accepted private equity investment during that period [1].
This is a significant number of firms brought together in a short space of time.
It’s also a concern shared by some of the profession’s most experienced leaders.
In his farewell remarks earlier this year, the retiring CEO of a major accounting firm cautioned peers against sacrificing culture in pursuit of growth, noting that most of his firm’s expansion had been achieved organically, not through acquisition [2].
The sceptics may have a point
Accounting firms are fundamentally different from manufacturing businesses. Their value sits in client relationships, institutional knowledge and the daily behaviours that earn trust – not in machinery, inventory or facilities.
If they move too quickly, standardise too aggressively or focus exclusively on financial engineering, this can erode the assets that justified the original acquisition.
The stats are sobering. Approximately 70% of acquisitions fail to deliver the value originally anticipated [3], for which people-related and cultural challenges are among the most frequently cited causes [4].
When key people leave, clients often follow. When culture deteriorates, retention suffers. In a profession built on relationships, those outcomes affect revenue directly. This is why culture should never be a secondary consideration. In professional services businesses, people risk and investment risk are closely connected and culture is where value is protected.
Culture is where the returns live
At Ledger Capital Partners , we draw a different conclusion from those statistics: it’s not that consolidation is flawed; it’s that consolidation must be executed thoughtfully.
In accounting firms, culture and performance are linked. Firms that retain talented people, maintain strong client relationships and continue generating referrals typically have healthy cultures underpinning those outcomes.
When you damage the culture, the consequences extend beyond employee morale – and client retention, talent retention and recurring revenue all come under pressure.
Viewed through this lens, the role of private equity is to preserve and strengthen the ‘X Factor’ qualities that make a firm successful, while providing access to capital, ops support and growth opportunities that may be difficult to achieve independently.
What this looks like in practice
This thinking shapes every stage of the investment process at Ledger Capital Partners.
We assess people risk before we assess price. Before discussing valuation, we seek to understand how decisions are made, where client relationships sit and how dependent the business is on a small number of individuals. A firm built around one or two rainmakers has a different risk profile to a firm with deep institutional strength.
Our objective is not to force every firm into a single mould. We prefer a network of complementary businesses that retain their individual identities, while benefiting from shared resources, systems and capital. The goal is a stronger platform.
We take integration seriously. The period immediately following a transaction often determines whether value is preserved or lost. This is why integration planning gets the same attention as the deal itself. Clear communication, leadership alignment and thoughtful retention strategies create stability during periods of change.
We treat organic growth as the scoreboard. Acquisitions build the platform, but growth demonstrates whether the platform is working. When partner firms continue winning clients, developing people and growing sustainably, this is evidence that the culture is healthy. If growth depends on acquisitions, the model needs examination.
The question founders should ask
Consolidation within the accounting profession is not a possibility. It’s already underway and continuing at pace. For founders, the important question is who they choose to partner with and whether that partner views culture as a core asset or merely an integration challenge.
Strong partnerships don’t erase what made a firm successful. The name remains. The client relationships remain. The people who built the business remain. The ‘X Factor’ remains. What changes is the platform beneath all of that: greater access to capital, stronger systems and increased capacity for growth.
Learn more about our investment approach at www.ledger.co.za or DM us directly. We’re ready to talk numbers, strategy and scale.
References
[1] International Federation of Accountants (IFAC) (2026) Private Equity Investment in Accountancy. New York: IFAC. Available at: https://www.ifac.org/private-equity-investment-accountancy (Accessed: July 2026). Figures reported in CFO Brew (4 March 2026) and CPA Practice Advisor (6 March 2026).
[2] Hood, D. (2026) ‘Looking back and ahead at BDO’ (interview with Wayne Berson, retiring CEO of BDO USA), On the Air with Accounting Today [podcast], June.
[3] Deloitte (2026) The Future of Human Capital in M&A: Why HR is Key to Success. Deloitte Luxembourg. Available at: https://www.deloitte.com/lu/en/our-thinking/future-of-advice/the-future-of-human-capital-in-m-and-a.html (Accessed: July 2026).
[4] Mercer (2026) Deal Value Optimization: Connect Business and Human Capital Strategy. Mercer. Available at: https://www.mercer.com/insights/people-strategy/mergers-and-acquisitions/deal-value-optimization-business-and-human-capital-strategy/ (Accessed: July 2026).
