More Than Half of UK Firms Surveyed Aren’t Interested in Private Equity

For their headline about a professional services survey from UK law firm Kingsley Napley, Accountancy Age chose to go with the glass half empty approach: “Half of UK accountancy firms open to private equity.” That number was actually 46% — definitely not half — and we feel it’s strongly countered by a figure in the survey that’s actually more than half: 54% of respondent firms that said they had no interest in private equity investment now or down the line. Mind you these are firms with fee income ranging from £10 million ($13.5 million USD) to £1 billion ($1.4 billion USD) and there were 22 respondents.

Here’s what Kingsley Napley said in their July 8 news release:

Nearly half (46%) of UK accounting firms are open to private equity investment, a survey undertaken by law firm Kingsley Napley reveals.

Of the 22 respondents from the top 60 UK accounting firms questioned in May this year, 27% have already taken private equity funding, whilst a further 19% would be prepared to consider doing so in future, the survey found.

A striking 86% of those responding said their firms had received approaches from private equity houses or other external investors in the calendar year 2024.

In contrast, just over half – 54% of respondent firms – said they had no interest in private equity investment now or down the line.

OK so 46% are interested, 54% are not, and 86% of them are getting flirted with whether they want to be or not. Let’s compare this with the numbers from ICAEW’s 2024 mid-tier survey (btw they recently released a new one, we’ll get to it soon) covered in Here’s How Mid-Tier Accounting Firms Are Feeling About Private Equity and M&A:

As they’re different surveys this isn’t exactly an apples to apples situation but close enough. In the above-referenced ICAEW survey, close to two-thirds of respondents (62%) said that PE was “not [or] not at all attractive” to their firm. We expect that number to throttle down significantly in the next couple years as aging firms watch their compatriots get gobbled up by PE-backed megafirms and ventures.

But getting back to the Kingley Napley survey. Julie Matheson, partner specialising in Accounting Regulatory at Kingsley Napley, said: “Our survey confirmed that UK accounting practices are aware of the various benefits private equity investment can bring but also wary of the risks, particularly in relation to regulatory compliance. It shows the potential for private equity in the sector, yet it also identifies where further education and confidence building is required to make decision makers comfortable with this new funding model.”

Respondents cited concerns about loss of strategic or operational control, loss of identity and partner retention as major concerns when it comes to letting private equity in. John Young, partner in the Corporate, Commercial & Finance team at Kingsley Napley, had this to say about reluctant firms: “In our experience older partnerships tend to be the most favourably disposed to private equity investment, whereas younger partners may have different priorities and be wary of a remuneration model where the future earn out is more difficult to predict.” Makes sense. The old guys want to cash out, the young guys (and gals) are thinking more long-term and not so desperate to find an exit. “Private equity funds need to be mindful of seeking to assuage these concerns when approaching target firms,” he added.” We’d love to hear the pitch there.

Although a small survey, it does give us a peek into the thinking of larger firms across the pond.