The epoch of the pernickety Scots-trained accountant – horn-rimmed glasses on the forehead – punching numbers into his pocket calculator to prepare the ‘ETB’, the extended trial balance, are long gone.
Now the new accountant’s universe involves mesmerising mountains of digital data, swirling around on multi-coloured spreadsheets, levitated by fastidious individuals who can cope with constant regulatory flux.
Accountancy firms are witnessing the same kind of change that disrupted the media, legal, banking and insurance industries. The profession is moving rapidly towards a value-added ‘trusted’ advisory service for millions of businesses and individuals. With more than 50,000 smaller practices in the UK, consolidation is well underway – while growing interest from American-backed private equity firms suggests there are plenty of deal opportunities to come in this fragmented sector.
The introduction of the Limited Liability Partnerships (LLP) Act 2000 allowed firms to convert from traditional partnerships, where unlimited liability fell on the shoulders of partners, to LLPs, which required the filing of public accounts.
Prior to this, most Scottish accountancy firms were traditionally structured, and the personal assets of partners were at risk in the event of legal action or bankruptcy. LLP status opened the floodgates for consolidation in the legal profession, but it has only been in the last five years that the attention has turned to the UK’s regional accountants.
What the dealmakers, whether consolidators or private equity-backed financiers, want is the stability of the resilient, and recurring, underlying revenue of a successful practice.
The adage before the 2008 banking crash was: you were more likely to change your husband or wife than your bank. While this no longer applies to banking, business people tend to stick with their accountants. Investors are attracted by this ‘sticky’ loyalty, the high-quality cash flow guaranteed by the requirements of UK tax and business regulation, and the low levels of borrowing of a typical accountancy firm.
The major corporate work remains the domain of the global big four of PwC (UK fee income of £6.3bn in 2024), Deloitte (£5.7bn in 2024), EY (£3.7bn in 2024) and KPMG (£2.9bn in 2024). These players were once the acquirers of bespoke advisory firms that were bolted on to the big four brand.
Today, the consolidation is in the larger SME and private company market in the UK with the likes of BDO, Grant Thornton, RSM, Azets Group, Forvis Mazars, PKF UK, and Johnston Carmichael in Scotland all making strides. There are around 25 accounting consolidators in the UK, plus the ten family wealth practices, mainly emerging from the south of England, all scouring for likely acquisitions.
In the last two years, well-known Scottish names such as Chiene + Tait, a firm with more than 130 years of history, have been acquired by Mardon Wealth and rebranded as Seven Street Wealth, while BK Plus has made acquisitions with FourM Accountants in Dundee, Cornerstone Accountants in Glasgow, and some Haines Watts offices south of the Border.
Meanwhile, MHA, part of Baker Tilly International, which floated on AIM in April raising £100m in the biggest IPO of the year so far, has taken over firms including Edinburgh’s revered name, Geoghegans.
Chancellor Rachel Reeves was expected to make a £2bn raid on the LLPs in the Budget, as the partnerships operate by distributing profits among members, who then pay income tax, but do not pay National Insurance contributions. Experts predicted that £1.9bn could be raised from this tax hike. But there were solid reasons why accountancy firms pursued LLP status and engaged with private equity in the first instance.
Driven by artificial intelligence
The rapid change in accounting and financial technology, the increasingly digital demands of HMRC for critical tax information and the inexorable rise of AI, have been the reason for the acceleration. While PwC in the UK has trimmed its workforce from 36,000 to about 30,000, it recently announced a mammoth investment of $1.5bh in AI over the next three years.
Increasingly, accountancy firms see cyber resilience and protection for client firms against ransomware attacks as part of their bolt-on support.
Satya Nadella, the head of Microsoft, remarked: “Ultimately, humans and machines will work together – not against one another.”
It’s a sentiment which rings true with Peter Gallanagh, chief executive officer of Azets, UK and Ireland, based in Glasgow. Azets, managed out of Scotland and with 600 people north of the Border, has been one of the leaders in the consolidation trail. The firm now has over 100,000 SME clients.
Gallanagh began his post-university career in 2000 as an Institute of Chartered Accountants in Scotland (ICAS) trainee with Campbell Dallas, the respected SME practice of Jim Campbell and Bob Dallas. Since then, Gallanagh has had a ringside seat for the consolidation over the last 25 years.
“The key driver for us selling into private equity then, still holds true for many independent firms in Scotland. The accountancy profession is going through an ‘innovation dilemma’ in how relevant we need to be and what we need to do to be relevant moving forward.”
With more automation and the use of AI, the compliance work is increasingly commoditised. This levels the playing field in terms of technical capability, including the preparation of accounts through the likes of Zero and other digital software platforms.
Lynne Walker, the chief executive officer of Johnston Carmichael, which sold its wealth management business to Partners Wealth Management LLP, part of the 7IM group, in March 2025, agrees that a range of factors have contributed to consolidation across the sector, including regulatory change, the pace of technology and succession planning.
Walker explains: “As firms scale and evolve, many are choosing to focus more deliberately on specific client segments, such as large corporates or high-net-worth individuals. While this isn’t universal, this specialisation allows firms to build deep expertise and tailor their service offerings, which can be a competitive advantage.
“At Johnston Carmichael [with over 900 colleagues and 72 partners across the UK], we’ve invested in building specialist teams and have increased our focus on key sectors, but our approach remains inclusive. Working closely with clients to understand their needs, we bring in expertise from the firm, ensuring we are a trusted adviser,” says Walker.
Gallanagh shared this view: “Much of the manual input, which drives the preparation of compliance, is now automated. This needs investment in technology and systems and a lot of smaller firms don’t have the financial capability for this kind of investment.”
He says with compliance being ‘commodity driven’, Scotland’s accountants need to be more forward-thinking using just-in-time information while working closely with clients to deliver high-end, high touch relationship advisory.
Bruce Cartwright, ICAS’s outgoing CEO, who is making way for Gail Boag, who starts in January, says: “The profession remains highly relevant by evolving alongside technology. Fintech and AI are reshaping how accountants work – automating routine tasks and enabling deeper data analysis. This shift allows professionals to focus more on strategic thinking and business advisory activities, which are the areas where real value is delivered.”
The role of accountants
For Azets, consolidation and building a national presence is predicated on a purpose to “improve the lives of our clients, our colleagues and our communities in a sustainable way”.
Gallanagh believes accountants in their communities are responsible for business health. “Consolidation, in my opinion, should drive the depth and the national scale, but the service needs to be delivered locally on people’s doorsteps.
“An SME business in Aberdeen is very different from one in Stirling, Ayr or Glasgow and Edinburgh.”
He is clear that only when accountants are part of local communities and adding to local wellbeing that they can genuinely add value.
“While there will be centralisation of the compliance work out of hubs, the actual interaction will still be done locally and face to face.”
Cartwright says: “Far from making accountancy obsolete, these technologies enhance its appeal. They position accountants as key decision-makers who can not only interpret data but also identify what data is required to make important decisions and guide business strategies.
“The profession is embracing innovation while maintaining its core strengths: financial transparency, regulatory compliance, and strategic insight.”
Consolidation will continue
Many partners in accountancy firms are either reaching retirement age or spy an opportunity to cash out after years of building their firms.
“This is an opportunity to exit at a value. This rush to exit might be expedited if the Chancellor makes a dramatic change to rules on tax on partnerships, and here National Insurance provision comes in,” says Gallanagh.
“We will buy more business in Scotland, there is no doubt about that. So consolidation will continue,” he adds.
“Consolidation is a natural part of any sector’s evolution, and accountancy is no exception,” agrees Walker.
How does Walker see the profession staying relevant?
“Client needs have evolved increasingly over the last few years from routine compliance support to real-time, proactive advice.
“With increasing complexity around tax, inheritance, and non-dom changes, clients want guidance that helps them make timely decisions and adapt quickly. It is important that clients work closely with their advisers to keep their plans under review, particularly as tax rules continue to change,” says Walker.
Another factor shaping the environment is that HMRC is more active in pressing companies on account submission, resulting in more inquiry work for accountants and firms.
A battle for talent
The accountancy profession must work harder to invest in a future that involves machine-learning technology.
“Scale gives you the opportunity to bring a strong cohort of young people into the business, to train them and deliver a proper level of knowledge and skill. Across Azets in the UK, we’ve taken on 348 graduates and trainees, with over 50 in Scotland. We had over 10,000 applications for these positions in the UK,” explains Gallanagh.
Walker says: “Broader skills are more important than ever – people buy from people, so interpersonal skills like communication, curiosity and empathy are key.
“We also value skills beyond traditional accountancy training, including problem solving, creative thinking, and being confident with technology.”
Johnston Carmichael is developing future-focused learning, working with organisations such as ICAS and Strathclyde Business School to make sure the courses reflect the changing business landscape.
Azet’s Gallanagh says: “We believe in diversity and social inclusion and we see AI will level the playing field for those from less-fortunate backgrounds to make the jump into the accountancy profession.”
ICAS is the oldest professional accountancy body in the world, but facing into the challenges of attracting fresh blood.
While the ICAS standards are world renowned, much of the UK accountancy consolidation is playing into the hand of ICAEW, its larger English rival, which regulates the main firms.
ICAS is standing its ground, fighting for its unique Scottish standards. ICAS recently launched the Shaping the Profession (StP) programme, with one of its key objectives to understand what the profession must do to better serve society.
“For new talent, accountancy offers diverse career paths across sectors – from corporate finance to government and not-for-profits – across all entities and a multitude of roles along with global mobility and continuous professional development.
As demand for skilled professionals remains high worldwide, the profession continues to be a compelling and future-proof career choice,” says Cartwright.
In conclusion, Cartwright says AI offers an opportunity to reassert what makes accountants indispensable. “The combination of AI and the professional accountant is a potent combination,” he says.
