A growing number of mid-tier accountancy firms are eyeing private equity investment and new ESG service lines, according to fresh research from the ICAEW — but a persistent skills gap could stall momentum.
The latest edition of Mid-Tier Evolution, now in its second year, paints a picture of a sector balancing transformation with constraint.
Of the 36 UK mid-tier firms surveyed, a quarter are considering private equity (PE) investment, up from previous years, while nearly half plan to offer ESG-related services within three years.
Both shifts reflect how capital pressures, regulatory complexity and emerging demand are reshaping the strategic priorities of the profession.
“More firms are actively investing in [ESG], recognising its potential for future growth,” said ICAEW Chief Executive Iain Vallance.
But he added a cautionary note: “The research also identifies a significant challenge in sourcing and developing the specialised skills required to meet evolving client demands.”
Appetite for capital, uncertainty over culture
The report shows a clear uptick in PE engagement. Nearly all independent firms surveyed had been approached by a PE house, with 25% having already taken investment — 3% of them in the last 12 months.
More broadly, 64% of respondents named private equity as the most influential macro trend in the sector.
But the interest is not universal. Among independently owned firms, 74% said PE was unappealing — up from 64% in the previous year — citing concerns over client relationships, firm culture and succession planning.
“For every firm that identifies opportunities to broaden its reach or invest in tech, another will recognise [PE] as a threat to culture and talent retention,” Vallance said.
ESG grows up — but skills are lagging
Just 10% of firms identified ESG as a growth opportunity last year. This year, that figure has jumped to almost 50%.
Yet a lack of in-house expertise remains a drag: two-thirds of firms not planning ESG service lines say the barrier is skills and resources.
Those that are planning to launch ESG offerings are already acting. Two-thirds have begun upskilling existing staff, and half are partnering with external ESG experts.
M&A activity signals a skill-led land grab
PE funding also appears to be fuelling consolidation. Half the firms surveyed completed acquisitions in the last year, and 67% are eyeing further deals.
Among PE-backed firms, 47% named M&A as a top driver of fee growth, compared to just 4% of non-PE firms.
Skills are once again central. More than 80% cited access to new capabilities as a key M&A motivator, with succession planning also high on the list.
“Investment in technology and talent is the common denominator,” the report noted.
The mid-tier remains resilient
Despite the external pressures, every firm surveyed reported growth in fee income, driven by new clients, higher spend from existing ones, and improved charge-out rates. That’s up from 93% in 2024.
Vallance said the findings underscore the importance of mid-tier firms to the wider economy: “Beyond doubt is the crucial role mid-tier firms play in supporting the national agenda for economic growth.”
The government’s recently unveiled Sector Plan for professional and business services places advisory roles front and centre in its vision for a digitally skilled and internationally recognised sector by 2035.
