Accounting firm mergers and acquisitions broke records in 2025, with transaction volume rising 26% year-over-year and continuing to climb in 2026 primarily due to private equity, according to a new report from Capstone Partners, a middle-market investment banking firm.
There was a record 194 transactions announced or completed in 2025, according to the report, and M&A volume has continued to climb so far this year, rising 14.8% year-over-year to 62 deals.
Robust transaction activity has been supported by participants’ ability to showcase stable cash flows, significant client retention, and strong financial projections, Capstone Partners says. In addition, buyers in the space have increasingly rolled up accounting firms with service and end market specialization to bolster cross-selling opportunities for tax, audit, and advisory offerings.
Other key takeaways from the report include:
- Accounting firms have increasingly expanded traditional and non-traditional offerings to capitalize on the sector’s ample white space and drive growth.
- Sponsor-led sector transactions have flourished year to date as PE groups across market sizes fervently search for a platform investment from which to consolidate and grow.
- PE capital raising for accounting services-focused funds has increased year-over-year in 2026, boding well for future sector M&A.
- Equity financing activity in the accounting services space has persisted as growth capital investors increasingly target firms with artificial intelligence tools and automated back-office functions.
- Outside capital has increasingly funded transformation, not just expansion. While acquisition capital has remained important, investors have placed greater weight on whether firms can use capital to implement AI tools, automate workflows, strengthen controls, and improve service delivery at scale.
- As AI reduces reliance on lower-value manual work, firms have reoriented manager and director roles toward oversight, advisory engagement, and client management, while PE-backed firms have continued to distinguish themselves through stronger wage growth and talent investment.
- Investor focus has moved away from compliance-heavy revenue bases toward higher-value, more commercially scalable offerings. Firms with stronger advisory capabilities, better organic growth, and clearer go-to-market maturity have increasingly commanded more attention than those whose equity story depends primarily on market fragmentation or M&A runway.
Capstone Partners says that strategic buyers have historically led accounting firm M&A activity due to American Institute of CPAs regulations requiring CPA firms to be majority owned by licensed CPA professionals. However, this trend has reversed as sponsors have increasingly utilized alternative practice structures to penetrate the space. To date, financial acquirers like PE groups have accounted for 54.8% of accounting firm M&A compared to 38.9% in the prior year period, with deal volume spiking 69.1% year-over-year.
Capital raising for accounting services-focused funds rebounded last year from a decline in 2024 and has continued to trend upwards this year. Total PE capital raised for sector-specific funds has risen 16.1% year-over-year to $12.7 billion year to date. Buyout funds have comprised the majority (87.9%) of PE capital raised in the accounting sector to date, which bodes well for accounting firm M&A activity throughout the rest of this year. In addition, the median size for accounting services-focused funds has increased 23.6% year-over-year to $581 million so far in 2026. This indicates that sponsors may move up market for platform transactions or further accelerate add-on dealmaking, Capstone Partners says.
“Technology transformation has become a strategic requirement in accounting services M&A, not a value enhancer,” Capstone Partners Director Erik Larson, the lead contributor to the report, said in a statement. “Investors are weighting AI readiness, organic growth quality, and operational discipline more heavily than market size or M&A runway, reflecting a shift toward firms that can deploy capital to improve delivery, scale efficiently, and expand into higher-value advisory services—a compelling opportunity for those well positioned and thoughtfully prepared.”
Photo credit: denisapolka/Freepik
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