Beyond private equity: third party ownership in the accountancy and audit sector

Read the full paper here.

Background and context

This paper explores how third-party ownership, including Private Equity (PE), is reshaping the European accountancy and audit sector. Building on Accountancy Europe’s June 2025 publication on private equity investments, it analyses the broader landscape of external capital participation.

This publication analyses and highlight both risks (such as on quality, independence, governance) and opportunities (including innovation, investment and growth). It also examines the motivations driving third-party ownership investors to enter the accountancy and audit market, and why parts of the profession are increasingly open to this evolution.

How have ownership models evolved?

Historically, most accountancy firms were partnerships owned and managed by practicing professionals. This ensured accountability and independence. As firms grew, many formed international networks, legally separate entities bound by shared standards and brands.

Following corporate scandals in the early 2000s, the EU introduced the Statutory Audit Directive 2006/43/EC, requiring that a majority of voting rights in audit firms be held by approved statutory auditors. The 2014 reform package (Directive 2014/56/EU and Regulation 2014/537/EU) reinforced this principle, preserving auditor-majority control to maintain independence and public confidence.

Approximately 100 PE transactions in the European accountancy sector were recorded in 2023, doubling to 200 in 2024. While 60% of these involved non-audit firms, the remaining 40% included audit services.

What are the third-party ownership models in accountancy and audit?

Several models of third-party ownership are now present in the accountancy and audit profession:

• Private Equity structures often separate audit and non-audit entities via administrative services agreements (ASAs), enabling compliance with EU ownership rules while attracting investment for growth and digitalisation.
• Public listings, although rare, provide another ownership route.
• Staff ownership models, such as employee share or cooperative structures, aim to preserve independence and strengthen employee engagement.
• Family ownership, typically where firms have grown out of family businesses or are part of larger diversified service groups.

How are private equity firms structured?

A third-party investor or PE fund ordinarily invests in an accountancy and audit firm that undergoes legal restructuring into two distinct entities: an audit firm and a non-audit firm. The non-audit firm usually provides professional services and resources to the audit firm under an ASA.

Ownership and control models

PE structures often include holding companies, which may vary depending on ownership levels. When a PE holds a minority stake, audit partners can participate in the holding company. However, when PE ownership exceeds 50%, EU and UK rules require statutory audit firms to remain controlled by qualified auditors, meaning the audit firm must sit outside the PE-controlled structure.

Governance mechanisms

ASAs allow PE-owned non-audit entities to provide centralised support services while keeping audit functions separate, though questions remain about whether these agreements always protect independence effectively. Independence requirements under the IESBA Code apply to both audit and non-audit entities within the same network.

Anti-money laundering and transparency

Regarding anti-money laundering (AML), PE firms are subject to obligations only when they qualify as obliged entities. Beneficial ownership disclosure rules apply to all EU legal entities, including PE structures, ensuring transparency.

Why do investors and accountancy or audit firms engage with each other

Accountancy firms attract third-party investors due to:

• High client retention, stable and predictable cash flows
• Market fragmentation and buy and build approach
• Strong growth potential of accountancy and audit firms
• Good reputation of the accountancy and audit sector

From the firms’ perspective, engaging with external investors offers:

• Access to capital for expansion, technology investments, or acquisitions.
• Operational expertise, bringing professionalised management and performance monitoring.
• Succession planning, addressing partner retirements and ownership transitions.
• These factors have made third-party ownership a growing strategic option for firms seeking to remain competitive and resilient.

What are the risks linked to third-party ownership in accountancy and audit firms?

• Third-party ownership brings benefits but also introduces important risks, particularly for audit firms with public-interest obligations.
• Regulators such as the UK Financial Reporting Council (FRC) and the Dutch Authority for the Financial Markets (AFM) have called for engagement before PE transactions to safeguard independence and audit quality.
• Short-term pressures from PE ownership may undermine the adherence to technical standards, independence, and long-term focus required to sustain high-quality audit and accountancy services.
• Ethical issues, particularly around conflicts of interest, remain central. Third party investors’ financial motivations may not always align with the audit profession’s public-interest mandate.
• Cultural differences between investors and professional firms can also create friction, with tensions between growth-driven, short-term objectives and the profession’s long-term commitment to integrity and quality.
• Firms need expert legal, governance, and transaction support to structure third-party investment agreements that safeguard regulatory compliance, independence, and future stability.
• PE-backed firms may shift focus toward more profitable non-Public Interest Entity (PIE) work, potentially reducing audit capacity in key market segments and creating imbalances that could prompt regulatory action.
• The exit strategies of investors, particularly PE, typically within three to seven years, can create uncertainty over future ownership, continuity, and independence.

What are the opportunities of third-party ownership in accountancy and audit firms?

Despite these risks, third-party ownership also offers significant opportunities for the profession:

• Innovation and technology investment: external capital enables firms to adopt advanced tools such as AI, automation, and data analytics.
• Consolidation and efficiency: by integrating smaller firms, investors can create stronger, more efficient networks with access to specialised expertise and economies of scale.
• Talent retention: investment supports structured development programmes, professional HR functions, and employee ownership schemes that help attract and retain skilled staff.
• Brand visibility and reach: investor backing and public listings can strengthen credibility and enable expansion into new markets.
• Access to business networks: investors’ ecosystems can open doors to new clients, partnerships, and innovation collaborations.

Outlook and next steps

Third-party ownership is reshaping the accountancy and audit sector. While it brings both promise and risk, its continued growth calls for thoughtful dialogue between policymakers, regulators, the profession and its owners-investors. Accountancy Europe does not advocate for or against such ownership but seeks to promote informed debate grounded in evidence and transparency.

The profession must ensure that, independence, and quality continue to serve the public interest. This publication forms part of Accountancy Europe’s ongoing work to monitor third party ownership developments and foster discussion on how the profession can evolve responsibly in a changing market.

Download the full paper here.