The Professional Services Shake-Up: PE vs. Public Markets

MHA just went public in a $98 million AIM listing—the first UK accounting firm to go public in over a decade. Meanwhile, Grant Thornton UK sold to Cinven, and H.I.G. Capital is eyeing an £800 million exit from Interpath.

Two paths. Same industry transformation.

The professional services sector is being reshaped by regulatory changes, technology disruption, and changing client expectations. And the firms that understand these dynamics are building valuable, scalable businesses.

The firms that don’t? They’re becoming commoditized service providers in an increasingly competitive market.

1. The Great Professional Services Divide

The professional services industry is splitting into two distinct categories: firms that are building scalable, technology-enabled platforms, and firms that remain traditional labor-intensive service providers.

The platform builders:

• Technology integration: Using AI and automation to improve service delivery and margins
• Geographic expansion: Scaling successful service models across multiple markets
• Service diversification: Expanding beyond traditional services into adjacent areas
• Client relationship management: Building long-term, strategic client relationships

The traditional providers:

• Labor-intensive delivery: Relying primarily on human capital for service delivery
• Local market focus: Serving primarily local or regional client bases
• Service specialization: Focusing on narrow service areas with limited expansion
• Transactional relationships: Competing primarily on price for individual engagements

The gap between these two categories is widening rapidly, and it’s driving very different investment and exit strategies.

2. Why Some Firms Choose PE, Others Choose Public

The choice between private equity and public markets isn’t random. It reflects fundamental differences in business models and growth strategies.

Firms choosing private equity:

• Transformation opportunity: Need operational expertise and capital to build scalable platforms
• Acquisition strategy: Plan to grow through acquisitions that require patient capital
• Technology investment: Need significant capital investment in technology and systems
• Management bandwidth: Benefit from PE operational expertise and strategic guidance

Firms choosing public markets:

• Proven scalability: Already demonstrated ability to scale profitably
• Capital efficiency: Can fund growth through cash generation and modest equity raises
• Market validation: Want public market validation of their business model
• Liquidity provision: Founders and employees want liquidity without losing control

MHA’s public market strategy:

• Retained control while providing liquidity to partners
• Using public currency for acquisitions (Cyprus and Greece expansion)
• Demonstrating that professional services firms can be successful public companies
• Building platform for further geographic and service expansion

Grant Thornton’s PE strategy:

• Cinven providing capital and expertise for international expansion
• Technology investment to improve service delivery and margins
• Acquisition strategy to build scale in key markets
• Operational improvements to increase profitability and competitiveness

3. The H.I.G.-Interpath Exit Strategy

H.I.G. Capital’s potential £800 million exit from Interpath four years after the KPMG carve-out is a masterclass in professional services value creation.

The Interpath value creation story:

• Carve-out execution: Successfully separating restructuring business from KPMG
• Service expansion: Adding corporate finance advisory to core restructuring services
• Market positioning: Building leading position in UK restructuring and advisory market
• Team building: Attracting top talent from competitors and building market-leading capabilities

Why the exit timing makes sense:

• Market leadership: Established clear market leadership position
• Service diversification: Successfully expanded beyond core restructuring services
• Financial performance: Demonstrated consistent profitability and growth
• Strategic value: Attractive to both financial and strategic buyers

The broader lessons:

• Carve-outs work: Professional services carve-outs can create significant value when executed well
• Service expansion: Expanding service offerings can significantly increase valuation multiples
• Talent retention: Success depends on retaining and attracting top talent
• Market timing: Exiting when the business has achieved scale and market leadership

4. Regulatory Changes Driving Consolidation

The professional services transformation isn’t just about technology and scale. It’s also being driven by regulatory changes that are reshaping the competitive landscape.

Key regulatory drivers:

• Audit reform: Changes in audit regulations creating opportunities for non-Big Four firms
• Conflict of interest rules: Big Four firms divesting non-audit services creating carve-out opportunities
• International compliance: Increasing complexity of cross-border regulatory requirements
• Technology regulations: Data privacy and cybersecurity requirements driving technology investment

The consolidation opportunity:

• Scale advantages: Larger firms better positioned to handle regulatory complexity
• Technology investment: Regulatory compliance driving need for technology investment
• Geographic expansion: Cross-border regulations favoring firms with international capabilities
• Service integration: Clients preferring integrated service providers over multiple specialists

Investment implications:

• Regulatory expertise: Premium valuations for firms with deep regulatory expertise
• Technology capabilities: Value creation through technology-enabled compliance solutions
• International presence: Geographic diversification reducing regulatory risk
• Service breadth: Integrated service offerings commanding higher margins

5. The Future of Professional Services Ownership

The professional services sector is evolving toward a more diverse ownership structure that reflects different business models and growth strategies.

The emerging ownership landscape:

• Public companies: Firms with proven scalability and capital efficiency
• PE-backed platforms: Firms building scale through acquisitions and operational improvement
• Partnership models: Traditional partnerships focusing on specialized, high-margin services
• Technology-enabled disruptors: New entrants using technology to compete on price and efficiency

Success factors for each model:

• Public companies: Consistent growth, predictable margins, and clear competitive advantages
• PE-backed platforms: Acquisition capabilities, operational expertise, and technology integration
• Partnership models: Deep expertise, client relationships, and service differentiation
• Technology disruptors: Scalable technology, cost advantages, and market penetration

The investment thesis: Professional services firms that can demonstrate scalable, technology-enabled growth will command premium valuations regardless of ownership structure. Firms that remain labor-intensive and geographically constrained will face margin pressure and limited growth opportunities.

The Bottom Line

The professional services shake-up is creating both opportunities and challenges for investors and operators.

The opportunities are significant: regulatory changes, technology disruption, and changing client expectations are creating value creation opportunities for firms that can adapt and scale.

The challenges are real: increased competition, margin pressure, and the need for significant technology investment are making it harder for traditional firms to compete.

The firms that succeed—whether as public companies or PE-backed platforms—will be those that:

• Build scalable, technology-enabled service delivery models
• Develop deep expertise in high-value, specialized services
• Create strong client relationships that generate recurring revenue
• Maintain operational discipline while investing in growth

The firms that cling to traditional models without adapting to changing market dynamics will find themselves increasingly marginalized.

Because the professional services industry isn’t just consolidating. It’s transforming. And the firms that understand this transformation will capture the value.

How are you seeing the professional services transformation play out in your markets? What opportunities are you seeing for value creation in this sector? Share your insights with the VCII community.