Accounting Firm Roll-Ups and M&A: Trends, Strategies, and Legal Insights
- Chris Johnsen
- Jun 17
- 4 min read
Updated: Jun 17
The accounting sector shows a rising number of business combinations and acquisitions and roll-up strategies throughout 2025. The industry trend advances because of market fragmentation and succession planning requirements as well as vertical integration demands. The blog post features Reginald Sewell from Johnsen Law to explain the current legal and operational and financial aspects affecting the industry.
What Is a Roll-Up in the Accounting Industry?
Multiple businesses operating in the same sector can become part of a single larger organization through a growth strategy called roll-up. The accounting industry merges independent local and regional firms into a single powerful organization that competes effectively in the market. The main goals of such initiatives are to combine operational resources and cut costs while expanding services and boosting market penetration through the consolidation process.
Why Are Roll-Ups and M&A Booming in 2025?
The current M&A and roll-up trend among accounting firms is driven by multiple key factors.
One of these key factors is the accounting sector, this exists as a fragmented market because it presents an ideal opportunity for consolidation through acquisitions and roll-ups.
Private equity companies currently invest in accounting firms because these businesses possess stable client bases along with growth potential.
The retirement of numerous firm owners has created an exit challenge which acquisition stands as a preferred solution. The shortage of qualified accountants at small and mid-sized firms creates an opportunity for consolidation to solve this problem. The adoption of cloud computing and AI and automation by firms enables them to stay competitive but acquiring tech-savvy firms provides a faster path to innovation.
Key Strategies: Vertical Integration and Service Diversification
Vertical Integration
Bookkeeping companies along with Payroll providers and Specialized tax service firms represent the types of vendors that accounting firms actively acquire.
When firms integrate these services under one roof they gain enhanced control over service delivery while decreasing costs which have risen 15-20% in the past years. The company can expand its service offerings and attract more clients and create more revenue streams through this integration process.
Service Diversification
Firms use Registered Investment Advisors (RIAs) and home offices to provide financial services to high-net-worth clients. The strategy depends on current client connections to build high-end advisory work that meets SEC regulations which offers a major market advantage.
Talent Shortage and Succession Planning
The accounting profession faces an intense workforce shortage which presents an unprecedented crisis. During the past three years the profession lost 300,000 accountants and current CPAs will reach retirement age within the next 15 years. Small to medium-sized firms encounter the most difficulties because they cannot match larger firms in their ability to recruit qualified staff.
The solution to these problems arises through the combination of roll-ups with acquisitions which:
The combined resources along with available talent make up the second benefit. The acquisition process enables owners to find succession paths when they decide to retire from business. The larger organization becomes more appealing to employees due to its combination of resources and opportunities.
Legal and Regulatory Considerations
Ownership Restrictions
State laws determine which ownership groups can manage accounting firms especially when the firms provide audit and attestation services. Various jurisdictions restrict CPA ownership for non-CPA owners which determines both acquisition structures and post-acquisition integration approaches.
Regulatory Approvals
Acquiring RIAs or SEC-regulated entities requires regulatory approvals and client consents, adding complexity and due diligence requirements to transactions.
Due Diligence
Thorough due diligence is essential, including:
Verifying ownership and corporate governance
Identifying outstanding debts and lender covenants
Ensuring compliance with all regulatory requirements
Due diligence is often overlooked but is critical for a smooth transaction and to avoid post-closing disputes.
Deal Structures: Equity vs. Asset Purchases
Most roll-up deals in 2025 are structured as equity transactions rather than asset purchases. Buyers acquire equity interests in the target firm, often via direct acquisition or reverse merger. This approach streamlines the transfer of client relationships and contracts but requires careful attention to regulatory and ownership rules.
Financing, Earnouts, and Seller Considerations
Financing Options
Third-Party Financing: Bank loans, SBA loans, or private equity funding are common.
Seller Financing: Sellers will possibly accept promissory notes paid over time, sometimes with earnouts tied to future performance.
Earnouts: Contingent payments based on achieving revenue or profitability targets post-acquisition.
Seller Risks
Seller Financing Risks: Sellers may face significant risk when compensation is tied to the future performance of a business they no longer control, especially in professional services where client retention is uncertain.
Professional Services Challenge: Unlike transactions involving physical assets, accounting firm deals rely on client relationships, making seller financing riskier.
Consulting Agreements
Sellers often stay on as consultants for a transitional period (2–3 months) to ensure smooth handover and client retention.
The Role of Attorneys vs. Brokers dealing with Accounting Firm Roll-Ups
While brokers can facilitate introductions and negotiations, attorneys ensure regulatory compliance, protect client interests, and manage very complex legal issues. Engaging legal counsel early prevents costly mistakes and ensures a smoother closing.
Final Thoughts
The roll-up trend in the accounting industry is set to continue, driven by market fragmentation, private equity interest, and the need for operational efficiency. Success requires careful legal planning, strategic deal structuring, and proactive due diligence. Whether buying or selling, partnering with experienced legal advisors like Johnsen Law is essential for navigating the complexities of accounting firm mergers and acquisitions.
For more resources or to schedule a consultation go here to book a free consultation to get started and see if Johnsen Law is the right fit for you and your needs.
You can connect with our skilled Texas M&A attorneys by calling (832) 786-8645 or reaching out to us here to set up a consultation. We're here to help you get the most out of your M&A acquisitions by using our effective M&A strategies.
