Transaction monitor 2022 & 2023: Newton's third law: action is reaction

In the accountancy market, the consolidation trend is unmistakably accelerating. Contrary to other media reports, takeover activity in 2023 has actually increased significantly. Moreover, it's not just private equity investors who are active in purchasing accountancy and administration firms. Increasingly, independent accountancy and administration firms are also entering the acquisition arena. This is evident from the Takeover Monitor Accountancy Market 2022 & 2023 that we released this week.

Deal size in 2023 three times higher than last year

The year 2023 marked a record in terms of acquisitions in the Dutch accountancy and administration market. The number of observed transactions increased by 30% in 2023 compared to 2022. Particularly notable are the relatively larger acquisition amounts in 2023. Compared to 2022, the deal size in 2023 - at over €1.1 billion - is more than three times higher. The upward trend is unmistakably continuing.

Private equity driving the consolidation trend

Over the past two years, private equity has already invested approximately €800 million in Dutch accounting and administration firms. This means that private equity has already had a significant impact on the market. Additionally, the role of private equity will only become more prominent in the coming years. Not only national but also international private equity firms are interested in Dutch accounting and administration firms. It is a recession-resistant and highly predictable business, and these companies have a diversified and loyal client base, making the risk profile attractive.

Independent firms are also venturing onto the acquisition path.

Private equity has been a significant driver of this acceleration over the past two years. In 2022, the share of private equity transactions was as high as 79%. However, despite the increase in deal volume, the share of private equity transactions decreased to 43% in 2023. This is an interesting development, vividly illustrating Newton's third law. The action, caused by private equity acquisitions in the accountancy market, triggers a clear reaction from independent accountancy and administration firms, which accounted for a larger share of mergers and acquisitions in 2023.