Market Update: Non-Attest Advisory Services Q1 2023
Over the past decade, accounting firms and pure-play consultancies alike have recognized that growth from higher-value-add advisory services will outpace legacy core compliance practices such as audit and tax. The Client Advisory Services (“CAS”) industry grew 20% annually in 2019 and 2020, where the broader accounting services market is expected to grow at a more moderate 11% CAGR through 2026. By offering greater value via specialized services than through traditional compliance-based accounting services, firms are demanding higher bill rates and generate strong gross margins, often in excess of 45%.
The momentum within non-attest advisory services and the emergence of advisory-only firms has attracted private equity investment and offered beneficial partnerships and growth capital to founders and owners.
M&A activity in the sector has accelerated in recent years driven, by private equity investment in landmark advisory-native platform deals, add-on acquisitions by accounting firm advisory practices, and most recently, platform investments in accounting firm advisory practices as new entities distinct from their legacy compliance-focused accounting firm. In this update, we highlight the landmark deals that have shaped the space to date and provide quarterly updates on activity as the space evolves.
7MA has advised Non-Attest Advisory businesses throughout the sector’s evolution and recently completed several M&A transactions for companies providing these services. 7MA has developed unparalleled deal expertise and knowledge of the industry trends, valuation trends, and most active strategic and financial buyers. Please contact Mark Landry, Tim Frye, Steve Buffington, or Tanner Lange if you would like to learn more about Non-Attest Advisory Services.